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Wednesday, June 12, 2024

CJ ENM posts another loss as streaming service struggles

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CJ ENM's headquarters in Mapo District, western Seoul [NEWS1]
CJ ENM’s headquarters in Mapo District, western Seoul [NEWS1]

CJ ENM logged another loss in the April-June period, posting 30.4 billion won ($23.1 million) of operating loss, as profitability weakened from its streaming service Tving and California-based production studio Fifth Season.

The figure missed the market expectation of 9 billion won of operating loss compiled by FnGuide.

It is the entertainment giant’s second consecutive quarterly loss this year. In the first quarter, it posted 50.3 billion won in operating loss.

Revenue dipped 12 percent on year 1.49 trillion won, still above the market estimate of 1.18 trillion won.

Net loss was 123.2 billion won, missing the forecast of 42.5 billion won.

CJ ENM’s business unit consists largely of four divisions: media and platform, music, commerce and film and drama.

The media platform division, which includes profit from its streaming service Tving, continued to log an operating loss on year to 29.9 billion won. Revenue sunk 11.6 percent to 342.8 billion won.

The film and drama division, which includes distribution sales and profits from its in-house content, produced an operating loss of 31.1 billion won. Revenue tumbled 32.2 percent to 229.6 billion won.

CJ ENM stated at an online conference call Thursday that although drama series “Tail of Nine Tailed 1938” and variety show “Jinny’s Kitchen” did well globally as they were simultaneously streamed worldwide through Amazon Prime, it continued to bleed losses from Fifth Season due to TV production delays. Both Hollywood actors and writers are undergoing a mega-strike to prevent artificial intelligence from replacing their jobs and better wages when working on shows for streaming services.

In music, operating profit slipped 1.1 percent to 12 billion won, while revenue plummeted 32.2 percent to 229.6 billion won.

In commerce, operating profit fell 4.2 percent to 18.7 billion won. Revenue fell 1.7 percent to 345.7 billion won.

The company drew a line under rumors that Tving will merge with another domestic streaming service Wavve to compete against global streaming giants such as Netflix.

“We are not actively considering the matter because there are numerous hurdles involved if we do merge [with Wavve],” the company said.

The company expects to recover losses in the latter half of this year as TV advertisement market improves, as well as cost-efficiently managing expenses related to content investment.

CJ ENM is also contemplating unloading its stocks in non-primary assets.

“We completed selling our stocks in Samsung Life Insurance and LG HelloVision earlier this year and will work towards showing tangible results by the later half of this year,” the company said. “However, we cannot reveal at this point when and which of the stocks [will be unloaded].”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]