CJ Hello Co., the largest cable TV company in South Korea, has started due diligence on D’Live Co. to acquire the industry's third largest player. Market watchers believe that CJ Hello is determined to restructure the paid broadcasting industry so that it is led by cable television companies instead of internet protocol television (IPTV) providers.
According to investment banking (IB) industry sources on August 22, CJ Hello started due diligence from this week. It is expected to take about a month to complete the process. An official from the IB industry, who is well-informed with the internal matters of CJ Group, said, “The fact that CJ Hello has launched due diligence on D’Live alone will cause widespread repercussions in the industry. Recently, there has been a general consensus within CJ Group that business reorganization through an acquisition instead of a sale is more efficient. With the latest due diligence, CJ Hello will compute a proper acquisition price and begin price negotiation. The market predicts that the price of D’Live will be between 1.3 trillion to 1.4 trillion won (US$1.16 billion to 1.25 billion).
CJ Hello currently leads the cable television market with a market share of 29.66 percent as of April this year. D’Live is the third biggest cable television company with a market share of 16.53 percent. When CJ Hello completes the acquisition of D’Live, it will become the second largest paid broadcasting service provider as a whole, including IPTV and satellite broadcasting, in terms of market share.
There has been a prevalent view in the industry that LG U+ Corp. will acquire CJ Hello. This is because LG U+, the third biggest IPTV service provider, can catch up with SK Broadband Inc., the second biggest, at once when it buys CJ Hello. In addition, CJ Hello also considered a plan to sell its paid broadcasting platform under CJ Group’s basic strategy to expand its content business. Accordingly, the majority of market experts said the acquisition between the two companies is just a matter of time as the interests of the two tally.
CJ Hello, which was considered an article for sale in the market, has decided to take over D’Live conversely because the paid broadcasting industry has been recently changing. The rate of decrease in number of subscribers on-year of CJ HelloVision and t-broad dropped 0.1 percent point and 0.7 percent point, respectively. On the other hand, that of KT and SK Broadband increased 0.7 percent point and 0.5 percent point over the same period. An official from the industry said, “The increase in IPTV market share and the decrease in cable television have made a slow progress compared with two to three years ago. As the speed of subscriber breakaway has slowed down, CJ Hello can take the bet.”