[일문일답] KT “In discussions for cooperation with Disney Plus…Currently the stock price is 30,000 won too low”

KT will invest in original content of up to 50 billion won per case by 2023. The total investment amount is about 400 billion won, the largest among domestic operators. KT secures a total of 1,000 source IPs (intellectual property rights) through investment, while also putting its efforts into creating a K-contents ecosystem with domestic and overseas production companies.

KT held a press conference on the 23rd and announced the KT Group’s media content business strategy. KT is a strategy to leap to Digico (digital platform company) based on its media content capabilities. The following is a question-and-answer with KT CEO Jae-Mo Lee, KT Kook-Hyun Kang (President), and Cheol-yeon Kim and Yong-pil Yoon, co-CEOs of KT Studio Genie.

Q. Cheol-yeon Kim, co-chairman, was in charge of global content business at OCN and CJ ENM, and until recently worked at Naver. I am curious if there is any reason to join KT this time. The corporate culture of KT and Naver seems to be a little different, but how will the corporate culture affect the content business strategy?

Cheolyeon Kim Co-CEO: I heard that KT is creating a virtuous cycle of contents that can create synergy between media subsidiaries, centering on KT Studio Genie. My heart really beats and I wanted to try it. For 20 years, CJ ENM seems to have done almost all of the business related to content, including production, organization, marketing, and global distribution. By gathering this experience, I joined the K-contents business because I wanted to achieve results.

The second question is only for KT. What I felt when I came to KT is that (KT employees) must have been very unfair. There are some people who say that KT seems to be a little slow (decision making) or conservative. When I was at KT for a month, KT was a very fast, resilient, and flexible organization. And it is an organization with a warm affection for society and humans. I will tell you about the results of the business again after about a year.

Q. You said that you will have 100 titles for large original dramas by 2023. What exactly is the expected content investment amount?

Representative Lee Sang-mo: While preparing the materials for the conference, the company decided to disclose the total amount of investment in the content, but only by the number of titles. (If you look at the details of the planned investment), there is a wide variation from a maximum of 50 billion won to a minimum of 5 billion won per case.

In fact, it is more important to invest properly in content that can be successful and to create content that customers want and can reach globally rather than the total investment scale. Even if you lose money after investing, it is also important how much you can withstand it. I will certainly say that I will endure the KT content business until the point where it becomes competitive and fully support it.

Kook-Hyun Kang, Head of Customer Division (President): Estimated content investment is estimated to be the largest among domestic companies. I’ll just tell you this much.

Q. You said that Studio Genie will take on the role of the control tower in KT’s content media business. I wonder if you are considering restructuring to vertically integrate the media business within the group by converting Studio Genie into an intermediate holding company.

Kook-Hyun Kang President: Studio Genie’s founding goal is to allow the content subsidiaries within the group to perform their respective roles well and create synergy overall. In the process, it will take more time to decide how to reorganize the governance structure. The pay-TV market is changing, and there may be major changes related to the content business (even within KT Group). It is now at the stage of drawing a picture as a whole. When the lineup of Studio Genie’s work is completed, I think I can also tell you about the reorganization of the governance structure.

Q. Currently, Disney Plus’s entry into Korea is visible. How is cooperation with global media content providers such as Disney Plus progressing? Also, what is the way KT can secure an edge in competition with overseas platforms?

Kook-Hyun Kang President: So far, there are no operators that have officially signed a contract with Disney Plus. There is no official decision to cooperate with KT at this time. For reference, Luke Kang, president of the Walt Disney Company’s Asia Pacific region, is Korean-American and speaks Korean well. Currently, I have a lot of conversations with me.

KT does not intend to compete with Disney Plus. In the media business, KT pursues a strategy of’WithKT’ with the focus of openness, sharing, and fostering. With Disney Plus, you will be able to cooperate when distributing the contents produced by Studio Genie overseas or when making joint investments. Various ways to cooperate are being discussed.

Q. You said that the recent OTT service season is also considering spin-off, but I am curious about the current progress. Also, are there any plans to merge StoryWiz or Genie Music with the season?

Representative Lee Sang-mo: The season is also likely to be spun off. StoryWiz has already spun off and is focusing on how well it grows independently without further mergers.

Kook-Hyun Kang President: Storywiz’s goal of creating an IP fund of 10 billion won has now reached 80%. Since Studio Genie has also been launched, StoryWiz plans to focus more on securing the source IP.

Q. I am curious about the current situation of the Delive acquisition discussion. In addition to KT Powertel, are there any affiliates that are about to be sold?

Representative Lee Sang-mo: The deal with Delive is currently sluggish. I think I have to watch. The sale of subsidiaries proceeds under the two principles of maintaining subsidiaries with necessary functions as a telecommunications company (Telco, Telco) and developing subsidiaries necessary to leap forward to Digico. It is difficult to comment on the specific sale plan.

Q. When is KT’s share price expected to exceed KRW30,000?

Representative Lee Sang-mo: I’ll start by saying that investment is done at your own discretion (laughs). However, there is no change in the belief that KT’s corporate value is currently undervalued. In the past, when I was the head of the management planning division, KT’s stock price rose to 35,000 won. From that point of view, I think that 30,000 won is also low.