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Edited Transcript of 035760.KQ earnings conference call or presentation 7-Nov-19 7:00am GMT

Q3 2019 CJ ENM Co Ltd Earnings Call

SEOUL Nov 9, 2019 (Thomson StreetEvents) -- Edited Transcript of CJ ENM Co Ltd earnings conference call or presentation Thursday, November 7, 2019 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Chul-Gu Kang

CJ ENM CO., Ltd. - MD of Global Support

* Jae Min Baek

* Min-hoi Heo

CJ ENM CO., Ltd. - CEO & Director

* Seong-Hak Lee

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Conference Call Participants

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* Eun Jung Shin

DB Financial Investment Co., Ltd., Research Division - Analyst

* Hoi Jae Kim

Daishin Securities Co. Ltd., Research Division - Analyst

* Min Jung Kim

HI Investment & Securities Co., Ltd., Research Division - Research Analyst

* Namjun Lee

CIMB Research - Analyst

* Sejong Hong

Shinhan Investment Corp., Research Division - Research Analyst

* So Hye Kim

Hanwha Investment & Securities Co., Ltd., Research Division - Analyst

* Sung-Ho Park

Yuanta Securities Korea Co., Ltd., Research Division - Analyst

* Sunghwan Kim

Crédit Suisse AG, Research Division - Associate

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Presentation

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Operator [1]

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[Interpreted] Good morning and good evening. First of all, thank you all for joining this conference call. And now we'll begin the conference of the fiscal year 2019 third quarter earnings result by CJ ENM (Operator Instructions). Now we shall commence the presentation on the fiscal year 2019 third quarter earnings results by CJ ENM.

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Unidentified Company Representative, [2]

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Good afternoon. This [Kay Che] from CJ ENM's IR team. First of all, I thank the shareholders and analysts for taking time out of your busy schedules to attend our session.

With that, I would like to begin the CJ ENM earnings release session for Q3. Please note that the financial and management results presented have yet to undergo the review of an independent auditor and, therefore, could be subject to changes in the future.

Today here with us, the IR, the head of the division and our CEO, Heo Min-hoi. So we have our Executive VP, Mr. [Hae Young-soo], and we have from Media Content, [Mr. Lee Min-hyung]. And from Media Solutions, [Lee] (inaudible). And from Commerce, we have Ms. [Kim] (inaudible). From pictures, we have Mr. [Cho Yong-gee]. And for music, we have Mr. [Kong Jong-yun]. And from Studio Dragon, we have the presence of Mr. Kang Chul-Gu.

First, there will be a presentation by the CEO on the major results of Q3 and management strategy.

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Min-hoi Heo, CJ ENM CO., Ltd. - CEO & Director [3]

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Good afternoon. This is CEO, Heo Min-hoi of CJ ENM. Despite the worsened domestic and international markets in 2019, CJ ENM focuses on overcoming such given environment by concentrating on enhancing business competitiveness. The advertising market has been down in general, but we continue to grow based on content, and we are addressing the dampened consumer sentiment with in-house product planning capabilities.

On an accumulated level, TV ads grew 13% Y-o-Y, which is in clear contrast to the negatively growing broadcasting advertisement market. Digital ads grew rapidly at 31%, enhancing our leading role in the digital media market. In-house PV GMV saw 56% of Y-o-Y, continuing our growth based on product plan and capabilities.

International movies distribution competition toughened, but we cemented our #1 position with overall audience market share of 24% and Korea movie share of 53%. Albums and records grew [soft] at 16% Y-o-Y, with expansion of artist pool and focus on music content production.

Today, more than ever, CJ ENM is preparing in-depth mid- to long-term management strategy for 2020. Next year, we will enhance production budget execution efficiency based on the management principle of strengthening profit. The strategy to expand business into digital and global will be made concrete. CJ ENM will not be a complacent #1 in the domestic market. We will grow our business in new markets with shareholders. Thank you.

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Unidentified Company Representative, [4]

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Next we will [have the] results presentation by our CFO, Baek Jae Min. The main financial statement follows the K-IFRS standard and is on a consolidated basis.

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Jae Min Baek, [5]

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Good afternoon, this is Baek Jae Min. The consolidated revenue in Q3 is at [KRW 1.15 trillion], (inaudible) of KRW 64.1 billion. The company continues in all business areas is coming down little with enhanced competitiveness and production capability to strengthen PD commerce or profit growth as it pictures with expanded planning and development. However, due to the decrease in consolidated profit of CJ Hello, operating margin decreased by 5.6%.

