Due to the worsening conditions in the paid broadcasting market, KT Skylife recorded its first loss since going public last year. The size of retained earnings held by KT Skylife has also halved for the first time in two years. Despite the dire situation of its subsidiary, the dividends received by the parent company, KT, remain the same as in previous years. This has led to criticism both inside and outside the industry that if KT does not take the situation of its struggling subsidiaries into account, the crisis at the subsidiary level could spread to the entire group.
On the 27th, KT Skylife held its regular shareholders' meeting for 2025 and resolved to distribute dividends of 350 won per share. Even though it recorded its first loss since going public in 2011, it decided to maintain the same scale of dividends as before. KT holds a 50.3% equity stake in KT Skylife, while the Korean Broadcasting System holds 6.8%. The structure is such that KT, the major shareholder, takes about half of the dividends (around 16.5 billion won), which is expected to amount to approximately 8.3 billion won.
KT Skylife's recent performance has sharply worsened. The company's operating profit in 2022 was 63.2 billion won, but in 2023, it dropped to 14.2 billion won, a decrease of 78%. And last year, it recorded an operating loss of 1.1 billion won, transitioning to a loss. Notably, it recorded a net loss of 156 billion won last year, a figure that increased by 37% compared to the 113.7 billion won net loss in 2023. The company explained that the consecutive net losses of over 100 billion won for two years were due to the impairment losses reflected from its subsidiaries, KT HCN and KT ENA, caused by the worsening conditions in the paid broadcasting market. The impairment loss for KT HCN alone reached 141.7 billion won last year.
As a result of this fallout, the retained earnings held by KT Skylife have shrunk from 534 billion won in 2022 to 258.9 billion won last year, a decline of more than half. Retained earnings refer to the operating capital that the company generates and accumulates, symbolizing the funds necessary for future reinvestment.
After the pandemic, the pressure from global over-the-top (OTT) service providers like Netflix and Disney+ has intensified, shrinking the domestic paid broadcasting market. According to a report published by the Korea Communications Commission and the Korea Information Society Development Institute, total revenue from paid broadcasting services last year decreased by 4.7% compared to the previous year, while revenue from major OTT services like Netflix increased by 6.4%.
The number of paid broadcasting subscribers for KT Skylife is also on the decline. The total number of subscribers, including those from its subsidiary KT HCN, decreased by 2.5% from 5.9 million in the first quarter of 2023 to 5.75 million in the fourth quarter of last year. The drop in satellite broadcasting subscribers, which is KT Skylife's main business, is even more pronounced, decreasing by about 8% from 3.65 million in the first quarter of 2023 to 3.36 million in the fourth quarter of last year. KT ENA, a content production and broadcasting channel operator, has also not seen any hit productions since 'Extraordinary Attorney Woo' in 2022, despite investing over 110 billion won in production costs since 2023, leading to further losses.
To rebound in performance, KT Skylife is focused on developing self-recovery measures. It aims to improve profitability through the promotion of new businesses, including the integration of artificial intelligence (AI) and media. For example, KT Skylife is preparing to introduce AI unmanned camera-based sports broadcasting services and is set to launch related products in the first half of this year. To this end, in July last year, KT Skylife acquired 170,000 shares (23.78%) of the AI sports platform company 'Hogak' for 6.8 billion won.
During the regular shareholders' meeting on the 27th, it added 'video transmission service operations' and 'information and communications services utilizing advanced technologies such as artificial intelligence and sales, leasing, or service operations of related equipment' as new business objectives.
However, there are growing concerns about whether KT Skylife can secure the financial resources necessary to invest in the AI new business. The decrease in retained earnings has raised fears of dwindling investment resources, and there are no signs of a market turnaround. There are also indications that KT's aggressive acquisition of Hyundai HCN at the group level in 2021 to maintain its position as the top player in the paid broadcasting industry has hampered its current situation.
Ryu Jong-gi, a visiting professor at Sogang University’s Knowledge Convergence Media College, noted, 'KT's behavior of not showing interest in the management situation of its subsidiaries and consistently collecting dividends despite the losses is worthy of criticism,' adding, 'The amount of dividends is not what matters; rather, the lack of efforts to share responsibility and mitigate the risks faced by subsidiaries is the problem.' He further stated, 'If KT neglects the management risks of its subsidiaries, it could someday spread to the entire group.'