The 'standards for fair distribution of content usage fees' (hereinafter referred to as the standards) for cable TV are expected to be first applied to each service operator (SO) unit in early June.
Although the standards being introduced after long discussions may have limited scope and targets, it is significant as the first year applying the principles agreed upon between service operators (SO) and programming providers (PP). There is still passive participation from dominant players such as terrestrial broadcasters and opposition from small and medium-sized PP providers, but it is evaluated that everyone recognizes the necessity of the standards.
Amid declining revenue, cable TV has felt the need for the introduction of the standards as content usage fees have excessively increased to account for 89% of broadcasting revenue. Additionally, with the emergence of over-the-top (OTT) services changing content value and OTT usage rates more than doubling over five years, it is noted that the changes in market conditions must be reflected.
The issue of fee distribution is emerging as a structural problem directly related to the survival of the industry, despite the weakening of SO's content monopolies and decreasing content value in paid broadcasting, while content compensation continues to rise.
To prevent market confusion, cable TV plans to gradually apply the decline in content value over three years and set total aggregates of usage fees by channel groups to ensure that dominant channel groups, such as terrestrial broadcasters, do not influence negotiations of other channel groups in order to protect small and medium-sized PPs.
The introduction of the standards is evaluated as the first step towards resolving structural imbalances and creating a reasonable distribution of content usage fees and a symbiotic structure. It is expected to create a trust-based market environment through normalizing fee distribution rates, reflecting changes in broadcasting revenue, and establishing fair competition systems through relative evaluations among channel groups.
Hwang Hee-man, president of the Korea Cable TV Broadcasting Association, noted, "It is time to transition the market, which has relied on practices for 30 years, to rational standards," adding, "It has great significance in that everyone cooperated to alleviate the industry's difficulties and lay the foundation for a symbiotic ecosystem."