[Conference Call] CJ ENM's operating profit of 1.5 billion won was once a 'humiliation,' but that is no longer the case... Amortization period for production costs shortened

CJ ENM is adjusting the amortization period for content to reduce earnings volatility.

Lee Hye-mi, CFO of Studio Dragon, CJ ENM's subsidiary, stated during the company's second-quarter earnings conference call held on the 6th that "the long amortization period for content production costs has previously led to significant earnings volatility," adding that "particularly, the burden of amortizing last year's production costs carried over into the first half of this year created a vicious cycle that pressured earnings."

CJ ENM reported an operating profit of only 1.5 billion won in the first quarter of this year, falling more than 90% below market consensus estimates. This drew significant attention, with some securities firms publishing reports titled, "The performance bonus for one (High) Nix must be even higher ㅠ."

The CFO said, "Going forward, we will align the timing of revenue recognition with the amortization period." She explained that "general dramas will be amortized over 48 months, with 64% accelerated in the first seven months," and "for OTT pre-sold content, the amortization period will be shortened from the previous six months to four months to accelerate cost processing."

She added, "This is expected to significantly ease the burden of deferred amortization. As the alignment between revenue and costs improves, the market and investors will be able to predict the company's earnings more accurately."