The Expert Verification Council to Convene as Early as Next Week... Effectiveness Remains 'Questionable'

Limitations in Asymmetry Verification Rather Than Mediation
Lack of Specific Judgment Criteria in Guidelines
Urgent Firefighting... Issues with Insufficient Preparation

As the ‘Compensation Verification Council’ aimed at resolving contract disputes between TV home shopping companies and pay-TV operators is set to begin operation next week, doubts are being raised within the industry about the actual effectiveness of this body. This is because the council’s essence lies in verifying contract fairness rather than mediation, making it unlikely to produce substantial agreements.

A 'Compensation Verification Council' to resolve contract disputes between TV home shopping companies and paid broadcasting operators is expected to be launched as early as next week.
[Photo by Asia Economy DB]

On the 30th, an examination of the ‘Home Shopping Broadcasting Channel Usage Contract Guidelines’?which were derived through mediation by the Ministry of Science and ICT in March between home shopping operators and pay-TV operators?revealed that the Compensation Verification Council is mandated to verify whether the operators have complied with principles such as sincere consultation and prohibition of coercion of unfavorable transmission fees, as well as whether the factors to be considered in compensation calculation negotiations are appropriate.

These provisions are expected to serve as a starting point to resolve the long-standing conflicts between TV home shopping companies and pay-TV operators, but the industry’s view is not entirely positive. For the Compensation Verification Council to examine the asymmetry between operators, there must be concrete verification grounds, but the revised Home Shopping Broadcasting Channel Usage Contract Guidelines are vague on these grounds.

In fact, under the revised guidelines, the role of the Compensation Verification Council is only specified as verifying the values of factors considered in compensation calculation, sincere consultation, provision of materials, and compliance with guidelines such as prohibition of coercion of unfavorable fees, without presenting specific judgment criteria. Given the heightened conflicts over transmission fees between TV home shopping companies and pay-TV operators, there are voices questioning whether a conclusion acceptable to both sides can be reached.

There is also criticism that even if the Compensation Verification Council verifies compliance with negotiation procedures and principles according to the guidelines, it does not propose calculation plans, which clearly limits its effectiveness. Ultimately, even after going through the Compensation Verification Council, the final negotiations must be conducted again between the home shopping companies and pay-TV operators, and given the years of conflict, the likelihood of reaching an agreement without enforceability is low.

Insufficient prior preparation for the Compensation Verification Council is also cited as a problem. Previously, after NS Home Shopping and others requested the formation of the Compensation Verification Council to mediate contract disputes with LG Uplus last week, the Ministry of Science and ICT reportedly maintained the position that "preparations are not yet complete." An industry insider said, "As situations worsened with TV home shopping companies like Hyundai Home Shopping and CJ OnStyle successively notifying transmission suspensions, it feels like there was a sudden shift toward holding the Compensation Verification Council urgently."

The Ministry of Science and ICT is currently reviewing whether to convene the Compensation Verification Council requested by NS Home Shopping and others, and operation is likely to begin as early as next week. According to the Home Shopping Broadcasting Channel Usage Contract Guidelines, the Compensation Verification Council is automatically convened if no agreement is reached after the basic negotiation period (5 months) and additional negotiation period (3 months), or if one party expresses the intention to end negotiations.

The Ministry of Science and ICT is also expected to soon decide on whether to activate the Compensation Verification Council for Hyundai Home Shopping and CJ OnStyle. Hyundai Home Shopping and CJ OnStyle, after conflicts with cable TV operators over transmission fees, notified LG HelloVision on the 27th and 28th respectively that they would suspend broadcasting transmission. Prior to this, Lotte Home Shopping notified Gangnam Cable TV that it would suspend broadcasting transmission starting next month on the 1st.