This week, the Seoul Bankruptcy Court issued preservative measures and a general prohibition order against JoongAng Holdings, the group’s parent company, as well as JTBC, Contentree JoongAng, Megabox JoongAng and JoongAng P&I. The JoongAng, the group’s flagship newspaper, is said to pursue a restructuring workout process following the rehabilitation filings by the parent company and its affiliates. This bankruptcy filing is a shock to the entire weak South Korean entertainment industry.
Last week, JTBC defaulted after failing to repay a $13.6 million debt coming due, citing a sharp contraction in the television advertising market amid viewers’ rapidly shift to digital and streaming platforms. Central to the group’s financial troubles were costly deals to secure exclusive broadcasting rights to major sporting events. The group paid a combined $500 million for rights to broadcast the Olympics from 2026 through 2032 and the FIFA World Cup through 2030. It then sought to recoup those costs by sub-licensing them to Korea’s three major terrestrial broadcasters. KBS, MBC and SBS,. However, networks contested the fees as unreasonable and out of step with industry practice, leaving negotiations deadlocked. Prior practice had the three major networks pool one bid for international sporting events.
A bankruptcy reorganization can have a drastic effect on a conglomerate. When five subsidiaries of JoongAng Group, filed for court-supervised restructuring this week, the damage was expected to spill into the country’s film business right away. Two of the units seeking protection sit at the center of an industry that’s been reeling since the pandemic emptied theaters: the unprofitable multiplex chain Megabox and its distribution arm, Plus M Entertainment. Industry watchers now fear the group’s troubles could ripple out to the distributors, exhibitors and small operators that make up the rest of the business.
The network built its good reputation on its newspaper business. JTBC had gained the position of Korea’s most trusted press outlet. This trust came from its unbiased and thorough coverage of the tragic sinking of the MV Sewol in 2014 and the South Korean protests of 2016-2017. JTBC became one of the Big 5 channels in Korea due to its considerable success as not only a media outlet, but also a source of entertainment and drama.
JTBC’s broadcasting license could also be at risk. Kim said the regulator was closely monitoring the situation. As the reapproval process includes evaluations of financial and technical areas, the regulators will be paying close attention to those financials. It will probably have a great impact on spending for television shows or adding new debt to pay operating costs. Alas, JTBC’s reputation for being an innovative and edgy drama network may be tarnished.