Korea's key movie firm to push content production M&As

In recent years, the content creation industry in South Korea has been a key investment sector for local investment banks. Some major content production companies in Korea have been proactive in attracting external capital or mergers and acquisitions over the past few years.

The recent M&A cases include CJ ENM Co., which bought an 80% stake in Hollywood studio Endeavor Group Holdings, the producer of the Golden Globe award-winning movie La La Land, for $775.3 million last November.  Also, Kakao Entertainment Co. is in talks to buy an 18.7% stake in SM Entertainment Co., the first-generation K-pop music label, for around 1 trillion won.   

Showbox Ltd., one of Korea’s top four film distributors, has taken a different path since its inception in 1999. It hasn’t received any external investment until March of this year and has focused on returns from mega-hit content. The company is well known for some Korean movies that attracted more than 10 million audiences, including The Host, directed by Bong Joon-ho. It also produced Itaewon Class, a drama series that was popular on Netflix in 2020.  

Now, the company is speeding up investment attraction and M&As. In April, Maum Studio, a subsidiary of US investment firm Maum Capital Group (MCG), injected 131.7 billion won ($102.6 million) into Showbox. MCG was founded by Brian Koo, the son of conglomerate LS Group’s late first Chairman Koo Ja-hong, and bought a 30% stake in Showbox to become the second-largest shareholder in the film company. Showbox’s largest shareholder is its parent company Orion Holdings Corp.

The Korean film company is also considering M&As to survive in the fast-changing environment of the global content market, Showbox Chief Executive Kim Do-soo said in an interview with The Korea Economic Daily. Kim joined Showbox in 2007, worked as director of film production and investment and became CEO in 2018. 

“We will use the funds to acquire some film production companies as it is time to expand business in the K-content industry,” Kim said. Showbox is increasingly garnering attention from some global content companies, the CEO added.  

“We aim to build a well-organized system for cooperation with great writers and directors of the target companies,” Kim said. Showbox and MCG will jointly develop metaverse and non-fungible token (NFT) businesses in the US.

The company’s performance has been heavily impacted as the pandemic slammed the movie industry. Showbox’s annual sales plunged from 78.7 billion won in 2019 to 46.8 billion won in 2020, edging up to just 50.9 billion won in 2021.

Boosted by the success of Itaewon Class, the company is looking to launch some drama series in the near term. “We are preparing for around 40 over-the-top (OTT) and TV dramas. The content products will solidify our reputation in the drama-creation sector,” Kim said.  

The company is planning to release some movies this year – air disaster movie Emergency Declaration, featuring Korean stars such as Song Kang-ho, Lee Byung-hun and Jeon Do-yeon, will come out in August. Apgujeong Report, a comedy depicting a plastic surgeon’s struggles in Apgujeong, Korea’s so-called plastic surgery capital, and Citizen Deok-Hee, about a middle-aged woman's adventures capturing voice phishing criminals.

Write to Hee-Kyung Kim at hkkim@hankyung.com
Jihyun Kim edited this article.