Watcha, Once Valued at 300 Billion Won, Sold to KinoLights for 4.25 Billion Won

In late 2022, LG Uplus actively considered acquiring Watcha, and negotiations were underway. At the time, Watcha was valued at 78 billion won through external investment. LG Uplus offered an acquisition price of around 30 billion won, but conflicts of interest among Watcha's shareholders ultimately led to the collapse of the negotiations.

Journalist Lee Seong-bong explained the situation at the time, stating, "Discussions with LG Uplus were quite specific." However, the acquisition ultimately failed due to irreconcilable differences among shareholders, which exacerbated Watcha's financial difficulties.

Despite financial difficulties, Watcha showed positive results through efforts to improve operational efficiency. Operating losses, which amounted to 55.5 billion won in 2022, were significantly reduced to 1.9 billion won in 2024 and 1.4 billion won in 2025. Journalist Lee Seong-bong stated, "As I mentioned, operating losses were 55.5 billion won in 2022, but they decreased to 1.9 billion won in 2024 and 1.4 billion won last year in 2025."

However, despite improved operating losses, Watcha suffered from severe debt problems. Net losses reached 6 billion won, and interest expenses alone amounted to 5.2 billion won last year. As of the end of 2025, Watcha's total debt reached 160 billion won, while its cash holdings were only around 300 million won.

Watcha faced immense pressure as convertible bonds and other debts it had issued matured. Its financial situation further deteriorated due to continuous interest expenses and limitations in generating operating profit. In 2025, Int Ventures, which had invested 20 billion won, filed for corporate rehabilitation against Watcha.

Journalist Lee Seong-bong stated, "In 2025, Int Ventures, which had invested 20 billion won, filed for rehabilitation," indicating that Watcha ultimately received a decision to commence rehabilitation proceedings.

One of the main reasons for Watcha's repeated acquisition failures was the blind bidding process. Bidders had to submit prices without knowing what other competitors were offering, making it difficult to accurately determine the purchase price. Journalist Lee Seong-bong explained, "First, the bidding method was blind. It was done without knowing how much others would bid, and it was impossible to know exactly how much to bid."

Furthermore, the high price demands from creditors placed a significant burden on potential acquirers. Acquirers had to consider not only the acquisition price but also additional costs for employee succession and normalization after the acquisition, which reduced Watcha's attractiveness. These factors combined made it difficult for Watcha to find a buyer.

KinoLights began its business by providing movie and OTT information and a rating community service, offering convenience to users with its OTT-linked search service. Journalist Lee Seong-bong introduced KinoLights' business model by stating, "First, we need to understand what kind of company KinoLights is."

Subsequently, KinoLights expanded its business into foreign film import and distribution, seeking to diversify its revenue streams. Moreover, it strengthened its position in film distribution and screening by directly operating the KT&G Sangsangmadang Cinema in Hongdae.

KinoLights recorded 1.4 billion won in revenue and 1.8 billion won in operating losses in 2024, but its revenue nearly doubled to 2.8 billion won in 2025. Driven by this revenue growth, KinoLights successfully turned profitable, securing its financial soundness. Journalist Lee Seong-bong emphasized KinoLights' growth, stating, "In 2024, revenue was around 1.4 billion won, and operating loss was around 1.8 billion won. But last year, in 2025, revenue increased to 2.8 billion won, about double, and it turned profitable."

This performance is mainly attributed to the success of its film import and distribution business. By strengthening its content acquisition and distribution capabilities, it established a stable revenue base.

The biggest reason KinoLights re-decided to acquire Watcha was the resolution of price uncertainty. The court's assessment of Watcha's liquidation value at 4.2 billion won provided a clear price benchmark for the acquirer. Journalist Lee Seong-bong explained, "The biggest change was confirming that the price had come down to a level where we could calculate it, given that I had been saying the price was expensive during the transaction."

Additionally, Watcha's efforts to improve operational efficiency, leading to a rebound in paid subscribers and improved profitability, also strengthened KinoLights' willingness to acquire. The clarified price and improved financial indicators positively influenced the acquisition decision.

KinoLights has finalized its funding plan for the Watcha acquisition. External investment was essential for KinoLights, a smaller company, to acquire Watcha, and discussions with major investors are reportedly well advanced. Journalist Lee Seong-bong mentioned, "KinoLights, being a small company, needs external investment to acquire this, and discussions with investors have reportedly become more concrete," implying that the detailed funding was a key driver for the acquisition.

Watcha's final acquisition price of 4.25 billion won was based on the court's assessed liquidation value of 4.22 billion won. KinoLights was selected as the acquirer by offering 4.25 billion won, slightly higher than the court-determined liquidation value. Journalist Lee Seong-bong stated, "To be precise, Watcha's liquidation value was 4.22 billion won, and they were selected as the acquirer by bidding 4.25 billion won."

This price was finalized as no additional bidders emerged during the public auction conducted via the 'Stalking-horse' method. KinoLights was able to confirm the acquisition by offering an amount that exceeded the minimum value set by the court.

