According to investment banking (IB) industry sources on the 11th, the Financial Creditors’ Committee—led by Hana Bank, the lead creditor—held its first meeting the previous day and agreed via written resolution to initiate a workout process for the JoongAng Ilbo. This comes just three weeks after the JoongAng Ilbo filed for the workout on the 19th of last month. This workout was finalized after securing the consent of more than three-quarters (75%) of the financial creditors, based on the amount of their claims. Consequently, creditors’ enforcement of their claims will be deferred for three months. The workout is expected to get fully underway following a due diligence review by an external accounting firm.
Previously, when JoongAng Ilbo applied for the workout last month, it submitted a self-rescue plan to the creditor group. The plan included: △reasons for pursuing the workout; △sale of management-controlling shares; △sale of real estate; △sale of subsidiaries; △measures to expand revenue; and △cost-cutting measures (such as a hiring freeze and executive salary reductions). It also included plans to expand newspaper advertising and the “Townboard” business—which utilizes elevator advertising in apartment buildings—as well as to increase subscribers to “The JoongAng Plus,” its paid digital subscription service.
The core of the self-rescue plan submitted by JoongAng Ilbo is a plan to sell shares, thereby relinquishing management control held by the founding family. Currently, JoongAng Holdings is the largest shareholder of JoongAng Ilbo, holding a 64.73% stake. The shares of JoongAng Holdings are entirely held by the owner family, including Hong Jeong-do, Vice Chairman of JoongAng Group (55.8%); Hong Jeong-in, CEO of Contentre JoongAng (37.2%); and Hong Seok-hyun, Chairman of JoongAng Holdings (7.0%). The plan is to sell all of these shares through negotiations with potential acquirers.
With the family of owners having officially announced the sale of management control, the market is predicting a high likelihood that mid-sized construction companies with ample cash reserves will enter the fray. The acquisition of media companies by construction capital is a common pattern in the industry. There are numerous precedents of construction firms becoming major shareholders of media outlets, such as Jungheung Construction’s acquisition of Herald Economy and Taeyoung Construction’s establishment and ownership of SBS.
Among potential buyers for the larger-scale JoongAng Ilbo, groups such as Booyoung Group and Hoban Group are being mentioned. Booyoung acquired local newspapers such as the Incheon Ilbo and Halla Ilbo through its affiliates in 2017, and it also holds a 5.5% stake in TV Chosun, having invested in the channel when general programming channels were first launched in 2011. Although it has not been a prominent player in the media acquisition market for some time, there is speculation that it may explore expanding its media influence through the acquisition of the JoongAng Ilbo.
Booyoung is also known for its unique connection to the JoongAng Ilbo’s former headquarters. In 2016, Booyoung acquired the Samsung Life Insurance headquarters building in Seosomun, Seoul, and currently uses it as its headquarters (Booyoung Taepyeong Building); this building had served as the JoongAng Ilbo’s headquarters since 1985. At the time, in 1999, JoongAng Ilbo sold the land and building to Samsung Life Insurance to repay debts in the wake of the Asian financial crisis.
The Hoban Group, which has already accumulated considerable media expertise, is also a strong contender. The Hoban Group emerged as a major player in the media industry in 2021 by successively acquiring Seoul Shinmun, Electronic Times, and EBN. In 2023, it successfully resold Electronic Times, having experienced both acquisitions and divestitures. Given that it is currently managing the general-interest daily Seoul Shinmun stably, analysts believe it can expect significant media synergies through the acquisition of JoongAng Ilbo.
An industry insider explained, “From a construction company’s perspective, acquiring a major media outlet is a strategic move to boost external brand recognition and secure social influence,” adding, “A tug-of-war among construction firms is expected to intensify depending on the asset sale conditions specified in the self-rescue plan and the scale of contingent liabilities that will emerge during the upcoming due diligence process.”
