China’s Sohu Goes Gangnam Style, Wants to Acquire Korean Film Studio?

China’s video-streaming sites rely on big-name TV serials to bring in lots of young users. So the rumor that the country’s third-biggest video site, Sohu TV, is negotiating to buy a major South Korean film studio is actually a lot more plausible than it appears at first glance. According to an industry source cited by several local tech blogs, Sohu (NASDAQ:SOHU) is keen to acquire Korea’s CJ Entertainment (aka: CJ E&M), which is the largest entertainment company in the nation, and a subsidiary of the massive Korean chaebol CJ Group.

The Sohu TV site already has plenty of Korean drama series. Click to enlarge.

CJ E&M produces 60 to 70 percent of all South Korean films each year, and has rights to about 5,000 movies and TV series. All that would be a bounty for Sohu TV in the pricey battle for licensed content in which it’s up against the market leaders, the newly merged Youku and Tudou (NYSE:YOKU), and some smaller rivals like Baidu’s iQiyi site. In fact, inflated costs for such content pushed Sohu to form an alliance with two smaller rivals to prevent bidding wars for popular serials. Korean romantic drama series have been especially popular in China for several years.

In addition to the impressive CJ E&M library, the Korean firm is also a shareholder in DreamWorks, the studio co-founded by Steven Spielberg, and has regional rights to a good many DreamWorks films.

If this rumor proves correct, the deal will be announced later this month. It’s not clear how much such a major acquisition would cost. Filmbiz.asia suggests that the CJ E&M subsidiary brought in ₩1 trillion (US$887 million) in revenue in 2010, and is targeting ₩3.11 trillion ($2.76 billion) by 2015.

[Source: Marbridge Daily]