SK Telecom, which has been speeding up the discovery of AI services, attracted music again to secure core contents of AI. It has only been four years since the sale of online entertainment service company `Loen Entertainment` (Melon). It is expected to be released as a stepping stone to strengthen the AI service business in the future.

SK Telecom has resumed its music contents business under cooperation with SM Entertainment, the largest entertainment company in Korea, and a mutual takeover stake in affiliates.

SK Telecom has released that it would pay KRW 25 billion and KRW 65 billion to SK C & C on July 17, a content producer of iRiver and SM Entertainment, respectively. SM Entertainment also decided to pay KRW 40 billion and KRW 7.3 billion in paid-in capital to iRiver and SM C & C, respectively, along with its affiliates. SKT and SM Entity will become the two largest shareholders of SM C & C and iRiver, respectively once the capital increase is completed.

SK Telecom re-acquired its music contents business based on takeover of SM Entertainment and its stake in affiliates. In 2013, SK Planet, SK Telecom subsidiary, sold Loan to private equity fund management company Affinity Partners, and Affinity Partners sold the yen back to Kakao in 2016.

SK Telecom CEO Park Jung-ho mentioned that the merger was driven by enthusiasm from immediately after he took office this year. SK Telecom expects the merger and acquisition of SK Telecom to expand its business after the merger of CJ HelloVision last year and the merger and acquisition of a group of M & A professionals took office.

In particular, SK Telecom is expected to launch `Big Deal` within this year, and it is being discussed how to put the voice of Korean entertainment stars such as SM Entertainment such as EXO and TVXQ in the AI speaker `Nugu (Who)` who is expanding users. It is an observation that they will use Hallyu content as a strategic weapon in AI service. It is expected that SK Telecom will already have a Korean-style star sound source for SM Entertainment in the audio book service that SK Telecom will show in the second half of this year. The AI speaker `Nugu (Who)`, which the company released last September, has sold 140,000 units so far.

Besides, iRiver and SM C & C will be able to integrate contents and ICT. IRiver will be merged with SM Entertainment (Mobile Communications), a subsidiary of SM Entertainment, and SM LDC (Life Design Co.) will be acquired as a wholly owned subsidiary with KRW 30 billion. SM MC is a mobile contents producer with 46% of SK Telecom and 54% of SM Entertainment. SM LDC is a SM Entertainment affiliate that sells star-related products.

First, it is expected that iRiver will pursue a business that incorporates Korean entertainment content into its digital products. iRiver is talking about how to make AI speakers with the voice of SHINee Idol group or earphones with the logo of EXO.

Especially, cooperation with SM Entertainment is expected to contribute to strengthening iRiver`s presence in overseas markets such as China and Southeast Asia through the launch of K-pop related products.

It is expected that the combination of ICT and Hallyu content such as AI technology owned by SK Telecom will also decrease. For instance, users can play Exo songs with voice only from Astell&Kern headset with AI secretary, and participate in 360 degree virtual reality (VR) live fan meeting of TVXQ through mobile TV oksusu. SK Telecom is expected to be able to do third-party business such as tourism and shopping for Hallyu fans in the case of the first content business and second wave specialization business are activated in cooperation with SM Entertainment. The merger ratio between iRiver and SM MC is 1, 1.6041745, and the final stake of the merged entity will be 46% for SK Telecom and 20.6% for SM Entertainment. SM C & C plans to establish a stable profit base with 100% subsidiary of SK Planet, a subsidiary of SK Telecom. After the split of SK Planet, SM C & C holds 32.8% and 23.4%, respectively. SM Entertainment plans to acquire SK Planet advertising business and create an advertising business model that benchmarked Dentsu Inc, Japan`s largest integrated advertising agency. Dentsu is participating in the production and distribution of content by receiving pre-paid advertisers.

SK Telecom stated, "This investment is meaningful as ICT and the strongest player in content have joined forces."



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