Promotion of Hallyu Content: SK Telecom, SM Join Hands to Strengthen Content Business | BusinessKorea

Saturday, July 22, 2017

SK Telecom and major entertainment agency SM Entertainment have joined forces to beef up the next-generation Hallyu (Korean wave) content business converging information communication technology (ICT).
SK Telecom and major entertainment agency SM Entertainment have joined forces to beef up the next-generation Hallyu (Korean wave) content business converging information communication technology (ICT).
SEOUL,KOREA
17 July 2017 - 8:30pm
Yoon Yung Sil

South Korea's top mobile carrier SK Telecom Co. and major entertainment agency SM Entertainment have joined forces to beef up the next-generation content business converging information communication technology (ICT) through a series of stock sales among their affiliates.

SK Telecom officially announced on July 17 that it has decided to buy 25 billion won (US$22.15 million) and 65 billion won (US$57.59 million) worth of stocks to be sold by its music-device affiliate IRIVER and SM Entertainment's affiliate SM Culture & Contents (SM C&C), respectively. SM Entertainment will also increase a capital of 40 billion won (US$35.44 million) and 7.3 billion won (US$6.47 million) to IRIVER and SM C&C.

With the latest capital increase, SK Telecom and SM Entertainment will become the No. 2 stakeholder of SM C&C and IRIVER, respectively. IRIVER and SM C&C are planning to expand synergy in their business area through a series of merger and acquisition deals using the capital. 

IRIVER will acquire SM Mobile Communications (SM MC) and SM Life Design Co. (SMLDC) to roll out new businesses based on contents targeting K-pop fans. The company will be able to and sell earphones and headsets with Exo logo produced by its high-end audio brand "Astell&Kern."

SM MC was kicked off last year as a mobile content developer, with SK Telecom taking up 46 percent of the shares, while SM Entertainment holds the remaining 54 percent. SM LDC is also an affiliate of SM Entertainment, which sells celebrities-related merchandise in Japan.

IRIVER will merge with SM MC and acquire SM LDC with 30 billion won (US$26.58 billion) as a wholly owned subsidiary. SK Telecom will account for 46 percent of the final shares in the merged entity, while SM Entertainment’s affiliates will take up 20.6 percent.

SM C&C will also purchase the advertisement business under SK Planet, a subsidiary of SK Telecom, with 66 billion to establish the foundation of stable earnings. SK Planet’s advertisement business division will be spun off into a wholly owned subsidiary of SK C&C.

After the spin-off, SM Entertainment will have a 32.8 percent share in SK C&C, while SK Telecom will have a 23.4 percent. The M&A of IRIVER and SM C&C will be completed by the end of October after holding a shareholders’ general meeting in August.

With the M&A, the two companies will combine ICT and contents in earnest. The two plan to develop new business opportunities spinning off from hallyu entertainment contents based on IRIVER’s ability in product planning.

 

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