'Crisis of Survival' for Cable TV... Operating Profit Down 92% in 4 Years

Formation of Emergency Management Task Force "Association-Centered Response"

The cable TV industry is facing an existential crisis.

The Korea Cable TV Broadcasting Association announced on the 13th that it has entered an emergency management system as the operating profit of the broadcasting sector of cable TV MSOs (Multiple System Operators) decreased by 92%, from 233.4 billion KRW in 2018 to 19.3 billion KRW in 2022.

According to the Korea Communications Commission's "2023 Broadcasting Market Competition Status Evaluation Report," the operating profit margin of MSOs' broadcasting sector fell cumulatively by 11.4 percentage points over the past five years: 12.6% in 2018, 11.1% in 2019, 5% in 2020, 2.5% in 2021, and 1.2% in 2022.

The association stated, "Cable TV, as a regionally licensed operator, is subject to various regulations compared to competitors such as IPTV and online video services (OTT), and investment costs continue to rise due to the obligation to operate regional channels granted over 30 years ago."

The association explained that conflicts within the media ecosystem are intensifying as incoming revenue decreases. According to the association, the total content usage fees paid by cable TV to terrestrial broadcasters, general programming providers (PP), and comprehensive programming channels amounted to 533.6 billion KRW in 2022, which is about 86.8% of total subscription revenue.

They argued that the continuous decline in viewership of terrestrial channels negatively affects the sales of adjacent home shopping channels and the transmission fees paid by home shopping operators to cable TV.

The association added, "Despite this, there are ongoing demands for retransmission fee increases at a level that could destroy the pay TV ecosystem, without any standards for channel evaluation or retransmission fee payments, further worsening the management situation of cable TV."

In this situation, the cable TV industry has decided to form an "Emergency Management Countermeasure Council" centered around the association and to devote all efforts to rebuilding the industry.