We have here with us CFO Deuk-Soo Hwang and heads of different business divisions. From Media, we have Ki-s ung Hoon, Film Junhee Won, Music Shin Hyun-k wan , Global Junhyup Kim, Commerce Seongbae Park, Studio Dragon Kwang-s eok Oh, TVING Choi Ju-hui , and from CJ ENM Studios, we have CEO Yong Soo Ha.
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First, CFO Hwang will brief us on management plans and goals.
[Foreign language]
Good afternoon. This is CFO Deuk-Soo Hwang . Despite external conditions such as a slower advertising market and seasonality, CJ ENM continued to fortify its business competitiveness with continued content sales in the global market. Difficulties continued in the media and content-producing industries, and the recovery is not as fast as expectations. But CJ ENM, based on hit ratio of its content, is enhancing the synergy between channels and OTT platforms.
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The company realized a turnaround on a YOY basis with its stance of strengthening profitability since last year and is continuing to outperform competitors in the market. Popularity of Korean content increased in Q3 with simultaneous global airing of dramas and non-scripted entertainment programs including Love Next Door, No Gain No Love, and Jinny's Kitchen 2. Results strengthened in the cinemas and OTT platforms with movie content such as I, The Executioner and Uprising.
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The audience is enthusiastically receiving drama and entertainment content in Q4 as well, with programs including [Foreign language], The Star is Born, and Three Meals a Day Light. We will continue this success with [Foreign language], the musical, and movie Harbin. The company is focusing on improving profitability of each business division. TVing will continue its improvement of profitability through premium content and sports library. Music will expand profit leverage through girl group izna and global concerts of ZEROBASEONE , JO1, and INI. Commerce will maximize business results of a high season with growth in mobile live commerce and launch of new brands.
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With fast strategy of expanding business models and new markets, based on our strong basis as the dominant player in the domestic market, we will seek success of Korean contents and K-POP in the global market as well, continuing our success. I deeply thank the shareholders and analysts and conclude my presentation. Thank you.
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Next is results presentation. Quarterly annual results presentations are based on K-IFRS and is on a consolidated basis. Division of operating profit has not eliminated internal transactions. Now we will hear Q3 2024 results presentation.
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Good afternoon. This is Jin Young Kim from Finance. Consolidated revenue of CJ ENM for Q3 2024 stood at ₩1.1246 trillion, which is a 1.2% YOY increase. Operating profit at ₩15.8 billion saw an increase of 113.8%. Entertainment recorded a revenue of ₩790.7 billion, with ₩6.7 billion operating profit. Commerce recorded a revenue of ₩333.8 billion, with ₩9.2 billion operating profit. However, the company recorded a net loss of ₩531.4 billion, with one-off events including loss on disposal of PPE with LiveC ity contract nullification, other losses of ₩24.6 billion, and corporate tax of ₩130.5 billion.
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Media platform will continue to enhance channel viewership and TVing traffic growth with competitive content in Q4. Pictures and drama will focus on profitability improvement with expanded production and distribution. Music will continue its efforts to build on album activities and live concerts. Commerce hopes to ride the high season and enhance profitability with sophisticated one-platform strategy and category-specialized mobile live commerce content. Please refer to the presentation deck for details. Thank you.
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Now we will be hearing from Studio Dragon.
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Good afternoon. This is CFO Kwang-seok Oh from Studio Dragon. I will present the company's Q3 2024 results.
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Aired episodes in Q3 stood at 59, which is a decrease by 21% YOY. With sluggish pre-sales of new titles with the exception of Love Next Door and slow library sales, our revenue stood at ₩90.3 billion, with an operating loss of ₩900 million.
[Foreign language]
On a different note, we were able to expand our domestic channel with ENA original To My Haeri. Other businesses, including OST sales, had good results too.
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Lineup and pre-sales will continue to see some decrease in the second half, and the company will focus on viewer ratings recovery and portfolio optimization.
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Currently, The Star is Born is getting good viewer ratings. We will see recovery of viewership as the number one domestic player with improved hit ratio for individual IPs.
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Furthermore, in 2025, with portfolio optimization with S-IP level tentpole titles and small and medium titles, we will address the needs of different platforms and enhance partnerships and thus overcome the difficult market conditions. Thank you.
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Now we will move on to our Q&A session.
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Now Q&A session will begin. Please press asterisk 1, asterisk N1 if you have any questions. For cancellation, please press asterisk 2, that is asterisk N2 on your phone.