In the fourth quarter, the company will maximize business competitiveness and strengthen profitability. We aim to increase revenue and profit with premium content in the media business.

Commerce targets to fully ride the high season if -- with private brands. Pictures will continue to expand markets with library sales and overseas remake. Muted will enhance in-house timing and production and artist activities.

Third quarter media revenue recorded KRW 426.9 billion, which is a 4.9% growth Y-o-Y. However, operating profit decreased 56.8% at KRW 16.1 billion. Despite the segment broadcasting ad market and the high base effect from last year, TV ads continue to give solid revenue numbers with 0.8% growth. The number of paid subscribers to TVING grew as did MCN. With that, the company's digital revenue continued to grow rapidly at 24.4%. Average viewership for channels strengthened with premium content. But due to the low ad market, profitability decreased.

We will maximize the high season effect in the fourth quarter for TV ads and expand digital ad packages. Crash Landing on You, Psychopath Diary, New Journey to the West 7 and other contents will be strengthened, and we aim to improve profitability with production of digital original content and platform distribution expansion.

Page 6. Commerce.

Revenue from commerce in Q3 grew 14.7% at KRW 335.8 billion. OP grew 64.8%, with KRW 29.4 billion. Profit was strengthened with top line growth, centering around PB brands, such as O Daily, [Casaliving], A+ G and programming strategies that led to market trends.

TVs in the third quarter grew rapidly at 61.9% and its percentage out of GMV grew 3.5 percentage points at 9.8%.

The business aims to continue its profit growth with product enhancement strategy in the fourth quarter. PB living brands essential was launched. Seasonal offerings for fashion brands and beauty products will expect high profit (inaudible) new item introduction, the TV fashion brand such as A+ G, Vera Wang and g studio. The business will continue to solidify profit-oriented product category and portfolio.

Page 7. Pictures. Q3 pictures revenue grew 87.5% Y-o-Y with KRW 84.3 billion. Operating profit saw a turnaround with KRW 15.8 billion. In-house produced exit recorded box office revenue of KRW 79.1 billion, with accumulated audience number of 9.41 million people. That guy, which uses TV drama IP recorded a box office number of KRW 39.5 billion leading (inaudible) revenue. Overseas revenue grew 112% Y-o-Y, with the opening of Parasite in other countries, including the U.S. Library sales has done well, and ancillary revenue has grown 107% at KRW 14.3 billion.

The business will continue to fortify artistic and commercial aspects of pictures in the fourth quarter.

The Divine Move 2: The Wrathful has been released today, and (inaudible) will be launched in December. Overseas library remains has been accelerated with expected releases of Sunny in Indonesia, My Annoying Brother in Vietnam and Portrait of a eauty in Turkey. In the U.S., joint projects, [Press Play] is in plan.

Page 8, Music. Music revenue in Q3 grew 8.1% Y-o-Y, with KRW 62.9 billion, but operating numbers are a loss of KRW 1.0 billion. In-house produced albums and records and cost of revenue grew strong but predevelopment and new IT planning and development for Produce 101 (sic) [ProduceX101] Japan, Belift Lab and TOO, [Legend of War].

In Q4, there will be album releases and concerts of in-house artists, including IZ*ONE, X1 and Davichi. There are plans for both artist activities, too.

And the business will continue adding to its competency by enhancing in-house assets and production capacities.

Next, on guidance amendment. Last February, the announced guidance for 2019 revenue was KRW 4.8 trillion with OP of KRW 370 billion. The OP forecast has been downward adjusted by 5.4% to KRW 350 billion.

The broadcasting ad market was more sluggish than anticipated at the earlier part of the year, influencing our TV ad revenue. Decreased consolidated numbers from CJ Hello also influenced.

The market conditions are more difficult than was forecasted, but the company will be more focused in the last remaining fourth quarter.

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Unidentified Company Representative, [6]

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Now we will be hearing the presentation for Studio Dragon.

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Chul-Gu Kang, CJ ENM CO., Ltd. - MD of Global Support [7]

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Good afternoon. This is Kang Chul-Gu, the CFO of Studio Dragon. I will brief you on the results of Q3 and the plan for Q4. The revenue in the third quarter was the best ever at KRW 131.2 billion, which is a 6% growth Y-o-Y. Premium IPs, such as Arthdal Chronicles and Hotel Del Luna were in hand. Netflix Original Drama, Love Alarm and [Terrestrial Stations], Spring Night and Doctor John resulted in channel diversification and increased number of titles, leading to record results.

