320 Billion Won

The Fair Trade Commission (FTC)’s blocking a merger between SK Telecom and CJ HelloVision will significantly slash down the investment in contents.
The Fair Trade Commission (FTC)’s blocking a merger between SK Telecom and CJ HelloVision will significantly slash down the investment in contents.

 

As South Korea's Fair Trade Commission (FTC) made a final decision to block the proposed takeover by SK Telecom of cable TV provider CJ HelloVision, 320 billion won (US$280.21 million) funds, which SK and CJ planned to raise for the content industry within a year after the merger, will be significantly slashed down. In short, the decision has an adverse effect on creating the content ecosystem in Korea to produce outstanding contents like American television drama series House of Cards.

According to SK Telecom inside and outside sources on July 20, SK is expected to seek qualitative growth by strengthening partnerships with promising media content producers at home and abroad and pursue mergers and acquisitions in the medium and long term. Another official from SK Telecom said, “It will be difficult to seek M&As for a while but it doesn’t mean that the company has clearly given up.” The potential candidates are C&M, Hyundai HCN and T-broad as well as CJ HelloVision.

However, SK Telecom will not be able to take over a whole company. A figure in the law industry who involved in the latest M&A case said, “The FTC concluded that CJ HelloVision is a company which shakes the order in the mobile virtual network operator (MNVO) market. It also rejected the takeover bid after reviewing the pay broadcasting market shares by area. In order to prevent the logic, CJ HelloVision should spin off and sell its MNVO and pay broadcasting businesses. It also can be forced to sell its pay broadcasting business by area depending on the situation.” The company can face the same problem when it tries to merge and acquire another pay broadcasting companies. In that case, a buyer will fail to have synergy effect through M&A, while a seller cannot have proper prices.

Meanwhile, the Ministry of Science, ICT and Future Planning will form “Pay Broadcasting Development Committee” by the end of the year to present business development plans. Second Vice-minister of Science, ICT and Future Planning Choi Jae-yoo said to reporters at the Government Complex Gwacheon, “We will establish the Pay Broadcasting Committee and announce pay broadcasting development plans as early as the end of the year.” 

 

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