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The first question will be given by Hoe-jae Kim from Daeshin Securities. Please go ahead.
[Foreign language]
Yes, I have three questions. The first one is related to Live City. Is the loss impact from the cancellation of the contract over, or will we be seeing more numbers be reflected in the future? Would there be any reversal of the already paid amount to your books later on? That was my first Live City-related question. My second question goes to Fifth Season. Could we know about the revenue numbers and operating profit numbers for Fifth Season? I see that your delivery schedule saw some glitches. How do you foresee things unfolding in Q4? Could you give us guidance for 2025? My third question goes to TVing. How's your subscriber base growing? Could I also get the revenue number and operating profit number for TVing?
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Yes, this is Kim from Finance addressing your first live city-related question. Our disposal of tangible assets related to this project amounts to ₩320 billion. We've also some contributed acceptance to the Gyeonggi Province. We also saw losses with our assets in construction amounting to ₩260 billion. With return of land to Gyeonggi Province, our disposal loss stood at ₩61.8 billion.
[Foreign language]
In treating land-related losses, we have already reflected the losses related to Lot A6-2, which we have yet to return to Gyeonggi Province. Going forward, we do not see any large amount being reflected in our books.
[Foreign language]
We've already given out a disclosure in October related to contributed acceptance of our arena project, and should we decide in the later stage to actually go back to the arena project, that will lead to some differences in our calculation as well. Should there be any lawsuits, legal lawsuits going forward, there could be some minute changes to the in-and-out numbers, but not in a big way.
[Foreign language]
Now on your TVing and fifth season questions. TVing's revenue recorded ₩121.3 billion with an operating loss of ₩7.1 billion. For fifth season, the numbers are revenue of ₩108.4 billion with an operating loss of ₩23.2 billion.
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Yes, this is Junhyup Kim from Global Addressing. You're adding a question to fifth season. Our numbers saw some difference to our projection because of the delayed delivery of season two. It was scheduled to be delivered in the third quarter. It has been delayed to fourth quarter. In the fourth quarter, with the delivery of that title, we will be seeing some recognition of revenue numbers.
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Our TV series numbers were really influenced by the delay in the delivery of season two. On a year-over-year basis, that impact stood at 47.3%. It was decreased by 47.3%. Last year, we delivered a title called Life & Beth , and that added to our numbers. In 2024, our only title to be delivered was Severance. With the delay of that project, we saw some influence to our numbers. We would be working on the distribution of our library titles. As you're aware, there were some impacts from the strikes, the writers and the guild strike, which led to some impact. With that being more or less dissolved, we hope to see some improvement.
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[Foreign language]
TVing continues to see its paying subscriber basis grow on a year-over-year basis. That's a growth by 55%.
[Foreign language]
If I may put it more accurately, our revenue has seen an increase by 55%. That was mainly led to our subscriber basis growth, which saw a 40% increase. And even on a quarter-over-quarter basis, we saw a growth by 5% to 10%.
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We're also seeing ad sales contribute to our overall revenue.
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This quarter, we saw our operating loss numbers go below $10 billion. We recorded $7 billion loss, which is first-ever under $10 billion number.
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I believe it's all thanks to our effective operation and also economy of scale realization.
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The following question is by Eunjeong Shin from DB Financial Investment. Please go ahead.
[Foreign language]
Yes, I have three questions. The first goes to TVing. The KBO season has ended, and I do believe there will be some attrition related to end of season. How much of magnitude do you expect from the end of season of KBO? Even with the season, you saw negative numbers. So how are you going to improve the numbers now the season is over? Could you please brief us on your Q4 and your 2025 strategy? When do you think you will be seeing a break-even point? Those were my questions for TVing. My second question goes to your music division. The revenue number, the sales numbers were okay in 2024, but your operating profit did not really match stronger revenue numbers.
What's the reason behind it? Could we get some guidance on your expectations for next year, 2025? My last question, the third one goes to Studio Dragon. In your presentation deck, I read that you plan to deliver seven tentpole titles and you're going to see pre-sales of eight titles. The numbers, are they fixed? How many titles are you thinking of delivering in year 2025?
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Yes, this is TVing addressing your question. Now that the KBO season is over, the baseball season is over, we're closely monitoring the changes to our traffic. Every Monday there were no ball games. The traffic as of today is similar to what we have seen on Mondays during baseball season. It's about 5% to 10% influence.
