SK, LG to Purchase Cable TV Operators

Chairwoman of the Fair Trade Commission, Joh Sung-wook, speaking during a media conference at the Korea Fair Trade Mediation Agency in Seoul, Friday. / Courtesy of FTC

Fair Trade Commission said on Sunday, LG Uplus, and SK Broadband received conditional approvals from Korea’s antitrust agency to buying the country’s No. 1 and No. 2 cable TV operators CJ Hello and t-broad, respectively.

The FTC approved SK Broadband’s merger with t-broad, and LG Uplus’ acquisition of 50 percent stake with an additional one share of CJ Hello for 800 billion won ($690 million). SK Broadband is one of the subsidiaries of the country’s largest mobile carrier SK Telecom, while LG Uplus is the third-largest mobile carrier.

Joh Sung-wook, chairman of the FTC, said that the agency decided to grant approvals despite concerns that major telecom operators will dominate the country’s media market. She added that the decision’s goal is “to boost competition for innovation in a rapidly changing technology and market environment in the broadcasting and telecommunications industry.”

The conditional approvals ban LG and SK until 2022 from increasing their subscription fees for cable TV above the country’s headline inflation. They are also not permitted to impose consumers to switch to expensive subscription packages and prohibited from reducing the total number of cable TV channels.

Three major telecom companies will control the pay-TV market, comprised of cable TV and IPTV, after finalizing the merger.

According to Korea Communications Commission (KCC) KT possess 31.1 percent shares, the largest in the market, followed by 14.3 percent of SK Broadband; 12.6 percent of CJ Hello; 11.9 percent of LG Uplus; 9.6 percent of t-broad and 6.3 percent of D-Live, as of the end of 2018. With the merger, LG and SK’s market share will improve to 24.5 percent and 23.9 percent, respectively.

To fulfill the processes of merging, SK Broadband needs to win approval from both the KCC and the Ministry of Science and ICT. However, LG Uplus only needs to get permission from the ministry.

Science Minister Choi Ki-young said they are expected to get approvals by early 2020, and the government will try not to take too much time at the October National Assembly audit.

SK and LG both welcomed the FTC’s decisions, stating that the mergers will add in the development of the media industry in the country.

SK Telecom said, “The merger of SK Broadband and t-broad will help the growth of IPTV and cable TV and contribute to the development of the local media ecosystem.”

LG Uplus said it “respects the FTC’s decision, and we will faithfully implement the details of arrangements ordered by the agency.”

It added, “We will try to expand consumer choices and invest more to stabilize the job markets.”

About James Jung

Senior Writer @KoreaTechToday

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