CJ E&M denies spin-off rumors

Entertainment and media giant CJ E&M denied a news report that the firm plans to spin off its drama and entertainment production divisions to set up a new content production company.

“Although we plan to strengthen our content production business, nothing (mentioned in the report) has been confirmed yet,” Cho Young-sic, general manager of the communications team at CJ E&M, told The Korea Herald.

The denial came after a local media outlet reported Tuesday that the entertainment colossus plans to create a new content production company by spinning off its TV drama production business and merging it with two entertainment agencies -- Culture Depot and Hwa and Dam Pictures -- which CJ E&M recently acquired with an investment of 65 billion won ($53.3 million).

Culture Depot is an agency that is home to top actresses Jun Ji-hyun and Park Min-young and Hwa and Dam Pictures has hit-maker Kim Eun-suk, who wrote hit TV series “The Heirs” and “Secret Garden,” on board.

The news report said the entertainment giant attempts to create a mega content production company, which can produce TV dramas, entertainment shows and movies with its actors and writers and then distribute them on its own cable networks tvN, Mnet and OCN.

Despite the denial from CJ E&M, the spin-off is likely to take place to further strengthen its profitable content production business, according to industry insiders. It has been speculated that CJ E&M is trying to make a major change in its drama division to build a more systematic production system.

Drama production business has been a big moneymaker for CJ E&M, which made a turnaround last year after posting operating losses in the previous two years. Multiple analysts, such as Yang Seung-woo from Samsung Securities, said it is largely due to the huge popularity of its dramas and variety shows, including hit TV series “Reply 1988,” reality cooking show “Three Meals a Day” and travel-reality show “Youth Over Flowers.”

“Reply 1988” alone brought in 17.1 billion won in commercial sales. Also, the advertising rates of “Three Meals a Day” and “Youth Over Flowers” were the highest in the Korean TV industry last year, at 25 million won per a 15-second spot.

By Shin Ji-hye (shinjh@heraldcorp.com)