Operating profit was at KRW 10.9 billion. And the company was able to realize an operating profit of over KRW 10 billion for the last 3 consecutive quarters. Considering the fact that the project profit from Mr. Sunshine last year was over KRW 20 billion and the limited profit contribution from the Arthdal Chronicles, the results mentioned were quite positive.

In the fourth quarter, there will be focused on maximizing results from the anticipated new title, Crash Landing on You, written by Park Ji-eun and on overseas sales and procurement of the (inaudible) competency.

Netflix Originals, including Hollow, will be produced and remaking studio option contracts are now being pursued in the U.S. and major Asian markets. The company will continue creating concrete global businesses and results.

Now we will go to the questions. In consideration of limited time, please limit your questions to 3 each centering on core issues.

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Questions and Answers

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Operator [1]

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(foreign language) Now Q&A session will begin. (Operator Instructions) The first question will be given by Hoi Jae Kim from Daishin Securities.

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Hoi Jae Kim, Daishin Securities Co. Ltd., Research Division - Analyst [2]

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[Interpreted] Yes, I will give you the translation of the 2 questions. First is on the profitable sales of your stakeholding in Netmarble and Studio Dragon. And also on the possible usage of your treasury stock in order to (inaudible) the necessary fund. I see that your plans to sell CJ Hello has been delayed. So there might be some need of cash. So are you contemplating the sales of your stakeholding in these 2 entities? And could you also possibly use treasury shares. And this was the first question.

And now on the second question, it goes to Studio Dragon and the number of titles that the studio could create in a year. I know that you have captive customers such as TvN and OCN. And how many titles do you provide them to these captive channels. And in the future, how many could you provide to your captive customers. And the same question is applied to your non-captive customers as well.

So for the non-captive customer bound titles. In 2, 3 years, what do you think the number would be? And I believe that if you're to increase per unit sales for the titles, you would have to think about this co-airing at the same time, with international OTTs, such as Netflix. So what are your plans on the simultaneous airing with the global OTTs?

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Jae Min Baek, [3]

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[Interpreted]

Well, for the noncore invested assets, we are thinking of to enhance our media business and our commerce business, which are core to the company. And as for our stake in Netmarble, as of today, we have no concrete plans to sell the stakeholding. And as for our stakeholding in Studio Dragon, as was mentioned throughout our disclosure process, we have plans to have it used to optimize our core business. And if a decision is made, we will give you the disclosures then.

And the same answer goes to the use of our treasury shares as well, if there is opportunity to enhance our core business, we could think of using our treasury shareholdings, but nothing has been decided yet. If things are decided, we will make sure to disclose the results.

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Chul-Gu Kang, CJ ENM CO., Ltd. - MD of Global Support [4]

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So this is CFO from Studio Dragon addressing the second part of your question. Well, our basic sense is to enhance the lineup provided to TvN and OCN. We are going to provide titles that will enhance their competitiveness. And we also have plans to provide to our non-captive customers in order to enhance our profitability and also to seek diversity in channels. And this year, we have provided 3 titles to our non-captive channels. And next year, we have fixed our plans to provide 3 titles to non-captive customers. But the numbers could go as high as 6 next year.

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Operator [5]

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[Interpreted] The following question is by Hong Sejong from Shinhan Financial Investment.

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Sejong Hong, Shinhan Investment Corp., Research Division - Research Analyst [6]

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[Interpreted]

Yes, 2 questions. First, on your U.S. platforms, non-Netflix U.S. platforms. I know with Netflix that you have a very cooperative relationship. You provide originals to them and you also do license out to Netflix. But what about non-Netflix U.S. platforms, what do you have with them? So this is the first question.

And second is related to production cost. What was the production cost for the titles this year and what is the anticipated number next year?

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Unidentified Company Representative, [7]

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[Interpreted] Yes, for Disney (inaudible) and Apple TVs, with these platforms, they have yet to decide whether they will be coming to the Korean market or not. So we are not really preparing in a concrete way to address this business. And then as far as our works in the U.S., it's mainly remakes, and we also have joint production plans, so we are currently working on the option.

And as for your second part question, which was related to production cost. So this year, when it comes to our production cost on a Y-o-Y basis, we saw a 2-digit number increase. So that was the type of growth level that we witnessed this year. But next year, we believe that the growth number would be a high single-digit number. So we are going to work on investing in [tempo] products and tempo titles, but we're going to be very selective and try to curb the growth numbers.

