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Hong Jeong-do, Vice Chairman of Joongang Group, bows in apology during a press conference held at the Joongang Ilbo building in Mapo-gu, Seoul, on June 15, regarding the filing for corporate rehabilitation procedures due to liquidity crises at JTBC and several Joongang Group affiliates. / Photo courtesy of Yonhap News Agency

Joongang Holdings, the holding company of Joongang Group, and its flagship affiliate, the comprehensive cable broadcasting channel JTBC, have filed for corporate rehabilitation with the court. The filing came just two days after JTBC declared default after failing to repay 20.6 billion won in corporate debt. If the court rehabilitation process begins, a comprehensive restructuring of the financial framework through corporate downsizing and asset divestitures is expected.

"As the top management of Joongang Group, I offer my sincerest apologies to all our executives and staff," Hong Jeong-do, Vice Chairman of Joongang Group, stated during a press conference held at the Joongang Ilbo building in Sangam-dong, Seoul, on June 15. "Management has explored every conceivable measure to overcome the credit crunch and liquidity crisis while maintaining operational stability. However, due to accumulated financial burdens and a prolonged freeze in the capital markets, we have inevitably filed for corporate rehabilitation today for JTBC, Contentree Joongang, Megabox Joongang, Joongang Holdings, and Joongang P&I."

Previously, on June 12, JTBC declared default after failing to repay 20.6 billion won in matured securitized loans. Following the declaration, domestic credit rating agencies downgraded the credit ratings of key affiliates across the board. NICE Investors Service slashed JTBC's unguaranteed corporate bond rating from "BBB/Negative" to "CCC." A "CCC" rating indicates that the issuing company faces a high risk of default and is generally perceived by the market as incapable of normal capital raising. Joongang Ilbo's long-term credit rating was also downgraded from "BBB/Negative" to "BB-," and its short-term credit rating dropped from "A3" to "B-." Korea Ratings also lowered JTBC's unguaranteed corporate bond rating from "BBB/Negative" to "BB (Under Review for Downgrade)," while downgrading its commercial paper and short-term electronic bonds from "A3" to "B (Under Review for Downgrade)."

The deterioration of Joongang Group's financial structure is attributed to a shrinking TV broadcast advertising market driven by rapid shifts in the media landscape toward Over-The-Top (OTT) streaming platforms, coupled with aggressive overinvestment in sports broadcasting rights.

JTBC had secured exclusive domestic broadcasting rights for the FIFA World Cup through Phoenix Sports, a Joongang Group affiliate. Contentree Joongang, the parent company of Phoenix Sports, reportedly poured approximately 125 million dollars (190 billion won) into securing those rights. The group also spent around 500 million dollars (700 billion won) to acquire Olympic broadcasting rights from 2026 to 2032 and World Cup rights through 2030. However, JTBC suffered massive losses after failing to resell the Winter Olympic broadcasting rights to South Korea's three major terrestrial broadcasters last February. Furthermore, it only managed to resell its current World Cup broadcasting rights to KBS for 14 billion won, failing to reach deals with MBC and SBS.

Once the court rehabilitation process is initiated, the group will face a series of uphill tasks, including workforce restructuring, asset liquidation, and attracting new investment capital.

According to legal sources, the Seoul Bankruptcy Court assigned the corporate rehabilitation filings submitted by the Joongang Group affiliates and subsidiaries to the 2nd Rehabilitation Division, headed by Chief Judge Jung Joon-young. The court will determine whether to open rehabilitation proceedings after reviewing the financial data and documentation submitted by the petitioning companies. A decision on whether to initiate the corporate rehabilitation process is typically delivered within a month.

                                                                                                              Lee Ha-eun