So today with us are management and heads of different business divisions. We have CFO, Took Soo Hwang EVP, Woo Jin Lee CSO, Yoon Hong Kim and Head of Content Solutions, Hong Hak Lee. From IT Business, we have Ki Fang Hong. From Pictures, Kyeongbong Koo and Music, Hyun Soo Kim. And CEO of Studio Dragon, Ms.
Chae Hyun Kim is here with us too as well as TV CEO, Chae Lee Yang and CEO, Yong Soo from CJ E and M Studios. First, CFO, Took Soo Hwang, will give his remarks. Good afternoon. This is Took Soo Hong, CFO of CJ E and M. CJ E and M continues to enhance our global business competitiveness and OTT platform and thereby continue business growth.
With Fifth Season and the establishment of CJ E and M Studios, we are enhancing our content influence in the domestic and international markets. TVing is fortifying content and with merger pursuits with Seasons, continued subscriber acquisition. However, in comparison to our top line growth, there were much room for improvement with our profitability. Speedy business portfolio renewal was done to lead the changes in the content market. And with that, in 2023, the company is going to focus on profit and profitability enhancement.
Profitability for each business unit will be fortified, and we further will improve content and product hit ratio. As of at the October, there has been changes to key management positions, including the CEO. The company is now establishing strategic execution and detailed management plans with different business units for year 2023. We will be delivering you more details in our Q4 earnings session. The company will enhance profit growth approach and be very attentive to shareholder opinion.
Thank you. On
Good afternoon. This is Sang Mo Kwang from CJ E and M Finance. The consolidated revenue for CJ E and M in Q3 was at KRW 1,178,500,000,000.0000, which is a 37.4% growth Y o Y, but our operating profit at KRW 25,500,000,000.0 decreased by 70.9%. Thanks to TV, content sales and blooming music business, entertainment business unit recorded a revenue of KRW 8 and 69,100,000,000.0 with KRW 19,800,000,000.0 in OP. Commerce recorded a revenue of KRW 309,500,000,000.0 with KRW 5,700,000,000.0 operating profit.
The company will continue its global music business expansion in the fourth quarter and focus on TV growth and TV advertising. Commerce business will see a strengthening of portfolio and focus on peak season. Page four, media. Media business unit recorded a revenue of KRW 609,900,000,000.0 in Q3, which is a growth of 37.7% Y o Y, continuing its top line growth. Content hit ratio saw improvement.
Teasing subscribers and content sales revenue recorded steep growth as well. However, with more original content and the company, the production cost increase and with the Fifth Season's loss, the business recorded a loss of KRW 14,100,000,000.0. The business is focusing on TV ad recovery and TV growth in Q4 based on IP competitiveness. Anchor IPs have been enhanced with under the Queen's umbrella, Climbing Kilimanjaro of TVN and Show Me the Money season 11 of Mnet. TVN will continue growth of subscribers with firm competitiveness of original content such as Work Later, Drink Now two and Island.
Page five, commerce. Revenue for e commerce business unit decreased 2% Y o Y at KRW 309,500,000,000.0 in Q3. OP decreased 78.8% at KRW 5,700,000,000.0. Even with the increase in private brands, with curbed growth in the TV commerce sector and staunched consumer sentiment, TV GMV decreased. Profitability deteriorated with pressure from fixed cost, including platform commissions.
Q4 will see an expansion of programming for high margin products such as beauty and health supplements. With optimized portfolio, the business will aim to restore TV GMV. The business will continue to enhance the fashion PBs such as ATG, G Studio and Celeb Shop edition and maximize the high season effect with launch of new FW product. Page six, pictures. Pictures revenue at 118,600,000,000 won, so an increase of 258.2% over the previous year.
With confidential assignment two international success, theater revenue increased 376.8% Y o Y. Ancillary revenue from Alienoid and Fifth Seasons overseas revenue rose too. However, the lack of the domestic box office numbers for Alienoid and cost recognition with Fifth Seasons consolidation led to operating loss of 100,000,000 The business will focus on profitability recovery with domestic temple title Hero and grand musicals such as forty second Street and Moulin Rouge targeting the peak fourth quarter. Page seven, music. Music business recorded a revenue of 140,500,000,000.0 won, which is an increase of 113.5% Y o Y.
