"Despite New 'Raise vs Lower' Guidelines, Broadcast Fees Remain Uncertain"

Entered Additional Negotiations After Basic Negotiation Period
Opinions Clash Sharply, Delayed Compared to Previous Years
Guideline Shortcomings Including Compensation Verification Council

This year's TV transmission fee negotiations remain shrouded in uncertainty. Despite the government establishing the ‘Home Shopping Broadcasting Channel Usage Contract Guidelines’ to mediate transmission fees between home shopping companies and pay-TV operators, concerns persist regarding the effectiveness of the conflict resolution body, the ‘Fee Verification Council.’

According to industry sources on the 23rd, home shopping companies and pay-TV operators have been conducting additional negotiations on this year's TV transmission fees since the 17th. Under the revised guidelines effective from March 16, the home shopping industry and pay-TV operators were required to complete fee-related negotiations by the 16th of this month, five months after the previous contract's expiration date. However, due to differing views between the two sides, negotiations were not concluded within this period. If disagreements persist during the additional negotiation period, the matter will be referred to the government mediation body, the Fee Verification Council.

While disagreements between the home shopping industry and pay-TV operators occur annually, industry insiders commonly note that this year’s negotiation timeline is particularly delayed. A home shopping industry official stated, "In the past, negotiations with KT were usually completed around June or July, followed immediately by talks with SK and LG, but this year, many have yet to finish negotiations with KT," adding, "There are still numerous cable TV operators that have not even started negotiations."

Within the industry, the deepening divide between home shopping companies and pay-TV operators is attributed to deteriorating business conditions and declining performance. The combined operating profit of the four major home shopping companies (Lotte, CJ, GS, Hyundai) in the second quarter of this year was 56 billion KRW, a sharp 47.4% decrease compared to the same period last year. The home shopping industry claims that excessive IPTV (Internet Protocol TV) fees are the cause and is demanding fee reductions from IPTV operators. They are also requesting even larger fee cuts from cable TV operators, basing this on the fact that cable TV subscriber numbers are decreasing annually. TV transmission fees are set higher for broadcasters with more subscribers; while IPTV subscriber numbers are increasing, cable TV subscribers are on the decline.

However, IPTV and cable TV operators are taking a stance that makes it difficult to accept the home shopping industry's claims. A cable TV official explained, "Looking at actual data, the cumulative subscriber decline rate for cable TV over the past three years is about 3-4%, but the home shopping industry is demanding fee reductions of at least 10% and up to 20% annually."

Amid these foggy negotiations, criticism is also being raised that the government's new guidelines fall short of their original function to mediate conflicts. The core feature of the revised guidelines, the Fee Verification Council, is not explicitly detailed in the guidelines, leading to claims that it is a ‘half-measure’ solution. Although the Fee Verification Council was established to mediate prolonged disputes between the two parties, its role has been limited to reviewing the appropriateness of formulas and data presented by both sides, rather than fulfilling its initial mediation purpose, resulting in effectiveness concerns from the outset.

An industry insider said, "In the current situation, many parties will likely fail to conclude negotiations even during the additional negotiation period, raising doubts about how much the Fee Verification Council can actually assist in the negotiations."

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