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Operator [8]

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[Interpreted] The following question is by Kim So from Hanwha Investment Securities

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So Hye Kim, Hanwha Investment & Securities Co., Ltd., Research Division - Analyst [9]

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[Interpreted]

So 2 questions. One on media, and the next one on music. Well, your media business does not meet the market expectation. And during your past (inaudible), you talked about the profitability of the production cost. Well, and your results presentation shows that (inaudible) as is your digital business, so what is the actual reason behind the CJ ENM's media business not meeting market expectations.

And the same question goes to the music business as well. You have done well with your album revenue and also the performances, so I wonder how much you have spent on preexecution for the production so leading to the minus numbers.

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Jae Min Baek, [10]

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[Interpreted] Yes. This is CFO. And I will be addressing the first part of your question related to media results. Well, in the third quarter, our accumulated TV ad saw a drop by a single digit. And it's because many Japanese advertisers, they left the advertising market. So there was this attrition. And the pinch was felt by the market as a whole. But on an accumulated basis, TV ad grew 13%. And as for digital, it grew by 31%. And of course, the third quarter is the low season, so there was some influence from the seasonality on our OP numbers.

And you rightly mentioned that there was a slight increase in our production costs on a Y-o-Y basis. But if you look at the Q-o-Q numbers, it's actual decrease of production costs. And going forward, we will be very prudent and seek efficiency in executing our production budget. And well, the more use of production costs will lead to improving our content competitiveness, and it will also give us the desired premium content. And with premium content and competitiveness, there will be more viewership. And with that, more appetizers will be seeking to show their advertisements on our platform or our channels.

So as we mentioned during the presentation, the TV ad market was slower than what was anticipated at the earlier part of the year, but we are going with our plan, and we will seek ways to have more efficiency and more balance in our budget execution.

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Unidentified Company Representative, [11]

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[Interpreted] Yes, I would be addressing the question for the music-related question. Well, in the third quarter, there have been a lot of investments in Belift Lab and Produce 101 Japan and other global bond artists. So there was this advanced investment in nurturing these global bond artists. So on an -- a month basis, that spending was at KRW 4.5 billion per month. It was used for preproduction development and the -- also on the promotion of our global bond artists. But when these artists make their debut, they would be working in a global manner, and that would really contribute to enhancing the revenue of our music business. This number was weak because there is a time lag between the production stage and also the debut timing.

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Operator [12]

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[Interpreted] The following question is by (inaudible) Securities.

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Unidentified Analyst, [13]

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[Interpreted] So three questions. First is on your cost, what was the production cost like? And what is the amortization like for your intangible assets? And I heard that Live is going to be remade in the U.S. market. Would there be a pilot in February? And you talked about having options. And for how many cases would the option apply? And do you also have plans to establish a U.S. joint venture or perhaps a studio in the U.S. market?

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Unidentified Company Representative, [14]

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[Interpreted] So if I may address the first question. The intangible asset amortization out of our cost, that was actually 17% in Q3. And please note that the amortization applies for dramas and also movies.

Yes. For the Live, we do have an option agreement in place for the remake of that title. And we have found local writers to work on the script. And perhaps in February or March, it will be decided whether we will see going for the pilot on that.

And as for our U.S. business, if early by Q4 this year, it's laid by the first half of next year -- we're going to think of establishing a subsidiary, a legal subsidiary in the U.S. market. And we're in the process of planning the organization and also on finding the right talent for that U.S. subsidiary.

So we are speaking out to Asian, American writers, who would be working on content creation. And we also have IP remake plans in the U.S. as well as joint planning and production. And also, we are going to think of stake participation in terms of investment, too.

So have we addressed your question?

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Operator [15]

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[Interpreted] The following question is by Kim Sunghwan from CS Securities.

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Sunghwan Kim, Crédit Suisse AG, Research Division - Associate [16]

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[Interpreted] Yes, three questions go to Studio Dragon. What is the anticipated number of titles for Studio Dragon next year? And I believe that at the time of IPO, you've mentioned 40 titles by year 2020. So is your plan on track to create 40 titles by year 2020? Or have there been any changes?

And well, it was also communicated by Studio Dragon that by year 2021, exports will account for 70% of your revenue. So with that 70% number, how many titles are you taking off for year 2021?

And my second question is related to exports. You talked about the proportion of exports out of your revenue numbers. And after your copyright sales, could you carve out by platform? So I would like to get more color on your exports.

