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Wed, March 22, 2023 | 05:54
Newspapers, TVs fight for lives in media big bang
Posted : 2011-01-17 14:51
Updated : 2011-01-17 14:51
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Combining its dominating presence in cable television with its strengths in content production and distribution, CJ Group is emerging as the television industry’s new giant. / Korea Times

CJ may get more bang for the buck invested than big papers

By Kim Tong-hyung

A newly-deregulated media marketplace has pitched the country’s largest newspapers and television stations into a fight for their lives. And yet, the true winner could prove to not be any of them, but the CJ Group, which has quietly established itself as a content giant over the past few years.

With five new television channels coming into play in the latter part of the year, the competition is expected to intensify in what is already a cut-throat broadcasting industry.

In a licensing process completed in December, the Korea Communication Commission granted the Chosun Ilbo, JoongAng Ilbo and Dong-A Ilbo, the ``big-three’’ dailies, and the Maeil Economic Daily, the rights to operate comprehensive programming cable channels, which can provide original news content as well as entertainment, sports and documentary programs. Yonhap News, the state-run wire agency, won a license to operate a news-only channel to complement YTN.

The increase in the number of outlets, which is more dramatic when counting in the content services provided by Internet-connected televisions, smartphones and touch-screen computers, suggests that the golden age of the platform provider is over, according to some observers.

The media industry, they say, will increasingly go through content providers, and there is no bigger one here than CJ, which seems to control every entertainment channel that matters in the pay-television world. The group also owns a high-flying online video games company, the country’s biggest movie theater chain, has weight as a major movie distributor and is strengthening its presence as a production studio for both film and television.

CJ plans to merge its media and entertainment business into a single unit, CJ E&M (entertainment and media), which will officially make its debut in March and represent the country’s first attempt at a true, mega content company.

Ultra-competitiveness may come at the expense of television channels, with the new networks hustling against existing pay-television players and national terrestrial broadcasters KBS, MBC and SBS when the advertisement market is already spread too thin. Well, all the better for CJ, which has to be rubbing its hands at the thought of television stations bidding harder for its products.

It wouldn’t be a stretch to say that CJ is looking more and more like the Korean equivalent to Time Warner.

``After 10 years of reshaping, a new form is about to take hold of the media industry. The balance has shifted from platform providers to content providers, and it looks like CJ E&M could be standing alone in a `winner takes it all’ situation,’’ said Kim Hang-gi, an analyst from Dongbu Securities.

``CJ is the only business group in Korea that has achieved vertical integration in both the production and retail of content. With On Media telecommunications companies giving up on their content businesses, the competition on the content industry side has been weakened. With the new cable channels, Internet protocol television (IPTV) services and new media services enabled by mobile Internet devices adding competition to existing terrestrial and pay-television channels, the platform battles are becoming intense . And this will boost the demand for content even more.’’

Granted, it would be inaccurate to say that CJ doesn’t have competition as a content provider. But since its recent acquisition of On Media, a major cable company with a variety of movies and entertainment, CJ’s status as the industry’s kingpin looks undisputed.

CJ’s domination of the cable television scene clearly poses a serious challenge to the supremacy of national networks providing free over-the-air television. Currently, more than 80 percent of Korean households subscribe to some form of pay-television service. And pay-television’s overall share in viewership rose from 21.5 percent in 2000 to 41.1 percent last year. ``Superstar K2,’’ a talent contest that is essentially a clone of ``American Idol,’’ was one of the most watched programs last year, on cable or terrestrial television.

CJ E&M has absorbed On Media, CJ Internet, an up-and-coming online games company, Mnet Media, a popular cable music channel, CJ Media, the group’s main cable business unit, and CJ Entertainment, Korea’s largest entertainment company with a major presence in film distribution and production. CJ Entertainment is also the local distributor of Paramount Pictures, Dream Works and Universal Pictures and controls the country’s largest multiplex theater franchise, CGV.

CJ’s wealth in cable system operators and a national network of CGV theaters, as well as its dual strength in content production and distribution, combine to create a muscle that other media companies will be unable to match. Also CJ’s involvement in music and games will provide the group new opportunities in the era of Web-plugged televisions.

CJ expects CJ E&M to generate around 1.3 trillion won (about $1.16 billion) in revenue per year. That would be more than the 1.2 trillion won KBS, the country’s biggest television station, chalked up in 2009. MBC and SBS didn’t reach 1.2 trillion won combined that year.

``To compete with global media groups like Time Warner, it’s crucial to strengthen our competitiveness in content. The consolidation will allow us to invest more and be more efficient in the global markets,’’ CJ vice president Shin Dong-hwi told journalists recently.

``This clearly represents our attempt to become an internationally-renown corporation.’’

The business outlook is a lot gloomier for the newborn television stations spawned from the dead-tree media. Aside from the three major terrestrial networks KBS, MBC and SBS, there are currently around 190 pay-television outlets close to sucking dry an annual 7.5 trillion won advertisement market.

For the four new comprehensive channels to survive, each network must secure advertising revenue of around 500 billion won per year, according to industry observers. But it remains to be seen whether the market can squeeze an additional 2 trillion won from advertisers, especially in an economy that is so dependent on exports.

The new cable television channels are a central part of the Lee Myung-bak government’s ambitious plans to deregulate the country’s media industry, which started with the lifting of the traditional cross-ownership ban that prevented one corporation from owning newspapers and television stations at the same time.

Critics have raised concerns that the compromised diversity in the ownership of news organizations could hurt discourse, especially at a time when the line between profit and reporting is becoming blurry in a toughening environment for the print media.

However, the government contends that deregulation is crucial for the growth of the media industry and the emergence of globally-competitive players that could hold their own against international players.

Well, it looks like Korea will get its shot at having a global media company, but just don’t look for it from the traditional news organizations. The brightest prospect is CJ, which appears to have the significant part of the television industry already chopped up and served on its plate.

``CJ Entertainment controlled 40 percent of the Korean movies distributed last year, and CJ E&M will likely enjoy an even larger concentration of content. The same goes for the production and distribution of television and other video materials, as CJ E&M will absorb this content quickly,’’ Kim said.

``With On Media under its wings, CJ’s companies will easily control a significantly larger part of the cable viewership, and the weakened competition will allow the group to reduce the cost in content sourcing and program production. CJ’s command over content will allow it to have more clout in negotiations with channels over its cut in subscriber revenue. The group’s presence in television will be basically unmatched.’’
Emailthkim@koreatimes.co.kr Article ListMore articles by this reporter
 
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