The Korea Herald

지나쌤

SKT seeks to expand presence in pay TV

Rivals express monopoly concerns

By 이지윤

Published : Nov. 2, 2015 - 17:42

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South Korea’s No. 1 mobile carrier SK Telecom said Monday that it would acquire CJ Hellovision, the Internet television service affiliate of CJ Group, with aims to strengthen its dominance in media platform services.

The telecom company said it will acquire a 30 percent stake in CJ Hellovision owned by CJ O Shopping, the group’s home-shopping unit, for 500 billion won ($438 million) immediately. The remaining 23.9 percent stake will be acquired in a call option deal also for 500 billion won three years later. 

SK Group chairman Chey Tae-won SK Group chairman Chey Tae-won

And the company plans to merge its IPTV operating unit SK Broadband with CJ Hellovision in April next year, creating the nation’s No. 2 pay TV operator after KT.

KT has 6.15 million IPTV subscribers and 2 million satellite TV subscribers. With the planned acquisition, SK Telecom is expected to narrow the gap to less than 1 million subscribers.

Both KT and LG Uplus -- the nation’s No. 2 and 3 telecom carriers that are also competing fiercely in the pay TV market -- resisted the acquisition deal, citing SK Telecom’s dominant market position. 

SK Telecom’s head office in Seoul (Bloomberg) SK Telecom’s head office in Seoul (Bloomberg)
Currently, SK Telecom has a market share of more than 50 percent in the telecom market. Industry watchers predict it is just a matter of time for the company to catch up with rivals in the pay TV market based on its strong customer base.

The deal comes at a time when the nation’s top three telecom carriers are suffering from a saturated telecom market and turning to more promising media platform services.

In particular, the planned entry of Netflix, the world’s biggest on-demand Internet streaming service provider, next year is expected to pose a direct threat to the local players.

“The global ICT market is experiencing a convergence revolution. Our renewed commitment to media platform business is not an optional but a crucial decision for survival in the future,” SK Telecom said in a statement.

SK is hoping to strengthen its ties with CJ, which is making a big push on content production and distribution, taking advantage of the K-pop popularity in Asia.

Under the deal, SK will purchase 150 billion won new shares issued by CJ Corp. The two also agreed to establish a 100 billion won fund to support media content and IT start-ups.

Like other conglomerates here, SK is has been seeking to streamline its business portfolio and nurture next-growth engine business after chairman Chey Tae-won returned to the management in August after a three-year hiatus. The group is pouring resources into four main pillars -- the energy, semiconductor, IT and bio sectors.

By Lee Ji-yoon (jylee@heraldcorp.com)