Lotte Homeshopping likely ordered to suspend prime-time broadcast

By Lee Hyo-sik

Lotte Homeshopping will likely be ordered to suspend its prime-time broadcasting for the next six months for submitting false documents to renew its business license.

The Ministry of Science, ICT and Future Planning said Tuesday it recently sent a letter notifying Lotte, one of Korea’s major shopping channel operators, that it will not be able to air programs during peak hours for six months.

According to the ministry, Lotte Homeshopping falsified documents concerning employees involved in irregularities. In April last year, the company intentionally reduced the number of executives and employees implicated in corruption to receive approval from the ministry.

Lotte was able to extend its business license for three years at the time because of the false documents, according to ministry officials.

The Board of Audit and Inspection recently discovered this irregularity, asking the ministry to reprimand its officials involved for failing to screen home shopping channels properly.

“If we decide to impose a fine, the amount is only 78 million won ($65,000) in accordance with the law,” a ministry official said. “This is only a slap on the wrist. So we informed Lotte Homeshopping of our preliminary decision to suspend its prime-time broadcasting.”

The ministry plans to make a final decision early next week after reviewing a petition from Lotte, the official said.

If confirmed, Lotte would have to stop broadcasting for six hours a day for six months, between 8 a.m. and 11 a.m., and 8 p.m. and 11 p.m. Lotte and other home shopping channels generate about 50 percent of sales during these six prime-time hours.

“If we are forced to stop airing during these prime-time hours for six months, we expect to suffer 550 billion won in lost sales,” a Lotte Homeshopping official said. “This will seriously hurt our performance. But, moreover, our small-business partners will be hit even harder.”

The company also pays 19 billion won a month to TV stations that air its channel. Even if Lotte does not air programs, it will not get the fees back.

Lotte will soon submit its written opinion to the ministry, asking it not to suspend its broadcasting, the official said. “We work together with 500 small suppliers. Of them, 120 do business only with us. They would face a life-or-death situation if our operations are suspended.”

In 2015, the home shopping channel had 3.1 trillion won in sales.