Operating profit more than tripled at 34,000,000,000 won. INI and ENHYPEN's album sold well, leading to Lapone and Belief Lab and other label centered top line growth. Concerts and convention live revenue led profitability. Global growth momentum will further strengthen with in house artists' new album releases and concert tours in the fourth quarter. Kepler and JL One have released their new albums.
KCON Japan and IONI's Japan Arena tours are scheduled, and ENHYPEN will have its world tour. The growth will continue with global concert expansion. Now we will be hearing the presentation from Studio Dragon. Good afternoon. This is CEO, Chae Yong Kim of Studio Dragon.
I will brief you on management's results for Q3 twenty twenty two. Revenue in Q3 stood at KRW228.9 billion, which is the best quarterly result to date. Seven new OTT found originals were reflected in our revenue, leading to a 97.2% growth Y o Y. Operating profit continued to grow at KRW 18,900,000,000.0. Bottom line also saw an improvement together with top line and witnessed about 30% growth Y o Y.
Contract renewal with Netflix is in its last stages, reconfirming our content competitiveness. Numerous OTTs have long term contract needs, and with that, we're discussing additional partnerships. This will prove to be an opportunity for the company to cement our sustainable growth structure. Our first Hollywood drama, The Big Door Prize, has completed production and has been partly delivered to Apple Plus TV in the quarter. Next titles are well under planning, development and production.
Japanese local drama work has picked up speed, and we will put in our efforts to deliver you good news in the near future. Thank you. Now we will move on to the Q and A session. Due to time constraint, I please ask you to limit your questions to three each centering around core issues.
Now q and a session will begin. Please press asterisk one, asterisk n one if you have any question. For cancellation, please press asterisk two, that is asterisk n two on your phone. The first question will be given by Kim Hwae Jae from Daesian Securities. Please go ahead.
Yes. Thank you for the opportunity. Well, I have three questions. The first question is related to your results. Of your results, were there any one off elements included?
And if so, to what extent? And well, the next part of the first question is on your guidance number. You've given us a revenue guidance of KRW 4,800,000,000,000.0 with the OB guidance of KRW $270,000,000,000. Well, does it still stand? This is my first question.
And my second question is really related to Fifth Season and TV. You've mentioned in your past presentation that there would be profit contribution starting next year. So could you give us your outlook for next year's contribution from the two entities? So I know it's still too early, but if you could provide us with the guidance, that would be much appreciated. And now on to the third part of the question, which is to Studio Dragon.
You talked about delivery of your title, Big Door Prize, and you said you are readying yourselves for the next title or the next delivery. Well, it will it be season two of the same title, Big Door Prize, or will it be a whole new title? And my other question is related to your proportional recognition of production. Could you if you're doing so, could you please provide us with more color? Yes.
If I may address the first question, which is related to one offs. Well, I think you're referring to the sizable non operating item that you see in the documentation that we provided. And my simple answer would be there were no one offs. And you see a non operating loss number amounting to KRW 70,000,000,000. Well, our equity method loss amounted to KRW 50,000,000,000 in the given quarter and our net finance loss or expenses stood at minus KRW 15,500,000,000.0.
With the larger scale investments, our borrowings also saw growth and our numbers were consolidated with the numbers of 50%. And of course, on top of that, the rising interest rate also acted as a burden. Yes. If I may address your guidance related question, well, there has been a disclosure made. We have downward adjusted our guidance number.
The revenue guidance still remains the same at KRW 4,800,000,000,000.0, but our OP guidance has seen a downward adjustment by 42%, and the new number now announced stands at KRW 155,000,000,000. The second half market conditions proved to be much tougher than what everybody else has anticipated. And with consolidated losses with Fifth Season and TV, we had to downward adjust our guidance. And as was mentioned in our opening statement, while we are in the midst of coming up with a management plan to improve profit and see a turnaround in year 2023. And please do understand that it is quite difficult to give you a number wise answer today, but we will be giving you the directionality of the management.
Yes. Well, I'll be talking more about Fifth Season and CEO, Yan from TV, will be addressing TV related issues. Well, Fifth Season, the anticipation for the number of delivery this year stood at 14 titles, well, we expected the actual delivery to be slightly below. And these theater releases, those contributions were quite limited too. But as was mentioned in our communications in the second quarter with cooperation with us, we do hope to see more delivery going into the next year.