And then, number three, I think this question has been asked by a previous person, but I did not get the answer. The question was on the simultaneous airing with Netflix. So what are your plans for simultaneous airing with Netflix?

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Unidentified Company Representative, [17]

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[Interpreted] So if I may address the first question, which was on the number of titles. Well, next year, there would be 1 or 2 title increase from the number this year. And as to the mentioned 40 titles by 2020, well, we are going to stick with the plan. And in order to meet that number, we are building our competencies, and we will think of a balanced approach of the right production, joint production and also outsourcing.

And as to the second part of your question, which was related to our revenue contribution from overseas, now it's 35%. And out of that 35%, about half is bound for global OTTs. And the Asia number, excluding Japan, it's at 70%; Japanese market at 14%; and the U.S., 10%. And we did see a slight decrease in the Asian region this quarter, but we did see some increase in the Japanese market.

And to address the third part of your question, the number is 6, and we will be maintaining a stable number going forward.

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Operator [18]

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[Interpreted] The following question is by Kim Min Jung from HI Investment Securities.

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Min Jung Kim, HI Investment & Securities Co., Ltd., Research Division - Research Analyst [19]

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[Interpreted] Recently, KaKao and SKT have swapped their stakes and think that the domestic OTT players will be more aggressive going forward. And I've heard news that JTBC and you are working together on the TVING OTT channel or a platform. So what are -- is your first business plan for that area?

And then my second question is related to Chinese market. Recently, there have been rumors that a Korean content was aired on a Chinese OTT. So what is the environment like in the Chinese market? And what is your business plan for that area?

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Unidentified Company Representative, [20]

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[Interpreted] So I will be addressing the first part of your question. Well, CJ, if you look at the media industry, we have been leading the digital growth in the nation. We were the first to begin digital app business in year '14 and '15, and that digital ad has seen an exponential growth. And after TVING OTT platform in 2017, we were the first to introduce the free-to-play model.

Yes. And as was mentioned during the presentation and throughout our communication, we do have a strategy in place to enhance our TVING platform. And our concentration or focus is going to be on the content. We're going to provide what the viewers like. So our focus will be more on content rather than the platform itself. And we're working together with the paid broadcasting companies, and there the signs so far is quite encouraging.

And there have been questions recently on the possible spin-off or the sales of the TVING units, but it's too early to say now. What I can tell you is that we will be enhancing the business properties or business avenues of TVING, so that it is stand-alone.

Yes. So until the implicit plan on Korean content is listed by the Chinese market, we will be taking a very cautious approach in approaching that market. And it is true that the Signal -- the remake of Signal had passed the evaluation of the Chinese authorities, and that it has been aired. However, I don't think the Chinese audience are aware that it is a Korean content. So our global focus will be mainly on the U.S.

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Operator [21]

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[Interpreted] The following question is by Lee Namjun from CGS-CIMB.

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Namjun Lee, CIMB Research - Analyst [22]

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[Interpreted] Yes. The next question is on the TV ad market in general. So what is your [anticipation] in 4Q TV ad market as a whole? So as you mentioned, there has been a significant level in the third quarter. What is your anticipation for the fourth quarter or in year 2020. What do you think the market environment would be like then?

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Seong-Hak Lee, [23]

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[Interpreted] So this is Lee Seong-Hak from Media Solutions, and I will be addressing your question on the TV ad market. As was mentioned during our previous answer, because of the trade dispute with Japan, many of the Japanese advertisers had left. So there was this attrition. And also the domestic economy is quite sluggish. And with all these given environment, the TV ad market deteriorated significantly. And I believe the harsh conditions will continue for some time, continue until next year. But with the given adverse environment, we will be using our accumulated data platform. And therefore, GMV it would be more sophisticating, our business plans for the digital ad market. And we have outstanding premium content, such as Crash Landing on You and New Journey to the West, Part 7. And with these premium content, I believe that the advertisers will be seeing a maximization of their return on investments. And well, in the third quarter, it was a low season. That was also an element. So with all these adverse conditions, I don't think we have met the expectations of the market, but we would be fully riding the high season in the fourth quarter. And with that, we will be increasing our top line. And that will, of course, cut the burden on production costs.

One more thing about the decrease in the TV ad market, it's true that the TV ad market has been decreasing in size. It's because the advertisers, they have migrated to the digital place. And we have also place to address the digital needs. tvN D alone had seen the production of 5,600 digital max shops and original content. And with these endeavors in place, we are going to diversify our income -- or our ad income sources and channels. And we also have plans to go for the smaller-sized advertisers. So with our activities in this way, I think we will be in a far better position compared to our peers.

