Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
LG, SK get green light to buy cable TV operators
Joh Sung-wook, chairwoman of the Fair Trade Commission, speaks during a press conference about approvals of the proposed acquisitions between LG Uplus and CJ Hello and between SK Broadband and t-broad at the Korea Fair Trade Mediation Agency in Seoul, Friday. / Courtesy of FTC
By Baek Byung-yeul
By Baek Byung-yeul
Korea's antitrust agency has given conditional approvals for LG Uplus and SK Broadband to purchase the country's No. 1 and No. 2 cable TV operators CJ Hello and t-broad, respectively, according to the Fair Trade Commission (FTC), Sunday.
The FTC said it approved SK Broadband, a subsidiary of the country's largest mobile carrier SK Telecom, to merge with t-broad, and LG Uplus, the third-largest mobile carrier, to acquire a 50 percent stake and an additional one share of CJ Hello for 800 billion won ($690 million).
Despite the concerns that the country's media market will be dominated by major telecom operators, FTC Chairwoman Joh Sung-wook said the agency decided to grant approvals “to boost competition for innovation in a rapidly changing technology and market environment in broadcasting and telecommunications industry.”
Under the conditional approvals, both LG and SK are banned until 2022 from increasing subscription fees for cable TV services above the country's headline inflation and imposing consumers to switch to expensive subscription packages. Also, they are prohibited from reducing the total number of cable TV channels.
Once the mergers are finalized, the pay TV market, comprised of IPTV and cable TV, will be controlled by three major telecom companies.
KT has the largest market share of 31.1 percent, followed by SK Broadband with 14.3 percent; CJ Hello with 12.6 percent; LG Uplus with 11.9 percent; t-broad with 9.6 percent and D-Live with 6.3 percent, as of the end of 2018, according to the Korea Communications Commission (KCC). But the mergers will improve LG and SK's market share to 24.5 percent and 23.9 percent, respectively.
To complete the merger processes, SK Broadband is required to win approval from both the Ministry of Science and ICT and the KCC, while LG Uplus needs to win approval from only the ministry.
Given that Science Minister Choi Ki-young said the government will try not to take too much time at the National Assembly audit in October, they are expected to get approvals by early 2020.
Both SK and LG welcomed the FTC's decisions, saying the mergers will contribute to the development of the country's media industry.
“The merger of SK Broadband and t-broad will help the growth of IPTV and cable TV and contribute to the development of the local media ecosystem,” SK Telecom said.
LG Uplus said it “respects the FTC's decision and we will faithfully implement the details of arrangements ordered by the agency.”
It added, “We will try to expand consumer choices and invest more to stabilize the job markets.”