[26.06.15] JoongAng Group Files for Corporate Rehabilitation

JoongAng Group Files for Corporate Rehabilitation for JTBC and ContentreeJoongAng

Faced with a liquidity crisis due to rapid paradigm shifts in the digital media landscape and a structural contraction in the advertising market, the JoongAng Group has decided to undergo corporate rehabilitation to restructure its finances and normalize management.

1. Five Affiliates File for Corporate Rehabilitation

Key affiliates of the JoongAng Group, including ContentreeJoongAng, its subsidiary MegaboxJoongAng, and the cable channel JTBC, have filed for rehabilitation procedures, signaling a major financial restructuring process.

• Filing Details: ContentreeJoongAng filed for court-led rehabilitation at the Seoul Rehabilitation Court, along with requests for preservation orders and comprehensive injunctions to freeze creditor claims and maintain operations.
• Court Assignment: The Seoul Rehabilitation Court assigned the cases of five companies, including JoongAng Holdings, JTBC, ContentreeJoongAng, MegaboxJoongAng, and JoongAng P&I, to the Second Rehabilitation Division (Chief Judge Jung Joon-young).
• Trading Suspension: Stock trading of ContentreeJoongAng has been suspended starting today.
• Efforts and Limits: While the group previously attempted self-rescue measures, including the sale of its Sangam-dong office and Ilsan studio, mounting financial burdens eventually led to court-led rehabilitation.

2. The Trigger: Media Shift and Default

The crisis was triggered on the 12th by JTBC’s 20.6 billion KRW default on asset-backed borrowings.

• Root Cause: The shift from traditional TV to digital/OTT platforms severely impacted core advertising revenue.
• Structural Issues: Massive investments in content coupled with high interest rates and frozen capital markets made refinancing impossible.

3. Credit Rating Downgrades

Rating agencies have signaled significant risks with widespread downgrades across the group.

• JTBC: C → D (Default)
• MegaboxJoongAng: B → C
• ContentreeJoongAng: B → C
• SLL: B → B-
• JoongAng Ilbo: BB+ → B-

4. Management's Stance

Vice Chairman Hong Jung-do held a press conference on the 15th to apologize to stakeholders and explain the necessity of the move.

"Rehabilitation is a system to normalize the company by adjusting debts under court supervision while maintaining operations. We ask for your understanding as this is a deliberate choice to protect the group's future value."

• Priorities: The group emphasized prioritizing the recovery of losses for creditors and shareholders.
• Continuity: Essential operations, including World Cup broadcasts, will continue without interruption.

5. JoongAng Ilbo’s Workout Plan

The group’s parent entity, JoongAng Ilbo, will pursue a workout program—a voluntary debt restructuring agreement with creditors—rather than court-led rehabilitation.

• JoongAng Ilbo CEO Park Jang-hee: "We will pursue a workout to resolve temporary liquidity issues through negotiations with creditors, ensuring our public duties as a media outlet remain uninterrupted."

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One-line summary : Major affiliates of the JoongAng Group, including JTBC, have filed for corporate rehabilitation to overcome liquidity crises caused by the rapidly changing media landscape.