Can Jungang Group, in crisis, find a breakthrough by selling its headquarters? > News

JoongAng Group’s crisis became visible from the default of JTBC. JTBC was unable to repay a total of KRW 20.6 billion in principal and interest on time, including KRW 5.6 billion from Mir J Motors and KRW 15 billion from Jeil TV J Motors, and its credit rating immediately fell to 'CCC', a level unsuitable for investment. Credit rating agencies took this incident as an opportunity to seriously warn of the possibility of financial risks being transferred to all of the group's affiliates, including JoongAng Ilbo. In fact, JoongAng Ilbo is also experiencing a domino effect where the overall credit rating of the group is declining, with its long-term credit rating being downgraded to 'BB-' due to increasing uncertainty in funding. This proves that JoongAng Group, which has been aggressively expanding its business, has reached a critical point where it can no longer bear the burden of borrowings.

To overcome this liquidity crisis, JoongAng Group took the gamble of selling assets. The group decided to sell three key real estate assets, including the JoongAng Ilbo Building in Sangam-dong, the JTBC Building, and the Ilsan Studio, to KORAMCO Asset Trust for KRW 550 billion. Choosing the 'sale and leaseback' method of long-term lease for 10 years even after sale is a desperate measure to secure cash while maintaining the business foundation. Experts point out that although this asset securitization will contribute to solving the group's immediate liquidity problem, the rent burden that occurs every year may act as a new fixed cost and put a burden on future profitability. Ultimately, the key will be how efficiently the funds secured from asset sales can be used to repay loans to reduce interest costs.

Even amidst financial pressure, political and social issues are another task that JoongAng Group must solve. Ahead of the June 3 local elections, the JoongAng Ilbo covered the controversy over the National Election Commission's poor voting management and maintained the position that while listening to the voices of the people, the line should be firmly drawn against irrational claims such as election rigging conspiracy theories. In addition, in fierce battles such as the Daegu mayoral election, we tried to capture the center of public opinion by positively evaluating the 'negative zero' stance of the candidates and encouraging a mature election culture. On the other hand, it is performing its function as a media outlet by providing harsh criticism and analysis of President Lee Jae-myung's policies and political moves. This political influence is a key element in maintaining the group's identity, but at the same time, it faces the challenge of continuously securing readers' trust in a rapidly changing media environment.

The future of the group ultimately depends on how it catches two birds with one stone: the competitiveness of its main business, media content, and the stabilization of its financial structure. Currently, JoongAng Group has limited freedom of action due to its combined total borrowings amounting to 2.8 trillion won and payment guarantees between affiliates. The burden of repaying Content Tree Central's convertible bonds and the poor performance of major affiliates are still factors holding the group back. Although the group emphasizes that this securitization is an active and preemptive response, the market is still skeptical about the extent to which the group's fund management flexibility will be secured as the high interest rate trend and structural recession in the media market continue. The prevailing assessment is that without drastic structural improvement to succeed in the digital transformation of the media business, it will be difficult to escape the fundamental crisis through real estate sales alone.