Shortest Review Period Completed, SK Telecom Acquires T-Broad (Comprehensive)

SK Broadband + T-Broad Merger, KCC Pre-Approval
KCC Review Completed in 15 Days...Shortest Review Period
Synergy Between SK Broadband and T-Broad to Begin in Earnest

[Asia Economy Reporter Koo Chae-eun] SK Broadband, a subsidiary of SK Telecom, has virtually completed the procedure of acquiring and merging with T-broad. The Korea Communications Commission (KCC) approved the conditional preliminary consent in the shortest period (15 days). It is said that the government also conducted a swift review, judging that M&A in broadcasting and telecommunications convergence helps grow the media market through 'economies of scale' and enhances competitiveness.

On the 20th, the KCC held a plenary meeting and announced that it had granted preliminary consent for the merger of SK Broadband and T-broad with 14 conditions and 3 recommendations. Accordingly, the paid broadcasting market has been completed into a three-power system centered on IPTV: KT·KT Skylife (market share 31.31%), LG Uplus·LG HelloVision (24.72%), and SK Telecom (24.03%).

Han Sang-hyuk, chairman of the KCC, said, "There was a consensus that a swift approval process should be carried out to promote vitality and enhance competitiveness in broadcasting and telecommunications, so the agenda was brought forward." Accordingly, the government's M&A approval, which passed through the Fair Trade Commission, the Ministry of Science and ICT, and the KCC, has been virtually completed.

The specific conditions attached to the merger include ▲prohibition of regional channel expansion by area, ▲submission of evidence reflecting PP opinions when preparing PP evaluation criteria, and ▲disclosure of the ratio of PP program usage fees to subscription revenue. In addition, to protect and expand viewer rights, a coverage expansion plan to improve the convenience of viewers in rural and fishing villages was submitted, and viewer committees were operated by service type. To induce effective content investment, the content investment plan submission included distinguishing between investment targets and investment methods. Plans for personnel reallocation and wage adjustment after the merger, the status of maintaining non-regular employment, and listening to the opinions of cooperative company workers when reviewing follow-up measures after contract termination with cooperative companies were also required.

Recommendations were also presented. The merged corporation should appoint broadcasting experts as outside directors for a certain period to ensure that the public nature of broadcasting is not impaired, and establish a cooperative system among local broadcasting, local governments, and viewer media centers to support the production of community-based and viewer-participation programs and open facility use.

A KCC official said, "Through the addition of conditions for this preliminary consent, it is expected that the heterogeneous convergence between broadcasting operators in response to the rapid changes in the media environment will not only strengthen competitiveness but also raise the level of regionality, publicness, and public responsibility fulfillment of the merged corporation by one step."