South Korea’s cinema industry has suffered a major shake-up after the long-planned merger between Lotte Cinema and Megabox officially fell through. The deal, which had been in the works for over a year, would have united the country’s second and third largest multiplex chains, creating South Korea’s biggest cinema operator. According to a regulatory filing by Lotte Shopping, the memorandum of understanding signed with Megabox parent Contentree JoongAng was terminated on June 30, bringing an end to negotiations that first began in May 2025. The agreement had already been extended three times but never progressed into a final binding deal.
While neither company publicly explained why talks ended, the reason appears to be clear. Megabox’s parent company, JoongAng Group, is currently facing a severe financial crisis. In June, several of the conglomerate’s key businesses, including Contentree JoongAng, Megabox JoongAng and broadcaster JTBC, entered court-supervised rehabilitation after JTBC defaulted on loans worth 20.6 billion won (around $13.6 million). The Seoul Bankruptcy Court is expected to decide whether formal restructuring proceedings will begin later this month.
Industry insiders have also pointed to disagreements over governance, ownership structure and outside investment during the lengthy negotiations. However, Megabox’s worsening financial position ultimately appears to have been the biggest obstacle.
The collapse of the merger also comes at a time when Lotte Cinema has started performing better on its own. Lotte Cultureworks recently returned to operating profit, making it the only one of South Korea’s three major cinema chains to post a profit in the domestic theatrical business this year. Instead of taking on Megabox’s financial liabilities, Lotte is now expected to focus on upgrading its own theatres with recliner seating, enhanced projection systems, premium sound auditoriums and further expansion of its content business.
Megabox, meanwhile, is hoping that an upcoming blockbuster can provide a much-needed boost. Plus M Entertainment will release director Na Hong-jin’s highly anticipated sci-fi thriller Hope on July 15. Reportedly the most expensive Korean film ever produced, the movie has already secured distribution in around 200 international territories, setting a new record for a Korean feature.
When the merger was first announced, South Korea’s theatrical business was still struggling to recover from the pandemic, with cinema attendance and revenue experiencing significant declines. Since then, however, the market has shown encouraging signs of recovery. Strong performances from local hits like The King’s Warden and Yeon Sang-ho’s zombie thriller Colony have helped bring audiences back to theatres, even though overall attendance remains below pre-pandemic levels.
Although the proposed merger would have reshaped South Korea’s exhibition landscape, both companies will now move forward independently as the country’s cinema industry continues its slow but promising recovery.