Nature and Performance of Multiple Channel Networks in Korea

초록

In Korea, until 1999, broadcasting industry has been dominated by the terrestrial broadcasters, particularly 3 public service networks. Even though cable TV started, and 29 channels began to provide services in 1995, there have been no real channel businesses. It was due to the regulation by the old (1990-1999) Broadcasting Act. The previous law heavily prohibited merger and acquisition in the broadcasting market. Under this regime, a channel firm had to own only one channel. Conglomerates and newspaper firms could not operate the channel business at all. This tight regulation resulted in bad performance in terms of finance and viewing shares. In 1998, partly due to the then economic crisis that hit Korea as well as Asian countries, 5 cable channel networks out of 29 were bankrupt, and most channel networks were in severely bad situation. In order to survive in the market, the cable channel firms strongly argued deregulation in their market. At last, the government made a new law, the 2000 Broadcasting Act, which allowed the broadcasting firms to merger and be merged, and the conglomerates to enter the channel market. The law also decided to introduce first satellite broadcasting in Korea. As the new law enforced, multiple channel networks that operated several cable channels emerged in the market for the first time. Among them, On Media and CJ Entertainment have led the industry. While the former was owned by Dongyang Group which is one of the leading finance firms, the latter by the Cheil Jedang which ranks top 10 in Korea. The On Media has 5 channels: two movies, an animation, a game and a go channel. CJ has 5 channels: a music, a food, a fashion, a drama and a home shopping channel. These two networks ignited another firms acquisition of channels. This situation means that the broadcasting industry will change a lot, and the broadcasting firms will enter the real competitive market for the first time in Korea. It is unprecedented in Korea. Introduction of mult