CJ HelloVision’s share price falls after failed merger with SKT

[THE INVESTOR] Mirae Asset Daewoo on July 19 lowered the target price of CJ HelloVision to 11,000 won (US$9.67) per share in the next 12 months after its failed merger with SK Broadband, the IPTV unit of SK Telecom.

In the day, its share closed at 9,550 won, down 3.14 percent from the previous day.

The brokerage said the Fair Trade Commission’s disapproval of the merger would affect negatively the overall attractiveness of the nation’s paid TV market that is crowded with smaller players. 

The FTC’s decision is based on the companies’ market dominance in individual regional blocs. Considering most operators are dominant players in specific regions, it is expected to be difficult for them to seek merger and acquisition opportunities in the future.

“CJ HelloVision should continue to grow on its own through rapid digitalization or increased marketing activities,” Mirae said in a report. “Companies, including CJ HelloVision, could spin off businesses to merge them with smaller players.”

CJ HelloVision is the nation’s No. 1 cable TV operator with more than 4 million subscribers. It is the No. 2 player in the total paid TV market. Its annual operating profit stands at about 100 billion won.

By Lee Ji-yoon (jylee@heraldcorp.com)