The sale of Watcha was conducted through a public bidding process, and it was announced in an economic journal. Journalist Lee Seong-bong stated, "This was also a public bid. It was announced in a print journal. It was not uploaded online, so it's hard to find." This bidding process was a 'stalking-horse' bid. A stalking-horse bid involves pre-selecting an acquirer and then waiting to see if other candidates offer better terms. In this bid, there were no other bidders, so KinoLights acquired Watcha unopposed.

Watcha's debt amounts to approximately 166 billion won, but since this acquisition is a 'rehabilitation M&A,' KinoLights is not fully assuming this debt. Journalist Lee Seong-bong explained, "This is a rehabilitation M&A. M&A during rehabilitation proceedings is different. The court adjusts the debt. It adjusts the debt, and if a new investor appears, it allows the company to restart."

Rehabilitation M&A is a system where the court adjusts existing debts and helps a company restart if a new investor emerges. Therefore, KinoLights is acquiring Watcha's core assets and business rights without the burden of its debts.

The 4.25 billion won paid by KinoLights for the acquisition of Watcha will not go to existing shareholders but will be used to repay creditors' debts. Journalist Lee Seong-bong stated, "The existing shareholders do not get the sale proceeds; instead, it goes to repay creditors, meaning debts."

Existing shareholders are expected to have their rights organized according to the rehabilitation plan, and KinoLights is expected to incorporate Watcha as a 100% subsidiary, securing management rights.

Even after debt adjustment through rehabilitation, KinoLights must separately repay 'public claims' remaining at Watcha post-acquisition. Public claims include unpaid taxes, employee retirement pensions, and already contracted content usage fees. Journalist Lee Seong-bong explained, "Public claims are included in the total claims. Public claims must be repaid separately. For example, there are unpaid taxes, retirement pensions for employees currently working at Watcha, and already contracted content — these are expenses that must be paid."

These public claims are classified as essential expenses that must be paid for the normal operation of the company.

There is a very high likelihood of employment succession for Watcha employees. It is highly probable that employment succession will be included in the acquisition terms, and Watcha itself is not expected to desire a structure that dismisses all existing employees. Journalist Lee Seong-bong emphasized, "There is a very high possibility that employment succession will be a condition of the deal. Watcha itself would not want a structure that lets all Watcha employees go. Watcha has already significantly reduced its workforce through restructuring. It has become efficient, and it wouldn't be good to further reduce it and alienate good talent within Watcha. So, the possibility of employment succession is very high."

Watcha has already streamlined its workforce through restructuring, and the remaining personnel are likely performing critical roles. Therefore, employee turnover could negatively impact not only the company atmosphere but also operational efficiency, leading to the expectation that KinoLights will retain existing personnel.

KinoLights is expected to expand its proprietary IP (intellectual property) distribution channels and diversify its revenue streams through the acquisition of Watcha. Currently, KinoLights generates revenue by acquiring and distributing film copyright IPs. Journalist Lee Seong-bong explained, "KinoLights is currently generating significant profits by acquiring and distributing film copyright IPs, as they are called these days. Acquiring Watcha will create an additional distribution channel. I will be able to distribute the IPs I've secured through the Watcha OTT."

Watcha will become a platform for KinoLights to service its acquired film content, enabling vertical integration from IP acquisition to distribution. This will strengthen KinoLights' business competitiveness and enhance the content competitiveness of Watcha's service, creating synergistic effects.

After the KinoLights acquisition, Watcha is expected to transition into a vertical OTT targeting cinephiles. The strategy is to focus on independent films, art-house films, and classic masterpieces to appeal to users with specific tastes. Journalist Lee Seong-bong predicted, "Watcha's character seems to be seen as appealing to movie enthusiasts, or cinephiles. So, it will likely focus more on independent films, art-house films, and old masterpieces. It seems it will go more vertical."

This vertical strategy, similar to 'Laftel,' a specialized anime OTT, is expected to help differentiate it from large OTTs like Netflix and build a unique fandom.

KinoLights is currently raising external investment to secure the 4.25 billion won acquisition price for Watcha and operating funds post-acquisition. As of the end of last year, KinoLights' cash assets were approximately 580 million won, and its total capital was about 1.4 billion won, insufficient to cover the acquisition price. Journalist Lee Seong-bong stated, "As of the end of last year, KinoLights had about 580 million won in cash. Total capital was only about 1.4 billion won. The acquisition price alone is 4.25 billion won, which they don't have. So, external investment is definitely needed."

External investment is currently in its final stages, through which KinoLights is expected to successfully complete the Watcha acquisition and establish a stable operational foundation.

There are four key indicators to judge the success of the Watcha acquisition. First, whether the court's approval process proceeds smoothly with the consent of more than two-thirds of creditors. Second, whether the monthly active users (MAU) of Watcha's service consistently shift to an upward trend. Third, whether Watcha's financial indicators can continue to show profit improvement after the acquisition is crucial. Journalist Lee Seong-bong emphasized, "Procedurally, whether two-thirds of creditors agree, whether the number of users continues to increase, and we must continue to monitor profitability. Fourth, it is important whether KinoLights' core business shakes after acquiring Watcha."

Finally, whether KinoLights' core business remains stable and maintains its existing competitiveness after the Watcha acquisition will be a key criterion for judgment. These four indicators will help assess whether the Watcha acquisition brings positive synergy to KinoLights and whether Watcha's service can successfully re-emerge.