Gov’t lifts limits on cable TV ads, fees

The government yesterday announced that it will remove the price ceiling for content made and distributed by local cable television show producers and network operators as part of an effort to encourage better quality programs.

The deregulation, which will apply to all cable channels and satellite TV and IPTV operators, and will be implemented over the next three years, will also lift the limit on ad breaks in the middle of a show.

The measures are part of a package of policies by the Ministry of Science, ICT and Future Planning and Korea Communications Commission (KCC) rolled out yesterday to help cable TV show producers, most of which are small companies with limited investment, and small and midsize channel operators.

The government said that unlimiting advertising and higher prices charged by cable TV channels will encourage better quality programs.

As of now, all cable channels can be accessed by paying a monthly fee of 26,000 won ($25.70).

“Korea is one of the cheapest countries for people to subscribe to cable channels,” said Lee Yoon-ho, director of the ICT Ministry’s broadcast division. “Korean paid channels ranked 29th out of 30 OECD countries with the lowest revenue per customer.”

A KCC official added that “the policy could cause a price hike for viewers, but excessively cheap TV subscription fees result in a worse consequence - lowered quality of content.”

The policies are aimed at boosting the quality of Korean cable shows, which the government hopes will make Korean shows more appealing overseas and attract foreign investment.

The broadcast authorities are optimistic after the success of cable channel dramas and entertainment shows such as “Respond 1994” and “Grandpas Over Flowers” last year, which generated about 43 billion won in exports.

As part of the deregulation, the government also decided to permit text advertisements, which appear as subtitles, and allow more product placement and sponsorship notifications during shows.

Another aim is to even out the industry, in which most production is carried out by a few large companies. The cable TV show production and channel operation market in Korea is big in terms of annual sales, at about 6 trillion won ($5.9 billion) last year, according to KCC data.

However, sales are heavily concentrated on home shopping operators like GS Shop, and 11 companies hold 56.2 percent of the total market share. Most make their profits from selling products.

More than 150 producers and operators such as CJ E&M and TvN account for 36.5 percent of the market share, and six general programming and news channels such as JTBC and News Y take 7.3 percent.

The broadcast authorities said they will set aside about a third of the Digital Contents Korea Fund for small producers. The fund, which will be created by 2017, will hold about 400 billion won ($395 million) collected from the public and private sectors.

BY kim ji-yoon [jiyoon.kim@joongang.co.kr]