And now on the diversification of our app platforms, we have the TV bound ads, and we also can address the OTT needs, both international OTTs and the domestic ones. And we also can provide digital content through YouTube. So through our activities as a whole, the digital ad income would see an improvement.

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Operator [24]

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[Interpreted] The following question is by Shin Eun Jung from DB Financial Investment.

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Eun Jung Shin, DB Financial Investment Co., Ltd., Research Division - Analyst [25]

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[Interpreted] Yes. The next question is related to your program producers. I know that there are many noises in the market. So can I know the current status of the investigation? And what is the company's measure to address this investigation? And I've also read in the media today that the comeback of IZ*ONE, the group have been put back because of the ongoing investigation. And could there be any influences to the future activities of X1? And with the deteriorated activities of your artists, could there be an erosion of your profit?

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Min-hoi Heo, CJ ENM CO., Ltd. - CEO & Director [26]

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[Interpreted] Yes. This is the CEO speaking. First of all, I would like to offer my sincere apologies for having caused concerns. And this is my deepest regret that this situation had happened. And having said that, the investigation is currently ongoing. And internally, within the company, we also have an investigation ongoing to find out the facts. So since we are in the middle of the investigation, I don't think I could comment on this issue any further.

And as for your second part of the question related to the delayed activities of IZ*ONE and the possible decreased activities of IZ*ONE and X1. Well, these groups' activities will have to wait until the situation now is tided over. We would watch how the investigation unfolds. And after that, we will decide on the activities of our artists.

And as for the third part of the question, which was its influence on our profit, the influence to our overall profit will be quite minimal.

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Operator [27]

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[Interpreted] (Operator Instructions)

Interpreted The following question is by Park Sung-Ho from Yuanta Securities.

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Sung-Ho Park, Yuanta Securities Korea Co., Ltd., Research Division - Analyst [28]

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[Interpreted] So 3 questions. The first is on your other losses in the third quarter. Compared to your previous results, the other losses seems quite sizable amounting to over KRW 8 billion. So could you give us more color on the other losses?

And the second question is also related to Produce X1. I believe the way CJ ENM created internal IPs or in-house IPs was through audition programs. Through audition programs, you introduced the voting system in order to maximize the viewer interest. And you have created your internal IP using mostly these audition programs. And would the method in creating in-house IPs change going forward with the current investigation?

And the third question is related to your digital business. I know that your top line numbers have been much greater this year, but what about the profit contribution? I don't think there is significant profit contribution from digital yet. So what are your plans for this business going forward?

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Unidentified Company Representative, [29]

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[Interpreted] And now let me talk about the other losses. Our other loss numbers is at KRW 28.4 billion. It's mostly to do with digital music sales and the deal with Jinnie music. The valuation loss related to Jinnie music amounted for a bulk of the other losses.

Yes. If I may address the second question, well, it's true that we must have the audition programs based on the voting system. And going forward, we're going to introduce new system to in-house customers (inaudible). And if necessary, we could also disclose the overall data. And as for having other formats to create IPs, we will think of it in the -- going into the future.

And let me elaborate on your third part of the question, which was on our digital business. We are now giving you the breakdown of our revenue numbers, but we have yet to disclose the margins associated with our digital business. And as you're well aware, we have 3 channels: PIP, TVING and MCN. And as you're well aware, PIP and MCN gives us excellent margin. And with the subscription-based increase with TVING, we also see an improvement in TVING margin. And the platforms, we have domestic ones, we have in-house and we have YouTube.

And as was mentioned, MCN and DIA, they create an ecosystem, and we help the nurture and promotion of individual influencers, and the individual influencers give to us many insights, insights that we might have missed in the bigger market. And we can grow together in the short format market. And as you're well aware, after the merger, well, this is the commerce, well, it's all about the introduction of product itself and also the introduction of experience. So we have the basic influencer channels, and we also have a link with the product sales category.

I hope I had addressed your questions.

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Operator [30]

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[Interpreted] Currently, there are no participants with questions. (Operator Instructions)

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Unidentified Company Representative, [31]

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[Interpreted] Since there are no further questions, we will be ending the third quarter earnings release session of CJ ENM. Once again, thank you for being with us.

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Operator [32]

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[Interpreted] This concludes the fiscal year 2019 third quarter earning results by CJ ENM. Thank you for your participation.

[Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]