CJ Group, the Korean food and media conglomerate that began life as a sugar refiner for Samsung, had already signaled the scale of its media ambition in late 2009 when it launched a bold but successful takeover bid for its archrival in the pay-TV broadcast sector, On*Media.

At the time, CJ and On*Media were the two largest pay-TV broadcast businesses in Korea, and the acquisition cemented a sector lead in a country where almost every home subscribes to pay-TV.

CJ wasn’t finished however, following the takeover with a merger of its movie, music, online gaming and pay-TV channel assets to create CJ E&M, a dedicated content factory with streamlined production and acquisition costs, geared towards ramping up in-house production and cross-platform synergies to feed an ever-growing appetite for content at home and abroad.

A taste of things to come

The company had already tasted success with its entertainment channel Total Variety Network (tvN), which helped CJ attract much larger audiences on the back of its self-produced programming, now with an international offshoot in eight markets run as a joint venture with Fox International Channels.

“Our ultimate goal is to make our channels global franchises,” explains CJ E&M’s SVP and head of international business, Mike Suh. “In globalizing our brands and channels, we definitely need to have our own productions and our own IP.”

CJ E&M became one of Korea’s biggest media companies overnight, with annual revenues surpassing Korea’s three major terrestrial broadcasters, KBS, MBC and SBS, when it officially opened for business in March this year.

That isn’t big enough for CJ’s bosses however, who want CJ E&M to become the biggest content owner in Asia, a power player that would serve as a regional gateway between content producers and distributors in Asia and those in the rest of the world.

“Even before we merged into one entity, CJ E&M, our vision was quite clear that ultimately we are going to be the best and the largest content studio in Asia,” Suh says. “Even in the film businesses, the gaming businesses, in every content area, our vision is to be the best and the largest.”

Grand vision, ambitious goals

The immediate goal set by CJ executives is doubling CJ E&M in size by 2015, with overseas markets potentially contributing 30-40% of revenue, compared with about 10% today.

It’s not a wholly unrealistic target but one that will require CJ to make some strategic acquisitions at home and abroad, as well as maintain robust levels of organic growth, to grow so fast so soon.

CJ’s takeover of On*Media pushed the company to the limits of media ownership permitted at home by the Korean regulator.

Currently, Korean pay-TV channel owners are prohibited from earning more than a third of industry revenues – CJ’s share is already nudging that, at around 32%. Additionally, channels belonging to one group cannot occupy more than 20% of slots on any operator’s system.

That means CJ, which has 18 channels, cannot even run all of them on the cable network operated by sister company, CJ HelloVision – one of the smaller channels had to be dropped.

These regulations may be relaxed, though in their present form they encourage CJ to fast-track expansion abroad to meet its 2015 targets.

Overseas adventures

Here, the first priority is content sales, though this will be followed by the rollout of key channel brands: initially music channel Mnet, already present in Japan and the US, as well as entertainment offering tvN.

Longer-term, CJ is also priming its movies and lifestyle properties for overseas expansion. All this takes time however, and the company is scouting for acquisition opportunities close to home and further afield to speed up the process.

“It takes quite a long time to secure platform coverage, so we need to consider buying local channels, multi-program providers, in certain territories,” Suh says.

“There are some offers and proposals, there are some cases we are looking at, but it’s still at a very early stage. The first priorities for our footprint will be in Asia, particularly Southeast Asia, though if there is some benefit and justification to buy in Japan or the US in expanding our channel coverage, we are always looking at that opportunity.”