CJ Group, a major Korean conglomerate, said yesterday it has acquired a controlling stake in OnMedia Corp., a leading cable-television operator, for 434.5 billion won ($367 million).
The acquisition signals the emergence of the country`s No. 1 cable-television firm that runs 18 cable channels and reaches about 3.2 million households.
In a public notice to the Seoul bourse, CJ Group said it bought a 55.2 percent stake in OnMedia from HSBC, Orion Corp. and other shareholders. The deal, if approved by the Fair Trade Commission, will add 10 channels to the already powerful lineup of CJ Group`s eight cable channels.
The FTC said yesterday it will review the details of the takeover transactions to see whether it might undermine fair competition in the industry. If CJ Group files application documents to the FTC this year, a final decision is expected to come out in May or June next year.
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OnMedia is widely regarded as a major cable operator in Korea, with its entertainment and game-oriented channels drawing in more viewers than its competitors. OnMedia currently runs OCN, a top movie channel; OnStyle, a lifestyle broadcaster that appeals to female viewers with fashion programs; and Ongamenet, a gaming channel that covers professional championships involving Starcraft and other popular games.
CJ Group`s cable unit, CJ Media, is operating movie and entertainment channels such as CGV and Mnet, whose genres overlap with those of OnMedia. Both CJ and OnMedia have been focusing on entertainment genres, whose average ratings are higher than other specialized channels on the cable networks.
CJ`s acquisition of OnMedia will lead to a combined viewership of 27 percent in the domestic cable channel market, a significant share that will pose a serious challenge to existing cable channels operated by terrestrial broadcast networks.
CJ`s take-over deal comes at a time when the Korean government is weighing various options in granting additional cable-television broadcast licenses to news entrants, particular from the print media.
The speculation about CJ`s bid for OnMedia came about eight months ago. CJ and Orion are said to have undertaken negotiations that were prolonged far longer than expected due to their differences over the pricing. In September, the negotiations were temporarily halted as the price gap widened.
Prior to the public announcement about the takeover deal, OnMedia was 40.20 percent owned by Orion Corp (37.39 percent), its chairman Dam Cheol-gon (1.40 percent) and other affiliate shareholders.
CJ O Shopping, a cable shopping unit of CJ Group, handled the take-over transactions, acquiring the controlling stake in OnMedia from Orion and other related parities. CJ O Shopping`s president Lee Hae-sun said yesterday the take-over of OnMedia is part of efforts to push for a new growth momentum by piecing together media and shopping services. Korea`s cable-based home shopping market has long been crowded amid the lackluster growth in sales.
CJ Group is planning to move its media units to CJ E&M Center located in Sangam-dong, Seoul, by April next year. Companies that will join the new media center include CJ Media, CJ Entertainment, CJ Internet, CJ CGV and Mnet.
(insight@heraldcorp.com
By Yang Sung-jin