이 기사는 2021년 10월 28일 08:06 thebell 에 표출된 기사입니다.

CJ ENM is accelerating an effort to acquire SM Entertainment as it aims for content synergy with the company behind K-pop artists such as NCT, Aespa and SuperJunior amid intensifying competition in the streaming space.

“We are exploring the purchase of a stake in SM Entertainment in order to strengthen our music content business,” the South Korean media company said in Monday’s filing, adding that nothing has been finalized.

While CJ ENM has not disclosed details, it is internally working on developing business strategy post a potential acquisition of SM Entertainment, people familiar with the company’s plans said.

CJ ENM already sent a draft of a memorandum of understanding to SM Entertainment to buy an 18.72% stake in the company held by Lee Soo-man, SM Entertainment’s founder and chief producer, according to sources.

A deal is expected be announced in the coming weeks. CJ ENM is said to be aiming to complete the acquisition before the end of this year.

Lee is understood to think that CJ ENM is the most suitable fit for SM Entertainment. CJ ENM develops, produces and distributes media content through its drama production subsidiary, Studio Dragon, which has intellectual property rights to more than 180 dramas produced globally. Lee – who currently does not participate in the management of SM Entertainment – is said to be willing to return to the company to lead post-merger integration.

CJ ENM faces intensifying competition from streaming giants such as Netflix, which recently saw a big increase in subscribers thanks to hit show “Squid Game”, and Disney+, which is set to launch its service in South Korea in November. A potential acquisition of SM Entertainment would be in line with efforts by CJ ENM to diversify its content base by helping the media company secure more original content focused on K-pop.

CJ ENM also recently put 79.5 billion won ($68 million) into its streaming service Tving in a 150 billion won rights issue, in which JTBC Studios and Naver also participated.

Tving had nearly 1.8 million paying subscribers in the third quarter, with the number expected to reach 2 million by the end of this year.

“A potential acquisition of SM Entertainment would help CJ ENM create more original music content,” said an industry insider. “This would also help increase Tving’s subscribers and viewing rates on its television channels.” (Reporting by Nu-ri Moon)