이 기사는 2022년 03월 25일 08시00분 thebell에 표출된 기사입니다

CJ ENM, the entertainment arm of South Korea’s CJ Group, is stepping up efforts to find new investment opportunities in content after effectively pulling out of the race to acquire SM Entertainment.

CJ ENM has halted discussions with SM Entertainment, home to many K-pop artists, according to industry sources. Still, no official announcement has been made on the matter and the company is said to be closely watching talks between rival suitor Kakao and SM Entertainment.

“CJ ENM was viewed as the frontrunner in the race for SM Entertainment as recently as the beginning of the year and then things have suddenly changed,” an industry insider said. “But I doubt whether Kakao will be able to satisfy all conditions proposed by SM Entertainment to reach a final agreement.”

CJ ENM’s attempt to acquire SM Entertainment was part of the mid-term vision CJ Group chairman Lee Jay-hyun presented. Lee announced in November last year that the conglomerate would invest more than 10 trillion won ($8.2 billion) over the next three years for future growth in four themes: culture, platforms, wellness and sustainability.

The conglomerate’s investments in culture are led by CJ ENM. It announced the 1 trillion won takeover of US production company Endeavor Content last November, which closed in January. SM Entertainment, one of South Korea’s top entertainment companies, was its next acquisition target.

In an effort to bolster its investment activity, CJ ENM recently recruited Yoon Kim, a strategy expert, from Citigroup Global Markets Asia. Kim will lead the company’s newly created growth strategy division, according to CJ ENM’s announcement on Monday.

Kim, born in 1979, studied economics at Korea University and started his financial career as an analyst at McKinsey & Company. He later earned his MBA at Harvard Business School and spent a dozen years from 2010 as an investment banker at Citigroup Global Markets Asia where he advised on several deals involving South Korean firms such as Krafton, Kakao and Netmarble. Kim’s relationship with CJ Group began in 2018 when he worked on CJ Foodville’s sale of coffeehouse chain A Twosome Place.

Under the company’s growth strategy division are five units: strategic planning, mergers and acquisitions, investor relations, open innovation and ESG (environmental, social and governance). The open innovation unit searches for opportunities to invest in or partner with firms with innovative technologies.

CJ ENM earlier this week unveiled a partnership with KT Corp, one of the country’s largest mobile carriers, to collaborate with each other in various areas in media, such as TV dramas and music. As part of the partnership, CJ ENM will purchase 100 billion won worth of shares in KT Studio Genie.

KT Studio Genie is an assembly of the telco’s media and content businesses, with its main units including digital comics and novels platform Storywiz, ebook and audiobook service Book Club Millie and music streaming service Genie Music.

It is likely their content partnership could be expanded into the non-fungible token space where CJ ENM, like many other entertainment firms, tries to get an early foothold.

“It appears CJ Group, which has been a traditional leader in the content industry, is threatened by competition from big techs such as Naver and Kakao,” a source familiar with the conglomerate’s thinking said. “CJ Group is likely to continue to focus on securing intellectual property at home and aboard and doing what it is good at doing.” (Reporting by Nuri Moon)