Merger of Korean Cinema Chains Lotte and Megabox Collapses

The planned merger of Lotte Cinema and Megabox, South Korea’s second- and third-largest multiplex chains, has collapsed, ending a 14-month attempt to combine the two companies into the country’s biggest theatrical exhibitor.

Lotte Shopping, the retail conglomerate that controls Lotte Cinema operator Lotte Cultureworks, disclosed in a regulatory filing that its memorandum of understanding with Megabox parent Contentree JoongAng was terminated on June 30. Signed in May 2025, the preliminary agreement was extended three times — in September, December and April — without ever becoming a binding deal.

Neither company gave a reason for walking away, but there was little uncertainty in the Korean industry about the cause. Megabox’s corporate parent is in 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 maturing loans.

The filings capped a liquidity crunch brought on in part by the group’s costly bet on exclusive Olympic and World Cup broadcast rights. 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 unraveling finances as the central reason the merger died, according to various local outlets, such as The Korea Herald. According to earlier industry chatter, negotiations between the two companies over the past 14 months had reached various sticking points — over governance, the equity split and a search for outside investment.

The underlying industry realities also appear to have shifted in Lotte’s favor over the long period of discussion. Lotte Cultureworks swung to an operating profit in the first quarter, according to a May regulatory filing — making it the only one of Korea’s three major multiplexes to make money in the domestic theatrical business lately — while Megabox stayed in the red. A recovering Lotte likely had little incentive to absorb a struggling partner’s liabilities. Lotte is now said to be planning upgrades to its own business instead, refitting its theaters with recliner seating, upgraded projection and sound-specialized auditoriums, while also expanding its content business.

Megabox’s future, meanwhile, looks rocky. Plus M Entertainment, the group’s film investment and distribution label, will release Hope, cult director Na Hong-jin’s buzzy alien-invasion spectacle, in Korean theaters on July 15. By the director’s own account the most expensive film ever made in Korea, the Cannes competition title has pre-sold to some 200 territories — a record for a Korean feature — and a strong domestic run could give the struggling group a badly needed win.

When the Lotte-Megabox merger was unveiled in May 2025, it was widely described as necessary consolidation for a business in structural decline. The deal was proposed during the Korean box office’s post-pandemic low point, with theater admissions falling nearly 14 percent in 2025 to 106.1 million (attendance is the Korean Film Council’s preferred performance metric). Worse still, theatrical ticket revenue for Korean films that year plummeted 39 percent.

Combining Lotte Cinema’s 915 screens with Megabox’s 767 would have lifted the joint venture past market leader CJ CGV, which operates 1,346 screens, according to Korean Film Council data, while also uniting the groups’ beleagured distribution arms, Lotte Entertainment and Plus M. All three chains have since shuttered some underperforming locations.

Much like in North America, however, the Korean market has staged an encouraging turnaround in 2026 — first-quarter attendance jumped 53 percent thanks to The King’s Warden, now the highest-grossing Korean film of all time, with Yeon Sang-ho’s Cannes-launched zombie thriller Colony extending the momentum into May with a strong run. Overall, though, the business remains well below its pre-pandemic high point.