Earnings outlook for South Korea’s entertainment mogul S.M. Entertainment Co. is upbeat thanks to its newly added advertising business and world concerts planned by its top boy bands until next year, market analysts said.
S.M. Entertainment announced last month that its subsidiary SM C&C agreed with SK Planet Co., subsidiary of the country’s leading mobile carrier SK Telecom Co., to acquire its advertising unit. In return, SK Telecom would buy shares of S.M.’s related units and be the second largest shareholder of SM C&C, it said.
Market analysts expect partnership between SM Entertainment and SK Telecom would create synergy effect. In particular, SM Entertainment aims to nurture the newly added advertising unit to an integrated marketing and communications company representing not only general companies but also celebrities by combining its contents with SK Telecom’s platform, said SM Group Chairman Kim Young-min.
Thanks to the new advertisement business, SM Entertainment’s operating profit for next year is expected to jump to 57.7 billion won ($51 million), said Lee Ki-hun, an analyst at Hana Financial Investment Co.
Outlook for the company’s main entertainment business also looks bright. Its top boy bands with great ticket power including TVXQ and Super Junior have resumed their music careers after most members have completed their mandatory military services and are planning to hold mega concerts. While popular singers and many boy group members from its rival entertainment companies are still in military services, S.M. entertainers are expected to gain most attention from Korean pop fans until 2019.
Considering that TVXQ and Super Junior had drawn about 100,000 to 750,000 audiences to their concerts held in Japan from 2014 to 2015, expectations are high that they would repeat the same success in Korea and Japan, offsetting the Chinese government’s ban on Korean pop culture in retaliation against the Korean government’s deployment of an U.S. antimissile system.
“The number of concert goers to S.M. shows next year is expected to jump by one million or more from this year,” said Kwan Yun-gu, an analyst from Dongbu Securities Co. According to estimates by local securities companies, S.M. Entertainment’s operating profit this year is expected to reach 25.9 billion won, up 25.1 percent from a year ago.
Shares of S.M. Entertainment Thursday closed 1.6 percent down at 27,750 won from the previous session.
By Chung Woo-sung
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]