Kakao seeks to sell stake in SBS M&C to jump into TV ad market

Kakao Corp. is seeking to divest its stake in SBS M&C, a media ad marketing and producing agency for a local broadcaster, to make a foray into the country¡¯s 2.5 trillion won ($21 billion) worth TV advertisement market.

According to industry sources, Kakao has put up its 10-percent stake in SBS M&C for sale, which it has held for more than 10 years. The value of the stake is only billions of won, but the selloff is expected to help Kakao make a significant step forward to expand its advertising business portfolio beyond mobile and internet-based advertising businesses.

Under the current law in Korea, businesses holding a stake in media representative marketing and ad agency are not allowed to participate in TV advertising. Thus, without the 10-percent stake in SBS M&C, Kakao will be allowed to advance into the country¡¯s TV advertising market whose annual market value is estimated at 2.5 trillion won.

Kakao expects its inroad into the TV ad market would create synergy with its other media content businesses such as webtoons and web novels.

Kakao has been seeking to foster KakaoTalk Biz Board (TalkBoard) and KakaoTalk Channel, its B2B services based on its chat app Kakao Talk, under direction of Co-CEO Yeo Min-soo, who emphasized during an third-quarter earnings conference call that the B2B services¡¯ growth hinges on advertisement business.

KakaoTalk Biz, its main advertising business, posted growth every quarter last year, recording 292.5 billion won in the first quarter, 390.5 billion won in the second quarter, and 404.9 billion won in the third quarter. As Kakao¡¯s ad business in KakaoTalk Biz and Channel is in the fledgling stage, it is expected to play a key role as a new growth engine.

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