A New Entertainment Conglomerate

The CJ Group will merge two affiliates specializing in entertainment content and distribution in an effort to reorganize its entertainment businesses.

The merger will produce a giant entertainment firm comprehensively integrating the production of music and entertainment content and online and offline media, including a broadcasting channel.

Mnet Media, an affiliate of CJ Group, held an extraordinary shareholders meeting on Monday and decided to merge with CJ Music on May 31, according to sources.

Mnet Media is a management agency representing top celebrities, such as Song Seung-heon, Ha Seok-jin, Lee Hyo-lee, SG Wannabe, and Lee Beom-soo. Mnet Media runs Mnet.com, an online music portal site, and is the largest shareholder of Gom TV, an Internet TV service provider. CJ Music, an affiliate of CJ Group, runs Mnet, the largest cable music channel in Korea controlling some 30 percent of the domestic music distribution market. If Mnet Media is merged into CJ Music, an entertainment conglomerate operating comprehensive entertainment services from celebrity management and content production to online and offline broadcasting will be created. Annual company turnover is expected to be around $160 to $190 million.

“A decision was reached to create a maximum synergy effect by integrating all the stages of the entertainment business starting from content production to distribution. In order to promote the Korean Wave at the industry level ahead of the opening of the entertainment market, Korea needs a conglomerate capable of covering all aspects of the business, from content production to distribution,” an official of Mnet Media said.

KMTV, which belongs to tvN, another affiliate of CJ Group, is also planning to merge with Mnet Media according to sources. CJ Group prepared for the mergers of the entertainment affiliates by transferring Mnet from CJ Media to CJ Music after acquiring Mnet Media in 2006.

The mergers are expected to have an impact on the restructuring of related businesses and conglomerates that have moved into the entertainment industry, including Lotte Group and Orion Group.

parky@donga.com