Notice of Broadcast Suspension to LG HelloVision Following Hyundai Home Shopping
"LG HelloVision Ignores Deteriorated Home Shopping Market Conditions"
CJ OnStyle has notified LG HelloVision of its intention to suspend broadcast transmission due to issues with transmission fees.
According to CJ OnStyle on the 28th, they informed LG HelloVision that they will stop broadcasting transmission after the end of next month. CJ OnStyle stated, “As the basic negotiation period specified in the government's ‘Home Shopping Transmission Fee Guideline Amendment’ has ended, we are proceeding with contract termination procedures,” adding, “Broadcast transmission is expected to be suspended as early as October.”
Previously, Hyundai Home Shopping also notified LG HelloVision of its plan to suspend broadcast transmission. If the suspension becomes a reality, viewers watching paid broadcasts through LG HelloVision in 23 regions including Seoul (Yangcheon-gu, Eunpyeong-gu), Gyeonggi (Bucheon, Gimpo, Uijeongbu, Yangju, Dongducheon, Pocheon, Yeoncheon), Gangwon, Chungnam, and Gyeongbuk will no longer be able to watch CJ OnStyle and Hyundai Home Shopping. It is reported that LG HelloVision has 3.68 million subscriber households in these areas.
The reason CJ OnStyle decided to suspend broadcast transmission is that negotiations over the transmission fee rate did not proceed smoothly. Transmission fees are channel usage fees paid by home shopping companies to paid broadcast operators, and home shopping companies argue that excessively high transmission fees are affecting their profits.
In fact, the scale of transmission fees last year was 1.9065 trillion KRW, a 33.3% increase compared to 1.4304 trillion KRW in 2018. According to the Korea TV Home Shopping Association, transmission fees have increased by an average of 8% annually, reaching nearly 65.7% of broadcast sales last year. Meanwhile, the performance of home shopping companies has sharply declined. CJ OnStyle’s annual operating profit dropped from 179.8 billion KRW in 2020 to 133.1 billion KRW in 2021, and further down to 87.8 billion KRW last year. Last year, CJ OnStyle paid 369.1 billion KRW in transmission fees to IPTV and cable TV operators, accounting for 74.9% of its broadcast business sales.
CJ OnStyle stated, “When the industry was booming, we paid transmission fees 2 to 3 times higher than the growth in transaction volume annually, but now, due to deteriorating profitability, realistic transmission fee negotiations are not optional but essential,” adding, “Despite enduring losses for several years amid declining sales, LG HelloVision is trying not to reflect this by leveraging its position as a cable operator.”
If CJ OnStyle and LG HelloVision fail to reach a contract renewal by October, the existing CJ OnStyle channel will be blacked out.
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