Paid Broadcasting M&A Season 2 Opens... Is SKT the Variable?

[Asia Economy Reporter Seulgina Jo] SK Telecom (SKT), which has SK Broadband (SKB) as its subsidiary, has virtually completed the merger and acquisition (M&A) process with the second-largest cable TV operator, T-broad, shifting industry attention to 'M&A Season 2.' This is because SKT, equipped with cash mobilization capabilities, is highly likely to pursue additional M&A while KT, which has dominated the paid broadcasting market, is held back by the National Assembly. LG Uplus, which barely rose to second place in the industry by acquiring CJ Hello (now LG HelloVision), is also poised to continue its offensive.

◆ Three-Strong Structure in the Domestic Paid Broadcasting Market = According to related industries on the 21st, the Ministry of Science and ICT is expected to announce the final approval for the merger between SKB, a subsidiary of SKT, and T-broad as early as that day. For SKT, this resolves a long-standing wish to expand its paid market base after the Fair Trade Commission's failure to approve the CJ Hello acquisition in 2016, more than three years ago.

This M&A is significant in that it reorganized the domestic paid broadcasting market into a 'three-strong structure' consisting of KT and KT Skylife (market share 31.31%), LG Uplus and LG HelloVision (24.72%), and SKT (24.03%). What is noteworthy is that this three-strong structure is expected to further accelerate market reorganization. It is anticipated that KT, which has maintained the sole lead in the paid broadcasting market, as well as SKT and LG Uplus, which have grown through M&A, will engage in a full-scale battle for first place. An industry insider said, "In the media market, the number of subscribers equals competitiveness," hinting at M&A Season 2.

Immediately, the targets eyed by the three major telecommunications companies include cable TV operators with market shares of 6.09% for D'Live, 4.07% for Hyundai HCN, and 4.73% for CMB. D'Live, which KT also attempted to acquire last year, has secured more than 2 million subscribers in Seoul and the metropolitan area alone. It is a large-scale asset that can solidify the market leader position upon acquisition.

◆ SKT Likely to Lead Future M&A = However, KT, which should take aggressive steps under the new leadership, is still hampered by the National Assembly's discussions on the paid broadcasting combined regulation. The combined regulation bill, which prohibits a single operator from holding one-third (33%) of the total paid broadcasting subscribers across satellite broadcasting, cable TV, and IPTV, is still under discussion for reintroduction despite being sunsetted. Koo Hyun-mo, the next CEO of KT, who will officially take office in March, must watch the 21st National Assembly formed after the April general election before setting a strategy. An industry insider said, "Considering the possibility that the combined regulation might be mentioned again or that follow-up regulations might be at a similar level, KT faces significant concerns."

Ultimately, it is evaluated that the key to the upcoming M&A Season 2 lies with SKT, which also has cash mobilization power. SKT President Park Jung-ho recently responded to questions about additional M&A beyond T-broad by saying, "The ongoing merger must be completed first," while leaving ample possibility open. There is also analysis that SKT would not hesitate to engage in an M&A battle to compete with market leader KT, surpassing LG Uplus, which is within a 1 percentage point market share difference. LG Uplus has also recently prepared funds for additional investment by selling its PG division (electronic payment business).

This content was produced with the assistance of AI translation services.