CCS with Changed Major Shareholder Faces Uncertainty Over Ministry of Science and ICT Approval

When Changing the Largest Shareholder of a Comprehensive Cable TV Operator, Ministry of Science and ICT Approval Must Be Obtained
New Owner Contents House 210 Recorded 300 Million KRW in Sales and 90 Million KRW Net Loss Last Year

The largest shareholder of CCS, a company listed on the KOSDAQ, has sold all of their shares. Since CCS is a comprehensive cable broadcasting operator, the new largest shareholder must obtain approval from the Ministry of Science and ICT.

According to the Financial Supervisory Service's electronic disclosure on the 27th, Lee Hyun-sam, a director and the largest shareholder of CCS, signed a contract to transfer all 13,582,287 shares held at 1,472.5 KRW per share, totaling 20 billion KRW, to a corporation named ‘Contents House 210’.

Contents House 210 paid 5 billion KRW as a deposit on the contract day, and the remaining 15 billion KRW is scheduled to be paid at least five days before the date of the extraordinary general meeting. Once the balance is paid, Contents House 210 will become the largest shareholder holding 24.24% of CCS shares.

As a comprehensive cable broadcasting operator, CCS provides cable TV services in Chungju City, Jecheon City, and Eumseong County in Chungcheongbuk-do Province. The channel name is CCS Chungbuk Broadcasting. In addition to comprehensive cable broadcasting, the company is engaged in various businesses such as attracting local events and distributing program content.

Because CCS is a comprehensive cable broadcasting operator, the new largest shareholder must obtain approval from the Ministry of Science and ICT as the largest investor under the Broadcasting Act. The application for change approval must be submitted within 30 days from the date of the stock transfer contract.

Once the change approval is applied for, the decision on approval will be made within 60 business days. If a person becomes the largest investor or effectively controls management without obtaining approval, they cannot exercise voting rights on the acquired shares. Additionally, the Ministry of Science and ICT or the Korea Communications Commission may order the disposal of the shares.

The Ministry of Science and ICT focuses primarily on whether the largest shareholder can responsibly and transparently operate the broadcasting company, which is a public asset, when approving the change of the largest investor. To this end, they review whether there are no private conflicts of interest with the broadcaster, whether the largest shareholder is financially sound, and the extent of their participation in public interest activities.

When the Ministry grants approval, conditions are also imposed. When Lee Hyun-sam became the largest shareholder of CCS in 2019, conditions included ▲faithful implementation of conflict of interest resolution plans with CCS Chungbuk Broadcasting ▲submission of detailed plans to ensure public responsibility of broadcasting and management transparency.

Previously, when former CCS CEO Yoo In-moo requested approval for the change of the largest investor in 2009, the Ministry imposed specific financial conditions such as ▲prohibition of loans, collateral, or guarantees with the corporation ▲accounting audits must be conducted by an accounting firm designated by the Financial Services Commission ▲composition of the board of directors with a majority of outside directors and reporting meeting results to the Korea Communications Commission.

Contents House 210 is a corporation established in May 2021 with a capital of 10 million KRW, engaged in video production and advertising. The company is located in a shared office in Sangam-dong, Seoul. As of last year, it recorded sales of 300 million KRW and a net loss of 90 million KRW. Although it was fully capital impaired until the end of last year, it escaped capital impairment after Kim Wan-seop increased capital by 500 million KRW on the 20th.

However, considering the performance and capital of Contents House 210, it is estimated that about 4.5 billion KRW of the deposit was raised externally through loans or other means. It is also expected that external funding will be necessary for the remaining balance. A CCS official stated, “We cannot confirm details regarding the acquirer's funding,” and added, “We have informed them about the largest shareholder approval process, and the acquirer responded that they will prepare independently.”