Paid-TV market is consolidating as ranks shift

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Paid-TV market is consolidating as ranks shift

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Korea’s paid-TV market is on the cusp of a major transformation.

Just days after internet protocol TV (IPTV) provider LG U+ announced plans to acquire CJ Hello, a cable company, reports surfaced that SK Broadband was planning to merge with t-broad, the No. 2 cable operator.

“SK Telecom and Taekwang Group, the holding companies of SK Broadband and t-broad, are currently negotiating the merger of their TV operations,” said a source on the condition of anonymity.

“It’s possible that the two companies will sign a memorandum of agreement this week,” the source added.

A merger is expected to allow SK Broadband to strengthen its foothold in the paid-TV market in a cost-efficient way as it would only require a stock swap with t-broad.

SK Broadband is currently Korea’s second-largest IPTV provider after KT. With LG’s acquisition of CJ Hello, Korea’s largest cable company, however, SK is at risk of losing second place and becoming the country’s smallest IPTV provider in subscriber numbers.

Market watchers predict that with an SK merger on the way, KT will have no choice but to pursue transactions on its own to stay ahead of the game. KT is reportedly considering acquiring D’Live, another cable company.

“If SK Broadband merges with t-broad, it’ll become more likely for KT to acquire a cable company,” said Kim Joon-seob, an analyst for KB Securities. “Because KT and KT SkyLife’s combined market share is currently at 30.86 percent, however, the company will probably move forward with the acquisition after the National Assembly comes to a decision on paid broadcasting regulations.”

KT SkyLife is the mobile carrier’s satellite broadcasting provider.

The National Assembly’s Science, ICT, Broadcasting and Communications Committee is set to decide next Monday on whether to reintroduce a rule that expired last June that prevents a paid-TV provider from controlling more than 33 percent of the market. If the committee agrees to reintroduce the rule, it may be impossible for KT to acquire D’Live, which has a 6.4 percent market share.

Industry experts believe that cable company-IPTV combinations are inevitable as demand for on-demand TV services continue to grow.

IPTV providers collectively generated 2.93 trillion won ($2.59 billion) in revenue in 2017, posting 20.5 percent growth year on year, according to the Ministry of Science and ICT. Cable TV companies, by contrast, generated 2.13 trillion won in revenue in 2017, 1.8 percent less than in the previous year.

The mobile carriers, which are each related to an IPTV provider, are also being pushed to develop their TV and media services as new sources of revenue given the saturated mobile market and falling telecom profits.

“Mobile carriers will see revenues rise if they gain access to cheap content, save on shared network usage fees and sell customer service package deals through merger-acquisitions,” said Jeong Ji-soo, an analyst from Meritz Securities.

For the IPTV providers, the race to attract new users is already in full swing. LG U+ launched U+tv Bravo Life, which offers health and travel-related content targeting older customers, last Tuesday. SK Broadband is set to strengthen its children’s content, while KT is offering bonus content.


BY KIM GYEONG-JIN [kim.eunjin1@joongang.co.kr]

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