[Editorial] Rewarding mismanagement

By Korea Herald

Terrestrial broadcasters should not be allowed to take commercial breaks

  • Published : Nov 13, 2018 - 17:11
  • Updated : Nov 13, 2018 - 17:11

The government has said it will allow terrestrial broadcasting stations to take commercial breaks mid-program.

The Korea Communications Commission Friday unveiled a plan to improve the broadcast advertising system. The plan calls for the introduction of commercial breaks to terrestrial broadcasting programs and relaxed rules on virtual advertising and product placement.

The three terrestrial broadcasters -- KBS, MBC and SBS -- have persistently asked for permission to show commercial breaks for about two decades, and the commission has finally bowed to the pressure.

The government has banned terrestrial networks from showing advertisements during a television program to ensure the public nature of their nationwide broadcasting and protect the rights of TV viewers from advertisers. It is self-contradictory to allow commercial breaks, which can spur ratings competition and program commercialization as well as infringing on viewers’ “sovereignty,” which the commission has habitually championed.

The broadcasters cite financial difficulties as the biggest reason to need commercial breaks.

Their ad sales dropped by 753 billion won ($661 million) from 2.375 trillion won in 2011 to 1.622 trillion in 2016, but their total revenue increased by 84 billion won from 3.914 trillion won to 3.998 trillion won over the same span. Their retained earnings amount to 2.511 trillion won.

KBS and MBC recorded deficits of 44.1 billion won and 53.6 billion won, respectively, in the first half of this year. Each expects to record an annual deficit of about 100 billion won this year. But, this can be attributed more to their lax management rather than to decreased income.

If commercial breaks are allowed, the three terrestrial broadcasters are expected to see their revenue increase by 110 billion won each year.

Not long after President Moon Jae-in took office, the government replaced the directors of KBS and the Foundation for Broadcast Culture, who had been appointed by the previous administration. The foundation holds a major share in MBC. KBS is a public broadcasting enterprise owned by the government.

The performance of new managers of the two networks have exposed a kind of moral hazard in the industry: In the face of losses from poor management, the government’s response is not to seek corrective measures, but the opening of new revenue streams.

More than 60 percent of KBS executives and employees make more than 100 million won a year, according to data released by Rep. Yoon Sang-jick of the Liberty Korea Party during the parliamentary inspection of the government last month.

Reportedly about 70 percent of all employees are management staff.

Still, the network collects more than 600 billion won in TV license fees from viewers a year.

MBC also suffers from lax management. Managers are said to outnumber rank-and-file workers by 2-to-1.

Few networks would have such an abnormal manpower structure.

Even though management is getting out of shape, they hired pro-Moon, progressive figures to host current affairs programs for appearance fees excessive enough even for their labor unions to criticize them.

Ads during commercial breaks are said to be up to twice as expensive as existing ads. It is selfish of the networks to demand permission to show them.

Commercial breaks, if allowed for the terrestrial networks, will only encourage their already lax management. And yet, the government is rolling up its sleeves to help them. If they ratcheted up criticism of the government, it is unlikely the commission would be so inclined to support them.

Among other reasons to oppose the plan, public opinion is against it. A recent poll found that 6 out of 10 people opposed the introduction of commercial breaks during programs. Viewers’ rights are already infringed on by indirect and virtual advertising allowed by the previous government. Allowing commercial breaks is as good as turning a deaf ear to viewers’ inconvenience.

Before holding out their hands for help, the terrestrial broadcasters will have to try to find why their ad sales and ratings have fallen, and make efforts to reduce high wages and idle manpower.

If the commission calls itself an agency to ensure the public nature of terrestrial broadcasting and protect viewers’ rights and interests, it must demand belt-tightening measures, rather than allowing commercial breaks.