of Korea Communications Commission decided that Cocoa He broke the rules by getting it SM C and Ca multi-industry business dealing in content and advertising production, entertainment management, travel and tourism etc.
The case comes as Kakao is already the biggest shareholder of the media representative firm. SBS M&CIt is a privately managed company that provides integrated marketing services at the broadcast station. SBS. According to the KCC, based on Article 13 Clause 6 of the Broadcast Advertising Sales Act, a media representative cannot have a stake in an advertising business that represents certain affiliates in the industry. SM C&C, a subsidiary of SM Entertainment, falls under the category of “advertising business representing certain affiliates”.
On July 5 KST, the KCC held an advisory board meeting and concluded that Kakao must respond to this breach within the next 6 months.
Kakao previously acquired SM Entertainment in a public takeover bid in late March. Kakao currently owns 20.76%, and Cocoa entertainment It owns 19.11% of SM Entertainment’s total stake. SM Entertainment currently holds 29.79% of the total shares of SMS C&C, while Kakao owns 10% of the total shares of SBS M&C.
Kakao must remove SBS M&C or SM C&C within the next 6 months to resolve the violation identified by KCC. This is consistent with the CEO of SM Entertainment Jang Cheol Hyuk‘S’SM 3.0The company previously announced plans to sell off non-core assets to focus on the company’s growth. However, given the declining market value of SMS C&C in 2023 (228.1 billion KRW), it remains to be seen whether Kakao and SM Entertainment can sell the “non-core” subsidiary at a reasonable price.
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