It might not be a household name in the States, but South Korean conglomerate CJ Group has been establishing a beachhead in Los Angeles, where it has inked film distribution deals and opened a movie theater, among other moves.
But as Korea’s largest media conglomerate readies for further U.S. expansion, it has become embroiled in an ugly fight stemming from its purchase of an American television station.
The fight pits Seoul-based CJ against the co-founders of ImaginAsian TV. CJ bought a majority stake in the company in 2009 and moved it to Culver City, rechristening it Mnet America Inc.
The station’s founders, still minority shareholders, are contesting CJ’s programming decisions, saying that it has strayed from broader Asian-American fare toward Korean-language shows. They also accuse CJ of low-balling them in bids to buy out additional shares and misleading regulators about its programming plans.
The infighting has not gone unnoticed.
“If it isn’t resolved quickly, I think it will potentially be a problem for them,” said Bill Imada, chairman of West Hollywood marketing company IW Group Inc. “The competitors are already calling and telling us there are problems, and nobody wants to deal with a company in strife.”
The dispute comes as competition heats up for Asian-American viewers, not only the fastest growing racial group in the country but the fastest growing TV audience, according to Nielsen Co. Cable companies are acquiring channels marketed to the demographic, with Comcast Corp. picking up Mnet last year and Cox Communications striking a deal with another Asian-American channel, Redwood City’s Myx TV.
Seeing opportunities for growth, CJ, which has its American subsidiary, CJ America Inc., headquartered on Wilshire Boulevard in Koreatown, has made other forays. Its L.A. film unit has moved to distribute more Korean films in the United States and in 2009 the company opened a four-screen movie theater, CGV Cinemas, in Koreatown.
Last year, CJ opened a laboratory next to Grauman’s Chinese Theater in Hollywood demonstrating its “4D” movie theater technology, which features moving seats and nozzles that spray odors, mist and bubbles. It wants to open 200 4D theaters in the United States.
“CJ is active in seeking a greater presence in the U.S.,” said Randy Lee, entertainment and content project manager at L.A.’s Korean Trade-Investment Promotion Agency. “We’re seeing more activity going on than ever.”
CJ is one of a handful of powerful family-controlled conglomerates in Korea known as chaebols, having split off from another chaebol, Samsung Group, in the 1990s. Outside of entertainment, the company has recently opened restaurants and bakeries in Los Angeles County, also where its American subsidiaries for its food products and global supply-chain companies are headquartered.
The company declined to comment for this article.
Early success
Brothers Michael Hong and Augustine Hong founded ImaginAsian in New York in 2003 with $300,000, most of it from Augustine Hong, a money manager.
One of the first networks devoted to Asian-American programming, ImaginAsian made a big splash in its first few years, getting picked up by Time Warner Cable, Cox and Comcast, and garnering notices in the press. The company also opened movie theaters in several territories, including downtown Los Angeles.
The channel, which featured original sitcoms with Asian-American characters, Korean-produced soap operas and Japanese anime cartoons, was part of an early wave aimed at Asian-Americans that included Comcast’s AZN network, and MTV’s MTV Chi and MTV K.
But the concept struggled. The MTV channels folded in 2007, with AZN soon following suit. ImaginAsian had trouble turning a profit, burning through tens of millions of dollars in private investor money, and began looking for a buyer.
CJ seemed like a good match. The company had deep pockets, experience in the entertainment industry and a desire to expand into the U.S. market. In Korea, it owns several TV stations and music labels, and is the country’s largest film distributor and largest movie theater owner. It’s also a major player in food services, biotech, global supply-chain logistics, pharmaceuticals and home shopping. Last year, it reported more than $11 billion in sales.
After relaunching ImaginAsian as Mnet America in Culver City, the company struck a deal to be carried by Comcast last year. It was part of an effort by Comcast to add more minority programming due to pressure from lawmakers stemming from Comcast’s acquisition of media giant NBCUniversal.
But this month, the Wong brothers and a third founder, Nae Young Chung, filed a lawsuit against CJ in Los Angeles Superior Court. It seeks at least $9.8 million in damages, claiming CJ is manipulating valuations of the company so that it can pay the founders less for more shares. It also accuses CJ of “forcing ImaginAsian to devote an increasing percentage of its programming to Korean language programs produced in Korea and licensed from CJ or its affiliates … for the purpose of benefiting CJ and its affiliates.”
The lawsuit further claims CJ misled politicians and Asian-American activist groups that it would stay focused on broad Asian-American programming in order to get picked up by Comcast.
The plaintiffs declined comment through their attorney.
Crossing over
Eric Nakamura, owner of Giant Robot, an online Asian pop culture publication based in West Los Angeles, said that targeting only Asian-American audiences is a minor play for a company as large as CJ.
“I would think they would want to capture not just an Asian-American audience but a crossover audience,” he said. “They want K-pop to be everywhere, not just among Asian-Americans, and they want Korean directors to be Hollywood directors.”
So, though it may sound counterintuitive, IW’s Imada said that it made sense for Mnet America to steer toward programming related to Korean popular culture because it offers the greatest chance of finding a crossover audience.
“Almost all the latest trends I’m seeing coming out of Asia are coming out of Korea,” he said. “Someone who knows how to tap that properly is going to do really well.”
Both Nakamura and Imada said that CJ continues to make moves with Mnet America. Imada said he had met with Mnet last year to discuss its interest in getting corporate advertisers, while Nakamura was asked to pitch a sitcom pilot to the network earlier this year, although talks petered out.
Mnet America, meanwhile, is only one piece of CJ’s media strategy in the United States. Korean pop music, movies and TV shows, all of which CJ has a hand in, are increasingly popular in other Asian countries and have had some crossover success in the U.S. as well. Lee, of the Korean trade agency, said that CJ has also been looking to organize events that promote Korean entertainers.
Whether any one venture is successful or not, the risk isn’t huge, Nakamura said.
“This is probably all cheap stuff compared to what they’re putting into films in Korea,” he said. “This could all be pocket change for them.”
