KT affiliate Skylife is recording its lowest price since going public. As the online video service (OTT) market rapidly grows, the paid broadcasting business itself is heading toward decline, causing stock prices to plummet.
To survive by changing the structure of corporations, investments in new growth engines, such as content, must be strengthened. However, the current management is deciding on high dividends despite operating losses for the benefit of major shareholders.
Skylife's stock price is trading in the 4,300 won range as of the 20th. This is the lowest level since its listing in 2011.
Over the past 12 years, Skylife's stock price has steadily declined. The growth of various OTT services, including Netflix, Disney+, and Coupang Play, has reflected the situation where paid broadcasting service providers are losing their foothold. Ahn Jae-min, a researcher at NH Investment & Securities, noted that "the structural decline in subscribers for satellite broadcasting and cable television continues, and the service revenue, a cash-cow business, is also continually decreasing," adding, "As the influence of OTT expands, the sluggishness of the domestic broadcasting advertising market is serious, making losses unavoidable in the meantime."
The company is striving to secure new growth engines, such as enhancing content competitiveness, but there are limitations in producing high-quality content amidst stagnation in the main revenue source, which is the number of broadcasting subscribers.
Particularly, concerns are growing as the company decided to maintain its dividend at the same level as before despite incurring a loss for the first time since going public last year. Last year, Skylife recorded an operating loss of 1.1 billion won on a consolidated basis, and the net loss reached 156 billion won, yet decided on a dividend of 350 won per share, the same as the previous year. The total dividend amount was 16.5 billion won. The largest shareholder of Skylife is KT, which holds a 50.3% equity stake.
Although the dividend level has increased, the continuous decline in stock price reduces the investment attractiveness. Skylife's current dividend yield is in the 8% range. Securities firms report that Skylife is likely to maintain a dividend policy similar to last year. However, there are significant concerns regarding the stock price decline when deciding to invest based solely on high dividends. Even if dividends are received, selling at a lower price than the purchase price will decrease the overall investment return.
The CEO risk, which has surfaced ahead of the early presidential election, also overlaps. Choi Young-beom, the CEO leading Skylife, served as the first chief of public relations during the Yoon Suk-yeol administration.
Skylife has repeatedly faced controversies regarding parachute appointments as figures associated with the regime have been elected as presidents. Since CEO Choi is classified as a former government official, it is anticipated that disputes surrounding his position will continue both inside and outside the company following the presidential election. This signifies an environment where management may find it difficult to solely focus on improving the company's structure and enhancing business competitiveness.
Securities firms are presenting Skylife's target stock price in the 5,000 won range. However, they advise that in order for the stock price to rebound, the company must shift its business structure from its primary sector (paid broadcasting), which has become a declining industry, to a content-centered approach.
There are sectors achieving notable results. The ENA channel, which broadcasts Skylife's original content, is representative. Programs like "I Am SOLO" and "Global Travel with the Earth" are gaining popularity, indicating that Skylife's content production capability is likely to be reassessed. Jeong Ji-soo, a researcher at MERITZ Securities, projected that "enhancing the portfolio centered around entertainment and strengthening channel competitiveness could lead to growth in advertising revenue and improved profitability."