South Korean content distribution company JTBC Studios, which is seeking to receive funding from outside, is garnering strong interest from potential investors.
Sale manager Morgan Stanley plans to hold a first round of bidding to receive funding in early August, industry sources said on July 27. Morgan Stanley started the fundraising process in June and sent teaser letters and information memorandum to prospective investors. Given the value of the deal, the seller has contacted a limited number of potential investors who would achieve deal certainty.
Investment proposals were sent to foreign private equity (PE) firms including Blackstone, KKR, TPG and Morgan Stanley Private Equity and domestic mid- and large-sized PE firms like JKL Partners, Praxis Capital Partners and SG PE. Tencent Video, one of the top three over-the-top streaming platforms in China, is also reportedly reviewing the investment.
“Some potential investors like Blackstone are reviewing the investment seriously,” said an industry source. “The company is getting a lot of attention with Korean contents getting the spotlight after the Covid-19 pandemic.”
Established in 1999, JTBC Studios is a content arm of South Korean broadcasting company JTBC. Its distribution business, which accounts for half of the company’s revenue, has recorded an operating margin of 15% to 20%.
JTBC Studios’ production business is growing rapidly. The company has produced many popular in-house TV drama series, including ‘SKY Castle’ and ‘Something in the Rain’. Revenue for the TV drama production business rose to 47.6 billion won ($39.7 million) in 2019 from 6.7 billion won in 2015, a sevenfold increase in four years.
The trend is likely to continue this year. The company’s in-house TV series ‘Itaewon Class’ and ‘The World of the Married,’ which were aired in the first half of this year, also had great success.
JTBC Studios owns drama production companies Drama House, Contents Zium and nPIO. Drama House specializes in producing JTBC Studios’ in-house TV dramas. JTBC Studios owns a minority stake in Contents Zium and nPIO. The company grew last year by making a series of acquisitions including BA Entertainment, Perfect Storm and How Pictures.
Its digital business has also proved competitive. Studio Lululala, JTBC Studios’ digital contents production company, has produced several mega hits including ‘Workman’ and ‘Wassup Man’.
Market insiders are paying attention to the company’s valuation. JTBC Studios is likely to raise money after its merger with J Contentree Studio, which was spun off from J Contentree. In this case, J Contentree reportedly seeks a valuation of approximately 1.2 trillion won, half the largest TV drama production company Studio Dragon’s valuation of 2.4 trillion won. The fundraising amount is expected to be set after the preliminary bids. (Reporting by Se-hun Jo)