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In the months of February and March, we did not air baseball games. And compared to those months, our daily average user has seen an increase by 10%.
[Foreign language]
As you have mentioned in your question, we are embracing ourselves to prevent any attritions of baseball fans. We could see in the worst case about a 20% attrition of the baseball watchers. We are preparing diverse content to address and cater to the needs of the baseball fans. We will be airing WBSC Korea and Cuba team live match, baseball match. We are also preparing various original baseball-related documents. We are also thinking of basketball matches airing.
[Foreign language]
We did spend some amount to invest for our KBO programs. Now that the investment is over, we are going to see some decrease in our loss numbers. We have built up a good track record of attracting new subscribers. Going forward, we'll be starting with this healthier subscriber basis. With that, I believe that we will be able to reach our goal of a break-even point somewhere in the end of this year.
[Foreign language]
Yes, now next year's strategy, we will continue to strengthen our contents with sports programs and others. With that, we hope to attract more traffic. With added traffic, we're going to monetize it through advertisement packages. We're also going to offer differentiated service within TVing and build diverse business models. Now, on the account sharing, well, Netflix with their account sharing program, we're able to add 15% to 20% to their numbers. We have yet to do that, and we could see better results.
[Foreign language]
Yes, now I will address your music question. You've asked why our operating numbers were not as strong as our revenue numbers. The operating profit that comes from in-house artists and our Japanese in-house artists, they're quite good and strong. However, when it comes to KCONs that we had across different regions, they are associated with higher production costs, as are the artists that are not in-house. Also, the follow-up season of our Mnet seasonal TV shows did not really perform to our expectations, leading to a lower income associated with our advertisement.
How are we going to address the situation going forward in Q4 and year 2025? We're going to enhance our efforts with our in-house IPs. We're going to have concerts and conventions with in-house artists. We're going to strengthen that effort. We would also be adding new competitiveness to the newer contents on Mnet. With that, we hope to enhance our operating numbers so that they match our stronger revenue numbers. We do have an expected debut of a new girl group, izna, on the 25th of this month. We also do expect to see enhanced activities of ZEROBASEONE, INI, and JO1, our in-house artists.
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Yes, this is Studio Dragon addressing your questions on tentpole titles and the pre-buy or pre-sales numbers. The lineup for the second half of 2025 is not yet firmly fixed. It's a little bit liquid, but the numbers for captive, it's pretty much sure that 3 to 4 titles. For OTT bound, it's also about 3 to 4 titles. We're in the midst of negotiating and finalizing the numbers, but the progress has been there when it comes to discussions. For OTTs such as Netflix and Disney Plus, we are working with them very closely. This could be a more firmer number. On the pre-buy or the pre-sales, we have talked to Amazon, Netflix, and Disney Plus. We are currently coordinating with the numbers, but I do see that the company will be able to pre-sell or pre-buy 8 titles.
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Currently, there are no participants with questions. Please press asterisk 1 to give your question.
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The following question is by Yong-hyun Choi from KB Securities. Please go ahead.
[Foreign language]
Yes, your loss numbers, well, the loss numbers were there, but I do believe that you have seen some improvement when it comes to financial structure with improvement in your borrowing. Is it to do with PRS with Netmarble stocks?
[Foreign language]
Yes, it's true that through the PRS contract with our Netmarble shareholding, we have seen some improvement in our financial structure. We have used the proceeds from our PRS deal to pay back our borrowings. But it wasn't only that. We added more efficiency to our production, and we've seen optimization of our production and development capabilities. With that, our operating cash flow improved, and with this cash flow, we were also able to service back some of our borrowings.
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Currently, there are no participants with questions. Please press asterisk 1 to give your question.
[Foreign language]
Once again, if you have a question, please press asterisk 1, asterisk 1.
[Foreign language]
Since there are no further questions, I would like to end today's release session here. I do believe that you were rather disappointed in our lower than expected numbers due to many of our one-off influences. But as we've communicated with the market, we have been on a turnaround stance since the first half of this year. As you're aware, the media environment, the media industry as a whole, the whole value chain is experiencing much difficulties, and this is an external environment. But as the number one leader and the number one player in the industry, we are continuing to improve ourselves and develop the process even further. So you may have seen somewhat lower than expected numbers, but as I mentioned, we are on an improvement path going forward, and we will be delivering more detailed information during our roadshow that is scheduled for next week. Thank you.