"An Era of Broken Boundaries"... Home Shopping Regulations Remain 'As They Were' [Backtracking Distribution Regulations]

③ "Monopoly Status Is a Thing of the Past"... Home Shopping Crushed by 5-Year Reapproval Reviews and Transmission Fees

5-Year Reapproval Reviews... Emphasis on Public Duties Such as Supporting SMEs
Preparation for Reviews Started a Year Ago... Business Focus Dispersed, Qualitative Indicators Subject to Subjective Evaluation
Excessive Transmission Fees Also Under Scrutiny... Reached 57% of Home Shopping Sales Last Year
Operating Profit Plummeted... Home Shopping Companies’ Q1 Profits Down 10-62%
"Government Intervention Needed to Regulate Unfair Negotiation Environment Among Operators"

Home shopping broadcast screen (image and article content are unrelated).

As the media environment rapidly changes, the exclusive position that home shopping once held as a broadcast distribution operator has long disappeared, but there are growing voices that related regulations still remain stuck in the past. The industry is also quite concerned about the retransmission fees paid to paid broadcasters such as Internet TV (IPTV), cable TV operators (SO), and satellite broadcasters, which have risen to exceed half of home shopping's combined sales. There are calls both inside and outside the industry to correct this 'tilted playing field' and establish a foundation that allows the home shopping industry to focus on securing its core competitiveness in an era of distribution paradigm shift.

Home shopping operators receive re-approval every five years to obtain the business operation license according to the Broadcasting Act. The Ministry of Science and ICT holds a re-approval review committee composed of external experts to conduct a closed evaluation. Operators must score at least 650 points out of 1000 to continue their business for the next five years. The evaluation emphasizes public responsibilities such as establishing fair trade practices, protecting and supporting small and medium suppliers, and safeguarding viewer and consumer rights. They also undergo dozens of regulatory reviews from bodies like the Korea Communications Standards Commission, the Fair Trade Commission, and the Ministry of Food and Drug Safety. The industry complains that since preparations for the review usually start a year in advance, a lot of administrative energy is spent, which disperses business focus. There are also voices that the re-approval criteria rely more on qualitative than quantitative indicators, making subjective evaluations likely. Concerns remain that policy authorities might misuse the re-approval process as a means to control operators.

The industry claims that the government is effectively doing nothing to correct the 'tilted playing field' between business types, represented by excessive retransmission fees. The retransmission fees that home shopping pays to paid broadcasters like IPTV as a kind of 'seat rent' have grown every year, surpassing half of the total home shopping revenue since 2020. According to the Korea Communications Commission's "2020 Broadcast Operators' Property Status Disclosure Major Highlights," home shopping companies' retransmission fees in 2020 exceeded 2 trillion won, reaching 2.0234 trillion won. This was about 53.1% of the total home shopping sales of 3.8108 trillion won that year. Last year, the fees reached 2.2 trillion won, increasing to about 56.5% of total sales. The burden of retransmission fees has caused operating profits to plummet annually. Last year, the combined operating profit of the four major home shopping companies (GS, CJ, Lotte, and Hyundai Home Shopping) was only 491.9 billion won, a sharp 20.4% decrease from the previous year. The first quarter of this year also showed a tough situation, with their operating profits falling between 10.0% and 61.6% compared to the same period last year.

The home shopping industry says it reluctantly pays high seat rents to secure the 'golden channels' between terrestrial broadcasters and comprehensive programming channels. The industry sees the need for government intervention to establish fair fee calculation standards that reflect the realities of the home shopping market. They argue that drawing a line by treating retransmission fee decisions between paid broadcasters and home shopping as a 'contractual matter within the autonomous domain of operators' is inappropriate because both parties bear public responsibilities, and one side clearly holds a dominant position, making an unfair negotiation environment inevitable. This is the home shopping industry's appeal.

There is also significant controversy over fairness due to differing regulatory intensities within the industry. Live commerce, which is rapidly emerging due to changes in mobile-based consumer behavior, remains in a regulatory blind spot, and even individual live broadcasts at the level of 'broadcast accidents' are practically unmanaged. Since the playing field is already tilted in terms of manpower and resources needed to respond to regulations, the home shopping industry explains that competitiveness in the media commerce market inevitably suffers. To correct this reverse discrimination, there are strong calls to modernize home shopping regulations. A home shopping industry official said, "The media and distribution environment has changed, and viewers' ways of accessing information have diversified, but regulations remain outdated in this changed era," adding, "The excessive regulations and high retransmission fees unique to home shopping will also adversely affect the small and medium enterprise ecosystem, which accounts for about 70% of home shopping programming."