Dilemma for Cable TV... Difficulties in Negotiating Home Shopping Transmission Fees

Cable TV Sales Account for 40%
Rising Transmission Fee Burden in Home Shopping
IPTV Concentration... Cable TV Declining

Negotiation Difficulties Over Appropriate Fees
Need to Revise Contract Guidelines

[Asia Economy Reporter Cha Min-young] "We cannot pay the transmission fees. Please just remove our channel."

Some home shopping companies, including Hyundai Home Shopping, are refusing to pay transmission fees to cable TV providers whose subscriber numbers have sharply declined. The cable TV industry is in a state of emergency as 40% of their total revenue comes from home shopping transmission fees.

According to the broadcasting industry on the 29th, comprehensive wired broadcasting (SO) operators such as D'Live and HCN are facing difficulties in negotiations over transmission fees with home shopping companies like Hyundai Home Shopping. The "Home Shopping Broadcasting Channel Usage Contract Guidelines" stipulate that home shopping broadcasters and pay-TV operators must conclude contracts within 180 days from the desired contract date or contract termination date, but negotiations have stalled as stakeholders have failed to find a compromise.

The slow progress in negotiations is due to differing expectations regarding appropriate fees. A cable TV industry official said, "The home shopping industry has been reducing the transmission fees paid to cable TV operators by 30-50% annually compared to the previous year, but recently some hardline companies have even claimed 'non-payment.' In some cases, cable TV providers in regions with poor sales have been asked to stop transmission altogether."

Meanwhile, the home shopping industry complains that the amount paid for TV transmission fees has been increasing every year. This is because while cable TV subscribers are decreasing in the pay-TV market, IPTV subscribers are increasing, leading to higher fees paid to IPTV providers. The TV Home Shopping Association disclosed that the transmission fees paid by seven domestic TV home shopping companies exceeded 1 trillion won in 2014. The fees were 1.5497 trillion won in 2019, 1.675 trillion won in 2020, and 1.8074 trillion won last year. Home shopping companies argue that fee reductions are inevitable as the number of cable TV subscribers decreases. According to the Ministry of Science and ICT, the number of SO subscribers was about 12.93 million at the end of last year, down 300,000 from the previous year.

The broadcasting industry points out that the government urgently needs to establish comprehensive guidelines on transmission fees, including retransmission fees for terrestrial broadcasters. Terrestrial broadcasters and comprehensive programming providers have been raising retransmission fees annually, citing increased content production costs. Pay-TV operators cover the increased retransmission fees through transmission fees paid by home shopping companies. Ultimately, the fees paid by pay-TV platforms to individual broadcasting channel operators (PPs) at the bottom of the food chain may decrease, exacerbating the rich-get-richer, poor-get-poorer phenomenon.

According to current guidelines, the Minister of Science and ICT can form an expert committee to verify the appropriateness of home shopping channel provision or transmission fees upon request by home shopping broadcasters or pay-TV operators, or if deemed necessary. However, since this operates on a conditional 'upon request' basis, there is criticism that it is ineffective for the weaker party with less negotiating power.

The government is gathering industry opinions to revise the home shopping broadcasting channel usage contract guidelines. Since the original guidelines were established in 2019, there is a consensus that revisions are needed after four years. A Ministry of Science and ICT official said, "We plan to revise the guidelines to encourage fair competition and negotiations among operators. While we do not look into individual negotiation situations, we are listening to opinions from each operator."

A home shopping industry official said, "This is an issue that requires looking at the entire relationship chain from home shopping to pay-TV industry to broadcasters, not just bilateral negotiations. Since cable TV also has a unique role in revitalizing local economies, if the government values this, it should actively mediate rather than simply leaving it to the market."

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