We expect at least 20 titles to be delivered in year 2023. And next year's earnings with the improvement from Fifth Season and TV, well, next year's earning will be driven by these two elements, the improvement with Fifth Season and TV. Yes. Now, TV, please. Yes.
This is Siyo Yang from TV addressing the question. Well, as you're well aware, in order to go for an optimal growth in year 2021 and 2022 with expansion of the OTT market, TV made both preemptive investments for original titles, and this has led to the number of subscriber growth. But this preemptive investment led to somewhat of profit that rather wants improvement. So in the earlier part of year 2023, we will be seeing tangible results with our merger with KT Season. And with that, I believe we have laid out the ground to enjoy the fruits of economies of scale.
So starting next year, we will be seeing meaningful improvements to our profit numbers. So this is the answer provided by Studio Dragon. Well, Victor Prize, will there be a season two to it? Well, Victor Prize season one is to be programmed in the first half of year twenty three. And after seeing the results of season one, when after that, we could think about the possibilities of a season two.
And as to the new titles that we are working on, well, we make a a Hollywood remake of the designers. Well, we are currently in the last stages of discussion with the potential platform that is interested. And we will be working on about five titles, US remake of our own titles. So we are in the pre pitch phase of work with these five titles. And now on cost recognition in proportionate to production completion rate, well, our standard hinges on master delivery.
So upon master delivery, our numbers are recognized. As was mentioned during the presentation, we have partly delivered the the sum of the whole test and episodes. And upon master delivery, our rep the cost recognition will be done. Next question, please.
The following question is by Anjina from EBAs Please go ahead.
Yes. I have two questions. So once again, the first one is related to your nonobviously and loss numbers. I see that investment loss to your affiliates have been increasing for some time. Could you please give us more detailed information to related to it?
And until when will this loss continue? Will it continue to influence your non operating numbers next year as well? This was the first question. And now on to the second question, which is to do with corporate tax. I understand that corporate tax was not much of a burden until the first half of this year, but it has become a pressure starting third quarter and most probably in the fourth quarter as well.
And I think it could eat into your profit numbers as well. So I would like to hear more detail on your corporate tax related issues. And well, in your presentation, it was mentioned that there will be a stronger emphasis on profitability improvement next year. So could you give us a rough guidance as to how much? Answer, I told you that our non operating losses amount to 70,000,000,000, of which KRW 50,000,000,000 is with equity method loss.
Well, the number in the second quarter was at KRW 30,000,000,000. And of course, speaking about related companies, well, it's not well, we are not in a position to freely remark about the results of that particular legal entity. So please understand that we cannot provide you with detailed comments on that. But if you look at the financial market conditions, recently, there has been a lot of volatility. The currency move was also very volatile.
The one to the dollar moved at the range of JPY 1,400 to 1,441 to the dollar. Now it has seen a bit of a stabilization, and this company, it was really influenced by the fluctuations in currency. Well, should the current foreign exchange rates be maintained, I believe that their loss will be contained going into the future. And now moving on to the second part of your question, which was to do with corporate tax. Corporate tax payment in the second quarter was at 1,900,000,000.0.
In third quarter, the number rose to 8,600,000,000.0. This is, of course, on a consolidated basis. And if I may talk about CJ E and M, the legal entity CJ E and M, well, based on first half results, there was an interim payment paid out. And this interim payment is based on last year's results. So, of course, the number to be paid out in corporate tax was high.
Well, the tax related issue, it's quite a complicated one. So we would need to set up a separate meeting for that. But as was mentioned in the presentation, the profit level this year isn't as strong as what we have witnessed last year. With that, we would not really feel a pressure from corporate tax payment. Since you've asked us more color or guidance on the profit level for year 2023, well, I will give you a little bit more detail.
As you have stated, we have seen somewhat of a less than desirable OP number for year 2022. And at the earlier part of this year, it is true that many investors expressed their concerns over production cost. So I believe that giving you somewhat of a guidance for year 2023 and the next of course, next year's results would be much important. And on a stand alone basis, on an individual basis, the results still remain strong for the company. But since we have given you consolidated numbers, well, the results from Fifth Season and TV had an adverse effect amounting to KRW 130,000,000,000.
