Kakao Entertainment and Melon Company set for fall merger

Find out what this means for the Korean entertainment scene.

Kakao Entertainment and Melon Company will be merging this fall. Both companies plan to complete the merger on September 1 after a general meeting of shareholders on July 30, at which they hope to receive final approval on this move.

 

Melon Company was spun off from Kakao Entertainment on July 1. It will join the latter in the form of a CIC (company-in-company) in September. After the merger, Melon Company will be led by CEO Lee Jae Wook, and Kakao Entertainment will be led by CEOs Kim Sung Soo and Lee Jin Soo.

 

The merger ratio between Kakao Entertainment and Melon Company is 1:7.8367918. That means for each common share of the latter, 7.836791 common shares of the former will be allocated.

 

Kakao Entertainment itself is the result of a merger between Kakao Page and Kakao M in March. Its upcoming merger with Melon Company will be the second one it’s involved in this year. Sources say it was prompted by the company’s desire to secure global competitiveness and leadership in the entertainment industry.

 

Lee Jae Wook served as Kakao M’s CEO and Kakao’s Chief Music Officer before the merger with Kakao Entertainment. Kim Sung Soo and Lee Jin Soo will support him as the merger gives Kakao Entertainment the ability to control the planning and production of content, as well as strengthen the synergy between different content platforms.

 

Kakao Entertainment is expected to see annual sales of 2 trillion South Korean won or 1.75 billion USD because of its merger with Melon, which has been considered a top music platform since its inception in 2004. At the moment, it has over 33 million general subscribers and over 5 million paid ones. Melon has also hosted the Melon Music Awards since 2009 and produces artist-driven audio content.

 

Kakao Entertainment produces different types of content. It owns over 8,500 intellectual properties such as Itaewon Class, Navillera, Uncanny Counter, and What’s Wrong With Secretary Kim—webtoons that have all been made into hit K-dramas. Under Kakao Entertainment are six drama and movie production companies like Baram Pictures, Logos Film, and its own outfit KakaoTV.

 

Kakao Entertainment is also affiliated with different agencies and labels like BH Entertainment, Management SOOP, and Starship Entertainment. It’s also expanding into the North American market by acquiring Radish and Tapas, US-based companies specializing in web novels and webtoons.

 

In a statement, Kakao Entertainment said, “Starting with the merger of Kakao Page and Kakao M and now with the merger with Melon, our process itself is ‘innovation.’ We will build a strong entertainment business value chain and show global growth to become a true world-class company.”

 

Meanwhile, Melon said, “We expect that Melon, which has maintained its No. 1 position since we launched the service, will experience a quantum jump because of our connection to Kakao Entertainment. We will continue to lead the development of the domestic music industry and grow into a global entertainment company.”


Juan Leonardo Mauricio

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