CJ ENM's net profit drops 98 percent in the first quarter

The logo of CJ ENM [CJ ENM]

CJ ENM's first quarter net profit fell by 98 percent on year, the company said Wednesday.

The loss was mainly due to the absence of a hit film and one-off expenses related to the acquisition certain assets of Endeavor, a Beverly Hills, California production company best known for distributing hits like “La La Land" (2016).

In the January-to-March period, net profit was 1.6 billion ($1.3 million), far below the 47.9-billion-won market consensus compiled by FnGuide.

Operating profit declined 47 percent year-on-year to come in at 49.6 billion won, lower than market expectations of 65.6 billion won. Revenue was 546.4 billion won, 41.5 percent higher than in the first quarter of 2021 and higher than the market forecast.

The delay in the release and distribution of new shows from Endeavor contributed to the worse-than-anticipated performance, according to CJ ENM.

CJ ENM bought 80 percent of the "scripted business" of Endeavor for $775 million last November, the largest investment ever for the company. The remaining 20 percent is held by Endeavor Group Holdings.

The scripted business covers dramas, series and other shows that are produced using a script.

"Only one new show from Endeavor was distributed to other platforms this quarter," the company said in a conference call. "We hope to see improved performance in the latter half as more shows are delivered to other platforms."

The company's Tving online streaming service had no additional subscribers, though the company did not provide numbers.

It blamed "eased distancing guidelines that led people outdoors and away from their phones," according to the company.

It hopes to recover growth in user numbers with Paramount+, the online streaming service. The service will come exclusively in a bundle with Tving starting June.

"We are looking into expanding Tving globally, especially to Japan and Southeast Asia," the company said. "We believe that we have much potential for growth, and we are seeking the most effective ways to succeed in the global market. We will share more details in the second half when we have more solid results of our research."

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]