Cracks in the media empire, a harsh winter faced by Content Tree Central and Megabox > News

This incident began on the 12th when JTBC failed to repay securitization loans worth 20.6 billion won. As the traditional TV advertising market collapsed due to digital transformation and the rapid growth of OTT platforms, the profit structure of broadcasters had already deteriorated to the limit. This liquidity crunch was not just a problem for JTBC, but served as a detonator that threatened the financial health of the entire group. Major domestic credit rating agencies, including NICE Ratings, immediately downgraded JTBC's credit rating to 'CCC', a speculative level, and strongly warned of the possibility of financial risks being transferred to affiliates within the group. In the end, even key affiliates within the group, including JoongAng Holdings, were unable to avoid the wave of credit rating downgrades.

On the 14th, Content Tree Central, through the Board of Directors, officially applied to the Seoul Rehabilitation Court for preservation measures and a comprehensive injunction along with the commencement of rehabilitation procedures. On the same day, Megabox Central, a major subsidiary of the group, also went through the same process, effectively putting the group's two core business divisions under court management. Content Tree Central explained that this decision was an inevitable choice to ‘normalize management and preserve value as a going concern.’ However, the market is interpreting the joint rehabilitation application by Megabox Central, which accounts for more than 35% of total assets, as a sign that the financial structure has reached an unrecoverable level, with the entire group's debt exceeding 10 times its equity capital.

Korea Credit Rating took this situation seriously and immediately downgraded the short-term credit ratings of Content Tree JoongAng and Megabox JoongAng from B to C. What's even more painful is that these companies are still subject to 'downgrade review', which means that if they do not recover their debt repayment ability within the next six months, their credit rating could fall to grade D, which is virtually a piece of trash. The stock trading of Content Tree Central has already been halted in the stock market, and investors are waiting in fear for the market to dispose of it. If the debt adjustment plan is not accepted or the management normalization plan is not convincing during the process of the court reviewing the application, the company is expected to remain in a state of thin ice where even the survival of the company cannot be guaranteed.

This crisis goes beyond just one company experiencing management failure; it clearly shows how structurally the domestic content industry was standing on a weak foundation. In competition with OTT, the strategy of investing huge production costs and focusing only on external expansion came back as a fatal poison in the face of adverse macroeconomic factors such as high interest rates and economic recession. Megabox Central's quarterly loss exceeded 10 billion won, and Content Tree Central also recorded an operating loss. Despite the company's ability to generate profits from its main business having significantly decreased, sticking to a leverage strategy using debt remained a painful mistake. Now, according to the court's judgment, not only the fate of JoongAng Group but also the direction of the countless contents it has produced has fallen into the fog.