So with the improvement of the two subsidiaries, next year, we will be seeing improvements. Yes. Well, first season PMI is successfully over. And I can only give you a Well, it's not been finalized yet, but we expect the number of titles to be given by Fifth in somewhere around 14 for this year.
Next year, we do expect to see about 24 to 27 titles from Fifth Season. And that, of course, will contribute to our top and bottom line improvements. While The U. S. OTT market size is KRW 50,000,000,000,000.
And with Fifth Season, we have made full fledged entrance into this enormous market. And we do hope to see contribution from Fifth Season starting next year. And if I may talk about TV, well, it's true that there was some loss related to TV's numbers, but there were also very positive results from the business, such as subscriber number increase and content pooling and user perception improvement. And the Fair Trade Commission of Korea has given the green light with the merger with Season. And with that, we will be seeing migration of subscribers in the fourth quarter and in the first half of next year.
Next question, please.
The following question is by Yihua Zhang from NH Investment Securities. Please go ahead.
Yes. My questions are directed to Studio Dragon. Well, first is on amortization or depreciation of intangible asset. I see that there has been an increase by 10,000,000,000. Could you please elaborate on the increase?
And secondly, well, in your presentation deck, you have written limited profitability with OTT originals. It because your big door private the first season that you've said limited profitability? Or is it because of your recognition system or your revenue recognition system? And you said cost was recognized according to delivery. Is margin recognized in the same way?
Or is it more towards at the time of bearing? Yes. As to your first amortization or depreciation well, there have been concurrent error rate with together with the OTT in the third quarter, and that has led to the increase. Yes. And about the limited profitability with originals, that's not really to do with a particular title per se, big door price.
Well, we've seen OTT bound originals increase in the And to some OTTs, we provided them with our first title. And well, with this entrance to new platforms, the margin rates wasn't as high. However, the platforms that received our content, they are very satisfied with it. So with that, in the going into the future with increased volume, we will be seeing an improvement in our profitability as well.
We are currently in discussion with the diverse platforms, and the results will be reflected in our next year's numbers. And now on margin recognition, as for the revenue recognition, it hinges on master delivery. Next question, please.
The following question is by Kim Ho Jae from Tae Sian Securities. Please go ahead.
One single question to Studio Dragon. Well, has the contract with Netflix been renewed, and are the contract terms better? Well, we are almost at the end. We're almost we have almost we are at this close to the signing stage. We're working on fine tuning the details.
And even though we might well, we even if we don't sign the deal in 2022, for the titles that will be provided in 2023, we will go by the conditions that are being renewed. And we're quite pleased with the terms and condition changes. The
following question is by Kim Sung Hwan from Credit Suisse. Please go ahead.
Yes. I have three questions directed to Studio Dragon. Well, I see that your overseas number has seen an increase by billion or more for the third quarter. Well, I know that the company does not provide baseband numbers per channel or per OTT. But well, what is the kind of contribution of other new channels other than TV and Netflix when it comes to OTTs?
And my second question is related to your profitability rate. You've mentioned that due to OTT news and originals, the profitability or profit rate slightly went down despite the top line growth in Q3. So could you give me a comparison of the new project profitability versus the old one? And well, I with more OTTs, what is the profit rate associated with newer OTTs? And my third and last question is related to your asset in construction.
What's the number? Yes. If I may address your first question related to our overseas revenue, yes, we have seen an more additions of newer platforms in the third quarter for overseas OTTs and data revenue number increased. But the But the OTTs well, if you look at our business with them, it was quite well spread out. So there is no concentration with a specific OTT.
That was my first answer. And now moving on to the second part of your question, relatively weaker profit rate compared to our top line growth and the comparison between our new projects and existing projects. Well, relatively, the newer projects are associated with lesser profit, but it's not for every project. And so there are different profit rates associated with different projects. So there is no clear cut between the older projects and the new projects when it comes to profit rates.
And it's true that we have seen the margin some margin deterioration compared to the previous quarter. It's related to our library sales. Yes, we did sales our library titles to Amazon, but compared to the previous seasons, well, the number was rather one thing. And compared to our first window sales, our second window sales have seen a slight decrease, leading to somewhat of a deterioration with our profitability.