CJ Group may sell off CGV
A CGV theater in Vietnam / Courtesy of CJ CGV
By Kim Jae-heun
There has long been speculation that CJ Group would sell off its theaters and bakery franchise in order to concentrate on its three main business ― CJ Cheil Jedang, CJ Logistics and CJ ENM.
Every time such rumors surfaced, CJ Group flatly denied them giving no reason. However, three months after the speculation first emerged, it appears to have had a change of heart and has put Tous Les Jours on the market.
The story may be the same for CGV, the country's largest multiplex cinema chain, which has been hit hard by the COVID-19 pandemic.
The company's ticket sales have dropped 70 percent compared to last year and it reported a 200 billion won operating loss in the first half.
Although, its business is at worst for now, CGV's brand image is still big in Korea. It is also operating overseas branches in China, Indonesia, Myanmar, Turkey, Vietnam and the United States.
Last year, CJ Group sold its 28.57 percent stake in the merged entity created by combining three overseas corporations in China, Vietnam and Indonesia, to MBK Partners and Mirae Asset Daewoo Consortium.
This demonstrates that CJ could dispose of the rest of its stock in CGV when the “right time” comes.
It has already halted its plan to expand its business globally due to the uncertain future.
Before the outbreak of COVID-19, the multiplex cinema chain had been investing a lot to set up new theaters in regions with decent potential for success.
“Of course, we will open new theaters in countries where we think we will see an increase in audience numbers. But we will not take an aggressive approach toward investing by taking financial risks now,” a CJ CGV official said.
“We will not expand the business for now as it will be a burden. But we will not reduce the number of movie theaters as we are planning to do here in Korea,” the official added.
CJ CGV's business situation in Korea is different from that in other countries. The local movie theater market is too competitive with Lotte Cinema and Megabox in the game.
The company has already decided to shut down 30 percent of theaters here directly managed by the headquarters.
Some movie theaters are thinking about operating only on weekends, or screening fewer films on weekdays.
For CJ Group, with which Chairman Lee Jay-hyun wants to achieve his vision of “World Best CJ” by making its food, logistics and entertainment sectors No.1s in the world, CGV is nowhere in this plan.