Spackman: China ban on South Korean imports hurt results at SMGL

South Korea Kimchi package

Spackman Entertainment, a producer of Korean dramas, said on Monday China’s ban on entertainment imports and visits from artists from South Korea hurt the earnings of its associated company Spackman Media Group Ltd. (SMGL).

That was in response to queries from SGX on what changed after Spackman said it had paid a premium to acquire stakes in SMGL on the grounds that the deals would be earnings accretive.

But in its 2018 results, Spackman reported the share of results of associates was a loss of US$210,000, attributable to a loss from SMGL, SGX had noted.

“The group has been acquiring SMGL shares in preparation for the lift of the China ban,” Spackman said in a filing to SGX early on Monday.

China had banned individual artists and imports of South Korean entertainment products in retaliation for South Korea’s decision last year to install a U.S. ballistic missile defense system.

“During the past year, although there were signs of the China ban softening, it has yet to be lifted, and during which, SMGL and its artistes have entered into certain entertainment and endorsement projects related to China that were deferred as a result of this situation,” Spackman said. “As such, SMGL and its artists were facing a non-peak year as a significant portion of its potential earnings is expected
to flow in from these projects which were temporarily stalled.”

Spackman said SMGL has been actively seeking partners to re-enter the China market and/or enter the Southeast Asian markets, where demand for South Korean content has been growing.

In addition, Spackman said that SMGL was providing value as a platform to invest in other entertainment content projects which were previously inaccessible, such as its first co-produced drama “Terius Behind Me,” which was the top-ranked drama in its time slot.

The SMGL investment has also provided “unique collaborations,” Spackman said, pointing to its investment with SMGL into Singapore skincare firm Skin Inc. Global with actor Son Ye-jin as “brand evangelist,” and an investment in Nunsongyee, a Korean dessert cafe chain in Singapore.

“The group shall continue to look out for investment opportunities that can leverage on association with Korean celebrities under SMGL,” it said.

The company also said it is looking toward listing SMGL by end-2020.

Spackman added that The Makers Studio, a startup South Korean film production company it had invested in in late 2017, contributed to the loss from associates as a filming project was tentatively delayed and is now expected to be released by 2020.

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