[Viewpoint] Back to free-market basics on media

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[Viewpoint] Back to free-market basics on media

The heat is on among newspaper organizations vying for new licenses for commercial content and news channels.

There are at least eight consortia in the race. Their fervor is understandable considering their long-time wish to enter the broadcasting industry is about to be realized following parliamentary approval of the new media laws.

But before they jump in, newspaper companies should know what they are getting into.

The cruel reality is that they may not find a pot of gold at the end of the rainbow.

First of all, they cannot expect substantial revenue growth from advertisements. More and more corporate advertisers prefer direct promotional sales over advertising through media networks.

Advertisement expenditure has grown a meager 2.2 percent annually over the past five years, or combined 11.6 percent.

Second, to compete with national broadcasting networks, the new channels would have to invest exorbitantly to launch and produce programs to attract network viewers.

They would have to beat traditional commercial players like MBC and SBS, which spend billions of won, or millions of dollars, every year to produce programs, if they are seeking a certain level of viewership.

Some forecast the newcomers will likely hemorrhage billions of won in deficits for many years. The outlook for news channels is no brighter.

Third, they shouldn’t expect government support due to opposition from existing players. Ideas like tax benefits and channel allocation rights all have come under fire from existing broadcasting and cable networks.

Getting favors like commercial breaks and freedom in allocating ad spots also won’t come easy.

New networks necessarily require special care and support to start off, but the government will have a hard time offering that help for fear of offending the old guard.

Experts have been debating strategies in a search for win-win measures.

Some suggest the government should allow just one license for a commercial channel, given the limited broadcast advertising market, while others believe any bidder passing a certain qualification guideline should be allowed to start a network. Talks likewise vary on the license for a news channel.

When opinions get this polarized, it’s best to return to the basics. What is the main purpose of the new media law?

The Korea Communications Commission has said the realignment in the broadcasting market targets the stimulation of competition in media content and services to promote market and job growth. Newcomers can breathe fresh air into the content market by broadening the viewing spectrum, the thinking goes.

If just one network joins the market, bringing in investment of around 500 billion won, the market won’t get any bigger or more competitive, not to mention any large impact on creating new jobs. Capping licenses is just another form of restriction.

How will the broadcasting market develop any kind of competitive edge if entry is limited? All the fuss and the uphill battle to pass the new bill would go to waste.

Issuing just one license among an army of contenders will end in bloodshed. Naming one primary bidder will generate an outcry against favoritism, while selecting second or third runner-ups won’t be any less controversial.

The new venture will fall astray before it sets sail if it is overshadowed by opposition and suspicions over unfairness.

There is only one way to salvage the main purpose of the project as well as help bolster the media industry. That is to stick to the basics of the free market economy.

We should not allow below-standard programs to pollute the airwaves, but pick the best applicants to have a go on the market.

The newspaper industry, gearing up for new ventures, and the license authorizer should know the score and make plans accordingly take full advantage of this opportunity.

The Stockdale Paradox teaches us never to lose faith that we can prevail in the end, with the discipline to confront the brutal facts of our reality.

Confronting realities and working out how to battle them can eliminate uncertainty and fear.

*The writer is a professor of media studies at Soongsil University.
Translation by the JoongAng Daily staff.

by Kim Min-ki
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