The logo of the Korea Cable TV Broadcasting Association (provided by the Korea Cable TV Broadcasting Association) is displayed. The ‘Standards for Fair Distribution of Content Usage Fees’ (hereafter referred to as the standards) will be first applied at the level of each SO (cable TV station) in early June.
After extensive discussions, these standards are being implemented for the first time, representing a significant step as they apply the agreed principles between SOs and PPs (program providers). Although there is still minimal participation from stronger negotiating entities like terrestrial broadcasters and opposition from smaller PP businesses, the necessity of the standards is widely acknowledged.
Amid declining revenues for cable TV, the content usage fees have reached an excessive level, accounting for 89% of the broadcasting business’s sales, prompting the need for these standards. The emergence of OTT (over-the-top) services has changed the value of content as OTT usage has more than doubled in five years. About 41% of OTT users have reduced their paid TV viewing time after using OTT, indicating that market environmental changes need to be reflected.
Although the multi-homing strategy has weakened the SOs’ content monopoly and decreased the value of content within paid broadcasting, the compensation for content continues to rise, highlighting content fee distribution as a pivotal issue tied to the industry’s survival.
To prevent market confusion, cable TV plans to gradually apply the decline in content value over three years and set a total fee cap for each channel group to protect smaller PPs. This ensures that stronger negotiating channel groups like terrestrial broadcasters don’t affect negotiations for other channel groups.
The introduction of these standards is seen as a first step towards resolving structural imbalances, promoting rational distribution of content usage fees, and building a cooperative ecosystem. Normalizing distribution rates, reflecting fluctuations in broadcast revenue, and establishing a competitive, fair framework among channel groups are expected to create a trust-based market environment.
Hwang Hee-man, president of the Korea Cable TV Broadcasting Association, stated, “It’s time to transition the market, which has relied on conventions for 30 years, to rational standards,” adding that it’s significant because the entire industry has collaborated to address challenges and lay the foundation for a cooperative ecosystem.