Blackout Countdown... KT Skylife and Hyundai Home Shopping Negotiations Hit Snags

If No Negotiation by the 20th, Unprecedented Broadcast Suspension Crisis
Reduce Transmission Fees VS Present Sales Data Evidence
"Market Slump... Regulatory Easing Needed"

The unprecedented home shopping blackout (broadcast interruption) crisis is looming. KT Skylife and Hyundai Home Shopping are locked in a tense standoff as they fail to narrow their differences over transmission fees. If the two companies do not reach an agreement by the 20th, Hyundai Home Shopping broadcasts will be suspended on KT Skylife.

Hyundai Home Shopping announced that since its program transmission contract with KT Skylife expired on the 18th of last month, it will stop live broadcast transmission on KT Skylife's paid broadcasting service across all regions starting from the 20th.

[Image source=Pixabay]

The reason the two sides are confronting each other with the drastic measure of a blackout is the transmission fee. Home shopping companies argue that with the decline in TV viewership and fierce competition from mobile and live commerce platforms, it is difficult to bear transmission fees as before. Hyundai Home Shopping is reportedly requesting a reduction in transmission fees and to move its currently front-positioned channel number to a later position, as channels closer to terrestrial broadcasters command higher fees paid to paid broadcasting operators. KT Skylife, on the other hand, is demanding detailed data such as sales of broadcast products sold on mobile platforms according to the Ministry of Science and ICT's 'Home Shopping Broadcast Channel Usage Contract Guidelines' to accurately determine transmission fees. They also argue that changing the channel number is difficult since other broadcasting channel operators (PPs) are already occupying those positions.

KT Skylife stated, "Although the two companies have not yet narrowed their differences, we plan to make sincere efforts to reach a negotiation settlement." Hyundai Home Shopping said, "We are continuously coordinating opinions to find a consensus and are continuing negotiations."

The Ministry of Science and ICT, the supervising authority, said, "We will support the two companies to continue negotiations and reach an agreement." However, no request to form a fee verification consultative body has been received by the government yet. According to the Ministry's guidelines, such a consultative body is automatically formed if either party requests it, if no agreement is reached after the negotiation period, or if one party declares the end of negotiations. Industry insiders believe that if no agreement is reached until the last moment, the formation of the consultative body may begin before the 20th.

The transmission fee dispute between paid broadcasting and home shopping repeats every year. This year, conflicts occurred between D'Live and Lotte Home Shopping, LG HelloVision and CJ OnStyle, and Hyundai Home Shopping. In the past, during the boom of paid broadcasting and home shopping, increases in transmission fees were manageable, but growth has now stagnated.

According to the 'Broadcast Industry Survey' announced by the Korea Communications Commission in December last year, cable TV revenue in 2021 was 1.8547 trillion won, down 4.1% from the previous year. Satellite broadcasting revenue was 521 billion won, a 2.2% decrease. As market growth stalled, paid broadcasting relies heavily on home shopping transmission fees as a core revenue source. In the same year, home shopping transmission fees accounted for 27.5% of cable TV revenue, surpassing subscription fees (24%). For satellite broadcasting revenue, home shopping fees accounted for 27.1%. Although subscription fees still have a larger share (44.5%), they are declining annually. However, home shopping is also facing difficulties. During the same period, TV home shopping revenue fell 2.5% to 3.0171 trillion won. Profitability is deteriorating as consumers shift to other platforms.

Industry insiders believe that measures to revitalize the market are necessary. Unlike mobile and live commerce, which face few restrictions, home shopping is bound by various regulations such as product scheduling, so deregulation is needed to enable competition. A paid broadcasting industry official said, "The market needs to grow even slightly for operators to have room to compromise. The government must actively pursue deregulation."

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