Controversy over Fair Competition
SK Telecom officials held a press briefing session to announce its expected effects and vision after the takeover of CJ Hello Vision and merger with SK Broadband at the company's headquarters in Seoul on Dec. 2.
On the day, the company unveiled its business plan for the merged corporation. It said, it will foster the company into an innovative media platform operator with global competitiveness. SK Telecom explained that both domestic and global media markets are dominated by so-called over the top (OTT) global media content service providers such as Netflix and YouTube. The company said it will merge SK Broadband with CJ Hello Vision to gain competitiveness, and tap into global markets after winning a victory in the domestic market first. It added that the merger and acquisition of media platform providers is a global trend, citing examples from the U.S. where 31 broadcasters in 1995 decreased to three companies.
In a bid to strengthen the cause of CJ Hello Vision takeover, SK Telecom presented a plan to invest 5 trillion won (US$4.3 billion) over the next five years to upgrade cable network, that includes digital transition and expansion of UHD broadcasting, implementation of bi-directional intelligent network and content industry and supporting startups. Such a plan will generate a wealth effect of 7.5 trillion won (US$6.45 billion) and employ 48,000, it added. In particular, the company said it will establish an additional fund for small and medium content operators, in addition to a 100 billion won (US$85.95 million) content fund with CJ E&M that the company proposed last month when announcing the takeover. Moreover, SK Telecom is planning to develop innovative services that combine 1Gbps Internet connection, Big Data and Internet of Things.
In regards to competitors’ concerns over distorting fair market competition, the company said there will be no problem when the company abides by safety requirements and conditions of approval set by the government.
The company's announcement drew criticism from competitors. LG U+ said in a press release, “Although SK Telecom said it will invest 5 trillion won, its is merely a combined figure of usual investment made by SK Telecom and CJ Hello Vision. If the giant company appears, it will weaken the competitiveness of the media and content market in the long run, at a discount of combined products.” A KT official also said, “SK Telecom’s investment and business plan is nothing new and it has nothing to do with the merger and acquisition.”