CJ ENM loses W55.6 billion in Q3

CJ ENM lost 55.6 billion won ($40 million) in the third quarter, its second consecutive quarter of losses.

The company blamed investment losses and expenses related to the purchase of certain assets from Fifth Season, formerly known as Endeavor Content.

Analysts had expected a 26.2-billion-won net profit for the third quarter, according to FnGuide. Operating profit was also below a market forecast of 51.3 billion won, coming in at 25.5 billion won, down 70.9 percent year on year.

Revenues were 1.18 trillion won, up 37.4 percent on year and on par with a 1.19-trillion-won market consensus.

“Our profitability has been low compared to the top-line growth,” chief financial officer Hwang Deuk-soo said in a conference call Tuesday afternoon.

“The consolidated earnings result includes Fifth Season and Tving, which have been seeing losses and have led us to lower our internal guidance for the company’s annual operating profit for this year from 270 billion won to 155 billion won," a staff at the investor relations team said. "But we are aiming to improve our profitability and see a turnaround next year.”

Tving, 57-percent owned by CJ ENM, was recently given a go-ahead to merge with KT’s Seezn. When completed, the deal will create the country's second-largest streaming service after Netflix. Its revenue and subscribers numbers were not disclosed.

Studio Dragon, 55-percent owned by CJ ENM, reported a 17.8-billion-won net profit during the third quarter, up 20.5 percent on year. Its revenues were a record 228.9 billion won, 97.2 percent higher than the same period last year.

The production studio is in talks with Netflix to renew its content supply contract, which ends this year, while also trying to broaden its portfolio with other streaming platforms.

“We plan to strengthen our fundamentals to match our top-line growth by expanding the volume of global projects by using our content production capabilities,” said Kim Jey-hyun, CEO of Studio Dragon.

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