Six month ban handed to Lotte Home Shopping

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Six month ban handed to Lotte Home Shopping

Lotte Home Shopping will be banned from airing programs during primetime hours for six months, the Ministry of Science, ICT and Future Planning announced Friday.

The ban is intended to punish the channel for omitting the names of two executives under investigation for corruption from key documents it submitted to the government when renewing its channel license in April last year.

This is the first time such harsh actions have been taken against a home shopping channel.

Lotte’s sales programming will be suspended in the morning from 8 a.m. to 11 a.m. and at night from 8 p.m. to 11 p.m.

The ban will begin Sept. 28.

The ICT ministry said it has given the channel the grace period to minimize the negative impact the ban will have on the small and midsize enterprises (SMEs) that rely on the channel to sell their products.

The government says Lotte intentionally dropped from its application the names of two executives, including former CEO Shin Heon. The executives were said to have pocketed as much as 1 billion won from suppliers.

Eight of the company’s executives have been convicted of bribery and corruption stemming from a 2014 investigation.

The problematic documents were caught by the Board of Audit and Inspection of Korea in February.

“The company wouldn’t have been able to obtain approval if the corruption case had been disclosed during the screening process,” a spokesman from the ICT ministry said.

After the penalty was handed down, the company released a statement saying it was too harsh, particularly as the channel license they earned conditionally in 2015 allowed them to operate for just three years rather than the normal five.

“It was not good news, but we did not intentionally hide issues related to the two executives that were under prosecutors’ investigation and the process of investigation was already disclosed to the public through media,” the company said in a statement Friday. “Even if there may have been a lack of information due to our failings, the penalty is too harsh and threatens the stable operation of our company.”

The small and midsize suppliers to Lotte Home Shopping are also concerned, as a ban on primetime broadcasting could affect the supply contracts they’ve already signed.

“Based on last year’s sales data, the ban on primetime broadcasting could incur roughly 550 billion won in losses,” the company said, adding that 65 percent of the shopping shows it airs are operated by SMEs.

Five hundred and sixty SMEs sell their products through the channel, and 173 of those solely supply to Lotte Home Shopping, the company said.

The ministry demanded Lotte Home Shopping give SMEs priority for its remaining broadcasting hours during the day, and said it will create
other ways for the SMEs to sell their products.

It also demanded that Lotte Home Shopping do not unfairly dismiss employees during the ban, giving the company three months to turn in a feasible human resources management plan.


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