[Alpha Biz= Ellie Kim] Korea Ratings announced on May 8 that it has downgraded the commercial paper and short-term bond ratings of ContentreeJoongAng and Megabox JoongAng from A3- to B+.

The downgrade reflects continued operating losses at Megabox, which have persisted for six years due to sluggish recovery in domestic movie theater demand. Korea Ratings noted that weak earnings and accumulated losses have significantly undermined financial stability.

Senior analyst Chae Sun-young said that while the theater industry has largely normalized following COVID-19, demand recovery remains constrained by factors such as the proliferation of content platforms, shifting consumption patterns, a lack of compelling titles, and broader economic slowdown.

Although the box office success of “The Man Who Lives with the King” in the first quarter of 2026 may provide a temporary boost, the agency expects limited improvement in profitability due to the absence of follow-up hits, high fixed costs, and rising financing expenses.

ContentreeJoongAng’s rating was also lowered as the credit profiles of its key subsidiaries—including SLL JoongAng and Megabox JoongAng—have weakened. Analyst Kwon Hyuk-min cited deteriorating financial structures at subsidiaries and increased financial burden from intra-group lending.

He added that delays in securing external investment have heightened liquidity risks, and that the holding company’s structural subordination has deepened amid growing funding needs and weakening subsidiary performance.

 

 

 

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