Cable TV Operating Profit Plummets, but Terrestrial Broadcast Retransmission Fees Triple Increase

Cable TV Operating Profit Declines by 8.9 Percentage Points Over 8 Years

Although the operating profit of cable TV has sharply declined, retransmission fees for terrestrial broadcasters have tripled. Pay TV providers are required by the Broadcasting Act to pay retransmission fees to all terrestrial channels except EBS.

According to data shared at the seminar "Measures to Create a Sustainable Pay TV Ecosystem" hosted by the Korea Broadcasting Society on the 16th, the operating profit margin of cable TV SOs (System Operators) decreased by 8.9 percentage points over the past eight years, from 14.5% in 2013 to 5.6% in 2021. Operating profit also dropped by 69.38% (from 496.1 billion KRW to 151.8 billion KRW) during the same period.

On the other hand, the retransmission fee revenue that terrestrial broadcasters receive from SOs increased more than threefold, from 125.4 billion KRW in 2013 to 407.9 billion KRW in 2021.

Professor Kim Yong-hee of Kyung Hee University stated, "Without reasonable standards, operators with superior bargaining power tend to demand unilateral increases," and added, "Terrestrial broadcasters show relatively poor social value creation related to public responsibilities compared to other broadcasters, so there is a need to redefine the role of public broadcasting."

Seminar on Creating a Sustainable Paid Broadcasting Ecosystem
[Photo by Korea Cable TV Broadcasting Association]

According to Professor Kim's research, advertising revenue, an objective indicator to evaluate the content value of the three terrestrial broadcasters, has been declining since 2013 (from 1.4409 trillion KRW in 2013 to 910.3 billion KRW in 2021), and the number of free VOD views has also decreased by an average of 18.8% annually.

The market share also shrank from over 60% in 2012 to the low 30% range in 2022, and viewership ratings dropped by 37 percentage points (from 54.93% to 34.89%).

Professor Kim said, "KBS and EBS are public broadcasters funded by national public resources, and the content they provide is essentially of a nature equivalent to public works, so free use should be guaranteed," and added, "Since KBS 2TV and MBC are operated as public broadcasters, they should be included in 'mandatory retransmission' rather than 'voluntary retransmission agreements' such as 'simultaneous retransmission agreements.'

He further suggested establishing a 'Broadcasting Expert Committee,' a presidential advisory body, to strengthen the global competitiveness of the domestic broadcasting market and foster a healthy broadcasting ecosystem. This committee should set objective evaluation standards to calculate reasonable compensation for channels and mediate disputes.

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