"Even Cable TV Operators in Deficit Pay the Fund"... Fairness of the Broadcasting and Communication Development Fund Under Scrutiny

Cable TV system operators (SOs) are required to pay the Broadcasting and Communication Development Fund without exception, even when operating in deficit, while terrestrial broadcasters and general programming channels receive reductions. This has raised concerns about fairness. To address this imbalance, there are calls for institutional improvements, such as introducing reduction provisions for SOs as well.

Professor Yonghee Kim of Sunmoon University is presenting on the adjustment plan for the collection rate of the Broadcasting and Communication Development Fund by cable TV System Operators at the discussion held on the 22nd at the National Assembly Members' Office Building titled "Improvement Plan for the Broadcasting and Communication Development Fund System in the Broadcasting Media and Communications Committee Era." Provided by the Korea Cable TV Broadcasting Association

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Yonghee Kim, Professor of Business Administration at Sun Moon University, stated at the discussion titled 'Improvement Plan for the Broadcasting and Communication Development Fund System in the Era of the Broadcasting Media Communication Committee,' held at the National Assembly Members' Office Building on April 22, that "Adjusting the fund collection rate for SOs is a measure to restore fairness by correcting the current system, which does not adequately reflect public interest or financial conditions."

The current criteria for imposing the Broadcasting and Communication Development Fund differ by business type. Terrestrial, general programming, and news channel program providers (PPs) are assessed based on advertising revenue, while paid broadcasting operators such as SOs and Internet Protocol TV (IPTV) are assessed based on broadcasting service revenue. Home shopping channels are calculated separately based on operating profit. Professor Kim pointed out, "This system does not sufficiently reflect each operator’s ability to pay or financial condition," adding, "A clear imbalance is evident when comparing the actual burdens."

As of 2024, JTBC recorded an operating loss of 28.7 billion won and did not pay into the fund, while KBS, despite a deficit of 88.1 billion won, paid only 180 million won, resulting in an effective collection rate of just 0.01%. The fund burden rates for local MBC stations and regional private broadcasters were also only 0.49% and 0.75%, respectively. In contrast, 90 SOs paid 25 billion won from a combined operating profit of 14.9 billion won, meaning they contributed more to the fund than they earned. Even 38 SOs in deficit paid the full amount of approximately 9.52 billion won. The combined operating losses of these companies totaled 117.8 billion won.

The reason for these differing burden levels among operators, even when in deficit, is that there are no separate reduction measures for SOs. Although the Framework Act on Broadcasting and Communications Development allows for differential imposition based on financial conditions, SOs are excluded from the list of eligible operators defined in the enforcement ordinance. The SO fund collection rate has been fixed at 1.5% for eight consecutive years since 2017.

Professor Kim stated, "If the fund burden rate increases by one percentage point, the risk of capital erosion rises by a factor of 3.9," emphasizing that "the burden structure is directly linked to the industry's sustainability." He further suggested, "A reduction plan that combines a basic public interest reduction with additional reductions based on financial status is needed. If the burden relative to operating profit is normalized by lowering it to 90%, the number of deficit SOs would decrease from 38 to 25." He also expected that, over a cumulative 10-year period, this would result in additional revenue preservation of approximately 240 billion won.

The plan to adjust the fund collection rate was proposed in three stages. First, the notification should be revised in the second half of this year to reduce the fund burden on SOs. The second stage is to introduce a differentiated system based on revenue brackets next year. Lastly, from 2028 onward, amendments to the Broadcasting Act, a complete redesign of the fund system, and discussions on including online video services (OTT) should take place.

The cable TV industry is urging that the current 1.5% collection rate be reduced to 1.3%. Hwang Heeman, President of the Korea Cable TV Broadcasting Association, said, "We understand that the Ministry of Science and ICT has reviewed the plan to adjust the SO fund collection rate to a near-final stage," adding, "We hope that discussions and policy reviews will continue at the Broadcasting Media Communication Committee."

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