[Comprehensive] "Can't watch tvN on U+ Mobile TV" CJ ENM demands 2.7 times higher fees... Ultimately stops content distribution

[Asia Economy Reporter Joesulgina] As of midnight on the 12th, LG Uplus's online video service (OTT) 'LGU+ Mobile TV' stopped providing live broadcasts of 10 CJ ENM-affiliated channels, including tvN, Mnet, and Tooniverse.

The broadcast suspension resulted from LG Uplus and CJ ENM failing to reach an agreement by the deadline the previous night amid conflicts over content fees. The government has decided to investigate whether any unfair practices or legal violations, such as user inconvenience or infringement of viewing rights, occurred during the negotiation process between the two companies.

According to industry sources, CJ ENM halted the transmission of its channels on U+ Mobile TV starting at midnight. The affected channels include tvN, tvN Story, O tvN, Olive, Mnet, Tooniverse, and four others, totaling 10 channels. LG Uplus also announced this on U+ Mobile TV. However, video-on-demand (VOD) content, which requires separate payment, remains accessible.

◆ Fee Negotiations Fail... Ultimately, Content Transmission Suspended

This broadcast suspension was largely anticipated. CJ ENM had consistently stated that it would demand a triple-digit rate increase to receive fair compensation for its content and would stop supplying content if the demand was not met.

Until now, CJ ENM had negotiated content fees linked to IPTV services, but starting this year, it separately demanded fee increases for IPTV-affiliated OTT platforms. Notably, it reportedly requested a tenfold increase from KT and a two- to threefold increase from LG Uplus, sparking controversy. Currently, OTT platforms that provide CJ ENM channels for live broadcasts include CJ ENM's own TVING, LG Uplus's U+ Mobile TV, and KT's Seezn.

LG Uplus and KT have argued that their OTT services are additional services derived from IPTV with low revenue contributions, and that CJ ENM's excessive rate hikes should be discussed in conjunction with paid broadcasting program contracts as before. Conversely, CJ ENM has insisted on separate contracts, citing the changed status and scale of OTT platforms. Regarding the rate increases, CJ ENM defended its demands as appropriate given channel influence, rising production costs, and the scale of content investment.

Source: LG Uplus

The content fee CJ ENM demanded from LG Uplus for U+ Mobile TV this time was confirmed to be 2.7 times higher than the previous year. LG Uplus stated, "The amount is unreasonable," adding, "We repeatedly proposed double-digit increases to reach a smooth resolution, but CJ ENM insisted on a steep 175% increase compared to the previous year," explaining the breakdown of negotiations. The fee increases in 2019 and 2020 were 9% and 24%, respectively. Considering that typical increases between platforms and major PP (program providers) are within 10%, CJ ENM's actions can be criticized as holding users hostage.

An LG Uplus official said, "We requested reasonable proposals from CJ ENM until just before the suspension, but there were no additional offers, and the suspension notice was given that afternoon," adding, "Since CJ ENM's excessive fee increase demand caused the negotiation breakdown, CJ ENM needs to take responsible actions." This implies that CJ ENM is responsible for the inconvenience caused to users.

In response, a CJ ENM representative said, "There has not been a proper fee payment negotiation so far," and argued, "Since LGU+ Mobile TV is an OTT similar to Netflix, Wavve, and TVING, it requires a separate transmission contract and fee payment, not a mere add-on to IPTV."

◆ KT Seezn Likely to Follow with Broadcast Suspension... KCC to Investigate "Unfair Practices and Legal Violations"

Following LG Uplus, it is expected that KT Seezn will also suspend live broadcasts of CJ ENM channels soon. KT has not yet received a supply suspension notice. However, KT also finds CJ ENM's demands excessive and unacceptable, so a similar situation is anticipated on KT Seezn.

Some suggest that CJ ENM prioritized notifying the suspension on U+ Mobile TV, which is not subject to broadcasting law, to gain leverage in negotiations over IPTV program fees with telecom companies. There is also analysis that CJ ENM aims to secure a large number of subscribers by exclusively providing content to its own OTT, TVING.

Recently, CJ ENM and the three IPTV providers (KT, SK Broadband, LG Uplus) have been in conflict over content fee levels not only for mobile but also for IPTV overall. Despite mediation by the Ministry of Science and ICT last month, CJ ENM publicly criticized the IPTV industry, stating "The three IPTV companies are stingy in paying fees," while the IPTV Association retorted, "(CJ ENM is) full of arrogance and greed," showing escalating tensions between the parties.

The Korea Communications Commission (KCC) stated regarding this incident, "We will comprehensively review whether there were any unfair practices or legal violations." They intend to monitor to prevent infringement of viewers' rights and negative impacts on the media industry during the autonomous negotiation process between operators.

The KCC issued a statement late the previous night, saying, "Determining fees for broadcast channels is a matter of voluntary agreement between the parties, but if live channels are suspended, it is expected to cause inconvenience to the public who have been watching them," and "We plan to work with the Ministry of Science and ICT to comprehensively examine user inconvenience caused by CJ ENM channel supply suspension, unfair practices, and legal violations during negotiations between operators."

They added, "While voluntary negotiations between operators should continue, the KCC will strive to ensure that such negotiations do not infringe on the public's viewing rights."

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