Megabox sale part of production push
EmptySEOUL -- This week's sale of major South Korean exhibition chain Megabox by Orion Group affiliate Mediaplex is a sign of the parent company's plans to significantly expand its domestic production, a leading company representative said Friday.
"Yes, we sold Megabox, but we are keeping management of the company for the next 10 years," Mediaplex COO Jeong Tae-sung said in an interview. "With the money we raised in the deal, we will put it into content: films, cable TV, other media and so on."
On Wednesday, Mediaplex said that it had sold its 53.1% controlling stake in Megabox to the Korea Multiplex Investment Corp., led by Australian banking group Macquarie Funds, for 145.5 billion won ($159 million).
The deal officially calls for Mediaplex to retain operation of the theaters for two years in return for $10.9 million, but Jeong said that Mediaplex planned on retaining operations for 10 years.
Representatives at Macquarie had no comment and said that they will not make any announcements for "at least a couple of weeks."
Because local films are down 22% at the boxoffice from last year, much of the local industry is greatly worried about the future. Many companies have laid off workers, and there are signs of further contractions to come.
With the sale of Megabox to a foreign investment fund, rumors of Mediaplex's money woes only increased, speculation that Jeong rebuffed with a laugh. "We are not pulling out of the movie business," he said. "We have enough money, but now we are expanding. Not only us, but On Media and the other parts of the Orion Group."
With 155 screens in 19 theaters, Megabox is Korea's third-largest multiplex chain. Showbox, the distribution and investment wing of Mediaplex, will maintain its current slate of 15-20 releases a year, including three to five original productions through affiliate Motion 101.
A company called On Media, Orion's cable television division, is the leading program provider in Korean cable TV. Recently, it has been trying to add original content to its leading channel OCN, which mostly shows movies and such U.S. TV dramas as "CSI."
Currently, Mediaplex is producing a $3 million drama and another film for $10 million as well as investing in the John Woo period film "The Battle of Red Cliff," currently shooting in China. Mediaplex also has invested one-third of the budget for the $30 million monster movie "D-War," which will be released in Korea on Aug. 1.
"D-War" will be released Sept. 14 in the U.S. on 1,500 screens, making it by far the biggest release ever for a Korean movie in the U.S.
The Megabox sale, however, does not include Mediaplex's movie theaters in China. In fact, Mediaplex CEO Woody Kim told local media Thursday that the company will use the new funds to expand its investment in theaters in China, where it is opening another one in January.
The company opened its first in China earlier this month in Beijing's "silicon alley" neighborhood, Zhongguancun.