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Korean major wading through changes

CJ Entertainment to be split into two divisions

South Korean major CJ Entertainment will be delisted from the KOSDAQ technology stock exchange and absorbed into its parent company, CJ Corp.

CJ Entertainment will be split into a holding company and a new entity to operate CJ’s movie studio and distribution businesses. CJ Corp., South Korea’s largest food and feed maker, will acquire the holding company, per a regulatory filing.

Also, three subsidiaries of CJ Entertainment — lucrative exhibition chain CGV, cable arm CJ Media and online business CJ Internet — will be absorbed into CJ Corp. and henceforth managed independently.

CJ and CJ Entertainment described the move as a means of streamlining funding for the quickly expanding CGV, CJ Media and CJ Internet, while strengthening the overall structure of the conglomerate.

A statement described the changes as “a measure to invigorate and further globalize the operations of CJ’s entertainment and media interests, which rank as one of the conglomerate’s three main businesses.”

However, the move has provoked concern that the delisting of CJ Entertainment and its dissociation from the more profitable subsidiaries may signal a reduced ability to finance films in the future. CJ Entertainment is the most active investor in Korean cinema.

There are hints that CJ may be planning to reintegrate its media businesses into a larger entity at some point in the future. A merged company presumably would be seen as more stable by market investors, compared to the separately listed CJ Entertainment and CJ Internet.

Deal is subject to shareholder approval at a meeting skedded for March 7, and is expected to be completed by April 10.

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