A planned merger between Lotte Cinema and Megabox, South Korea’s second- and third-largest cinema chains, has collapsed, ending a 14-month attempt to merge the two companies into the country’s largest theater exhibitor.
Lotte Shopping, the retail group that controls Lotte Cinema’s operator, Lotte Cultureworks, revealed in a regulatory filing that its memorandum of understanding with Megabox’s parent company, Contentree JoongAng, was terminated on June 30. The initial agreement was signed in May 2025, and was extended three times – in September, December and April – without ever becoming a binding deal.
Neither company gave a reason for the withdrawal, but there was little uncertainty in the Korean industry about the reason. Megabox’s parent company is facing an open financial crisis: JoongAng Group, the media conglomerate behind the chain, placed five of its units — holding company JoongAng Holdings, Contentree JoongAng, Megabox JoongAng, JoongAng P&I, and broadcaster JTBC — into court-supervised rehabilitation in mid-June, days after JTBC defaulted on 20.6 billion won ($13.6 million) in outstanding loans.
The deposits capped a liquidity crisis caused in part by the group’s costly bet on exclusive broadcast rights to the Olympic Games and World Cup. The Seoul Bankruptcy Court has frozen the companies’ assets and is expected to decide by mid-July whether to formally open restructuring proceedings. Industry observers see the group’s financial collapse as the main reason behind canceling the merger, according to various local media outlets, such as The Korea Herald. According to previous industry chatter, negotiations between the two companies over the past 14 months have reached various sticking points – over governance, stock splits, and the search for outside investment.
It also appears that basic industry realities have shifted in Lotte’s favor over a long period of discussion. Lotte Cultureworks swung to an operating profit in the first quarter, according to a regulatory filing in May — making it the only one of Korea’s three major cinemas to turn a profit in its domestic theatrical business recently — while Megabox remained in the red. A recovering Lotte would likely have little incentive to absorb the defaulting partner’s liabilities. Lotte is now said to be planning upgrades to its own company instead, refitting its theaters with reclining seats, updated projection and specialist audio halls, while also expanding its content business.
Meanwhile, Megabox’s future looks difficult. The release will be made by Plus M Entertainment, the group’s film investment and distribution company He hopesa lurid alien invasion spectacle directed by Na Hong-jin, hits Korean theaters on July 15. By the director’s own account, it is the most expensive film ever made in Korea, the Cannes title has already been sold to about 200 territories – a record for a Korean film – and strong domestic success could give the struggling group a much-needed win.
When the Lotte-Megabox merger was revealed in May 2025, it was widely described as a necessary consolidation for a company in structural decline. The deal was proposed during the Korean box office’s post-pandemic lows, with theater admissions down nearly 14 percent in 2025 to 106.1 million (attendance is the Korean Film Council’s preferred performance metric). Worse still, theatrical ticket revenues for Korean films that year fell by 39%.
The combination of Lotte Cinema’s 915 screens and Megabox’s 767 screens would have lifted the joint venture beyond market leader CJ CGV, which operates 1,346 screens, according to Korea Film Council data, while also uniting the groups’ beleaguered distribution arms, Lotte Entertainment and Plus M. The three chains have since closed some underperforming locations.
However, as in North America, the Korean market saw an encouraging turnaround in 2026 – with first-quarter attendance jumping 53 percent thanks to King’s guardis now the highest-grossing Korean film of all time, with Yoon Sang Ho’s zombie thriller launching at Cannes. colony Extending momentum into May with a strong start. Overall, though, business remains well below its pre-pandemic high.
