Conflicts in the pay TV industry over content fees are growing. Groups of program providers (PP) that supply channels to pay TV platforms are protesting that cable TV operators (SO) are trying to cut the fees paid for linear channels.
The Korea Broadcasting Channel Promotion Association, the Korea Broadcasting Channel Provider Association, and the PP Council issued a statement on the 2nd saying they express serious concern and deep regret over cable TV operators' criteria for calculating content fees. The associations added, We strongly urge a full withdrawal of these fee calculation criteria that deny the value of broadcast content and cause a shortage of funding for producing K-broadcast content.
This follows LG HelloVision and D'live announcing in June last year that they would apply new fee calculation criteria.
What the PP industry took issue with was the draft criteria for fair distribution of content fees prepared by the Korea Cable TV Assosiation in May last year. The draft links cable TV operators' (SO) revenue size to content fees to lower their fee burden. The PP industry said, From the moment the draft was released, we continuously conveyed the problems with the fee criteria and PP operators' concerns to the SO side, but none of the PPs' concerns or proposals were reflected, adding, The SO industry unilaterally finalized the fee criteria in April last year without any substantive consultation with PPs, who are stakeholders.
They also argued a fairness issue. The PP industry said, Given that most SO operators have already signed multi-year contracts for terrestrial retransmission fees, there is no possibility the same fee criteria would be applied to those, and in the end the criteria can only be applied to PPs, who are less able to resist pressure from SO operators, creating an unfair reverse discrimination in which only the PP share of content fees is cut.
The PP industry said it has endured a freeze or reduction of SO content fees for years and is now at the limit. Over the past five years (2020–2024), PP content production costs rose an average of 6.9% annually, sharply increasing production cost burdens, while ad revenue fell an average of 3.8% over the same period, leaving PP operators facing a double squeeze.
The PP associations said, Cable TV operators should strengthen their essential service competitiveness by favoring PPs that provide quality content, and added, We hope SO operators will restore the intrinsic value of cable TV by revising their strategy to fairly treat and foster operators that supply quality content.
Regarding this, the Korea Cable TV Assosiation and the SO Council said, SOs already pay more than 90% of subscription revenue as program fees, bearing the highest level of content expense among pay TV platforms, and added, We have gathered diverse views through multiple rounds of feedback, briefings, and seminars based on expert reviews, and we have tried to reflect reasonable alternatives raised to the extent possible, so we cannot agree with the claim that there was no consultation. They continued, In a market environment changed by the spread of online video services (OTT), these fee criteria move away from past customary transaction methods to reflect content value and market realities.