Home Shopping Struggles with Paid Broadcasting Transmission Fee Increase

Failed Agreement on Transmission Fee Increase, NS Home Shopping Drops from 4th to 37th Place
Paid Broadcasting Restructuring, Will Transmission Fee Rise Become a Reality?

[Asia Economy Reporter Lim Hye-seon] Paid broadcasting companies, which were divided into IPTV and comprehensive cable broadcasting (SO) companies, are being absorbed and merged around IPTV, causing home shopping transmission fees to rise sharply. As the number of operators decreases, the bargaining power of paid broadcasting companies has increased, raising concerns that the side effect of a transmission fee bomb is becoming a reality.

Pay More to Keep Channel Numbers

According to the distribution industry on the 7th, as D'Live changes channels from the 10th through its regular reorganization in 2020, NS Home Shopping, which failed to reach an agreement on transmission fees, will leave channel 4 and move to channel 37. The Taekwang Group's data home shopping channel Shopping NT will take the number 4 spot. Channel 22, previously used by Shopping NT, will be occupied by Shinsegae Shopping. Hyundai Home Shopping Plus Shop will take the place of Shinsegae Shopping’s existing channel 25.

A home shopping official explained, "As transmission fees account for a large portion of the revenue structure of paid broadcasting operators, costs continue to rise," adding, "Operators who did not accept the requested transmission fee increase are being pushed back to later channels."

D'Live demanded an increase in transmission fees from home shopping companies starting early this year. Typically, home shopping companies prefer channels within the first 10 to 20 numbers. The slots between terrestrial broadcasters and major general programming channels are considered prime channel positions, commanding the highest transmission fees. Channels in the 30s receive significantly less attention.

NS Home Shopping recently applied for dispute mediation with the Korea Communications Commission and reached an agreement with D'Live. It is known that NS Home Shopping’s channel will be changed to the 20s in the first half of next year.

The increase in transmission fees for data home shopping companies is reported to be even greater. Since the performance of data home shopping companies improved this year, they argue that fees should be raised. Existing data home shopping companies have been paying lower transmission fees than general home shopping companies.

Home Shopping: "Unilateral Transmission Fee Increases Are Unfair"

Although they had no choice but to agree, home shopping company officials unanimously stated that D'Live’s unilateral increase demands are unfair. The issue of transmission fees in the paid broadcasting industry is not new. Internet multimedia broadcasters have raised transmission fees by 25-30% annually. Last year, 12 companies, including 7 home shopping companies and 5 T-commerce companies, paid 49.6% of their sales as transmission fees. This year, the proportion is expected to exceed 50%. A home shopping official pointed out, "The only thing we can rely on is dispute mediation, but even if we apply for dispute mediation with the Korea Communications Commission, it has no binding force and is of no help."

On the 4th, Kim Young-sik, a member of the People Power Party, introduced a bill to amend the Broadcasting Act to prevent paid broadcasting operators from exceeding the standards and limits set by presidential decree when determining home shopping transmission fees. The purpose of the bill is to introduce a cap system as concerns grow that transmission fees may be excessively increased due to the increased bargaining power of paid broadcasting operators during negotiations with home shopping operators.

Rep. Kim Young-sik said, "The broadcasting media environment is rapidly changing, but laws and systems are not keeping up," adding, "New issues are arising due to recent mergers and acquisitions and vertical integration in the paid broadcasting market, and we are preparing follow-up legislation to create a virtuous cycle structure in the paid broadcasting market."

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