CJ Group’s market price tumbles amid Choi scandal

The market capitalization of CJ Group, the nation’s food and entertainment giant, has tumbled 20 percent this year, hit by slowing domestic consumption and negative external factors, data showed Friday.

According to financial information provider Fnguide, the total market price of CJ’s nine listed companies plummeted to 20.5 trillion won ($17.9 billion) as of Thursday, from 25.7 trillion won at the end of last year. 

CJ was the worst performer among the top 15 conglomerates this year.

Of CJ’s nine listed companies, the market capitalization of eight affiliates dropped by up to 53 percent. These include CJ CGV, CJ E&M and CJ HelloVision.

Market insiders suspected that low domestic deman, and diplomatic ties between Korea and China -- affected by the planned deployment of the Terminal High Altitude Area Defense system here -- have impacted CJ’s stock price.

Concerns, however, are raised over possible further impact from the swirling high-profile corruption scandal involving Choi Soon-sil.

Suspicions are mounting that the conglomerate allegedly received benefits from Cha Eun-taek -- allegedly close to Choi -- for participating in various cultural businesses under the current administration.

While the group denied such rumor, CJ’s stock price plunged by 8 percent to the record low earlier this week.

Meanwhile, local broadcast MBN on Thursday reported that Cheong Wa Dae had pressured CJ Group Vice Chairwoman Lee Mie-Kyung to step down in late 2013.

The cable TV channel aired a seven-minute phone conversation that featured a former senior presidential secretary asking a CJ executive to have Lee quit. The authenticity of the file was not confirmed.

Vice Chairwoman Lee is a sister to CJ Chairman Lee Jay-hyun.

In the following year, the CJ chairman was indicted on charges of embezzlement and tax evasion. The chairwoman then led the group with her uncle Sohn Kyung-sik on behalf of her brother. But she later moved to the US for a medical treatment.

Speculations also grew that Cheong Wa Dae pressured Lee Mie-kyung to resign to hold her responsible for airing a comedy program that parodied President Park Geun-hye during her campaign in 2012 while beautifying opposition figures. CJ’s entertainment arm CJ E&M has a number of cable TV channels including tVN.

CJ E&M also released film Masquerade which was applauded by the opposition in the same year.

CJ shut down the comedy show segment and released patriotic films such as “Ode to My Father in 2014” and “Operation Chromite” this year, according to reports.

By Lee Hyun-jeong (rene@heraldcorp.com)