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Naver expands ties with CJ Group into OTT platform

Naver agrees to buy new shares in TVing for about $35 million

By Jul 01, 2021 (Gmt+09:00)

(Courtesy of TVing)
(Courtesy of TVing)
South Korea's Naver Corp. has agreed to buy 40 billion won ($35 million) worth of new shares in the domestic over-the-top (OTT) services provider TVing Co., in a strategic investment in the unit of CJ ENM Co. to further tighten its grip on the online service market.

The stake purchase follows the 600 billion won share swap deal inked between Naver and CJ Group, South Korea's food and entertainment conglomerate, in October 2020.

Under the latest agreement, Naver will buy 261,817 shares in TVing to be issued for 152,778 won apiece in a third party placement, said CJ ENM on Wednesday.

They did not specify how much ownership the stake would represent. Based on The Korea Economic Daily's calculation, the new shares are equivalent to a 15% stake in TVing, slightly below the current holding by the No.2 shareholder JTBC, a local cable TV channel. JTBC's stake is 16.67% prior to the rights offering due for July 7.

"This investment from Naver will invigorate original content production and speed up our business expansion," CJ ENM added.

Naver is not allowed to hand over the TVing shares to another party for the next five years.

Following the stake deal, both Naver and CJ Group plan to co-produce and co-distribute original content, which analysts said would mean CJ uses Naver's intellectual property content to create TV series and films.

For Naver, OTT streaming services will help the online portal keep its users on its platform. The company has already rolled out subscription services to watch TVing's releases since March of this year.  

The online giant has been bolstering its storytelling platform through a series of acquisitions of web-based novel platforms. Last month, it made a joint acquisition of the country's leading web novel platform Munpia Inc. with CJ ENM for around 240 billion won.

TVing, hived off from CJ ENM in October 2020, is aiming to produce about 100 original content by 2023 and to secure 8 million paid subscribers by 2023. It has been expanding its presence at a rapid pace, but is still trailing Netflix and South Korean rival Wavve, with about 1.5 million paid subscribers.

Write to Hee-kyung Kim at hkkim@hankyung.com

Yeonhee Kim edited this article.

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