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Merger of LG U+ and CJ Hello put on hold

Oct 18,2019
The merger between LG U+ and CJ Hello remains on hold as the regulator considers the transaction in the larger context.

On Thursday, the Fair Trade Commission (FTC) said it decided to delay its decision in order to examine a similar case and the competitive landscape.

LG U+ needs approval from the regulator and the Ministry of Science and ICT for the deal to go through. The carrier agreed to acquire a 50 percent stake and one additional share of CJ Hello in February for 800 billion won ($674 million).

But with a proposal by SK Telecom’s SK Broadband to acquire a controlling stake in t-broad, another major cable TV operator, the market is set for sudden consolidation and a concentration of control.

The authorities suggested they are stepping back to examine both mergers before agreeing to the LG U+ deal.

Recently, the FTC conditionally approved a proposal by SK Telecom and major broadcasters to merge their over-the-top (OTT) media businesses, creating an OTT giant that will likely compete with Los Gatos, California-based Netflix.

If the LG U+ and CJ Hello deal materializes, it would increase the carrier’s share of the paid broadcasting market to 24.5 percent, placing it just behind KT.

As of the second half of last year, KT held a 31 percent share of the market, followed by SK Broadband at 14.3 percent and CJ Hello at 12.6 percent, according to the ICT Ministry. LG U+ has 11.9 percent of the market.

This is not the first time that a major carrier tried to acquire CJ Hello. SK Telecom attempted to buy a controlling stake in CJ Hello in 2016 but was rejected by the antitrust regulator.

The LG U+-CJ Hello merger received preliminary approval in September, while the merger between SK Broadband and t-broad received a similar approval earlier this month.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]


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