U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

Box 4.6 Competitive conditions in the Korean audiovisual services market
Broadcasting and Cable
The Korean television broadcasting and cable market is one of the largest and most technologically advanced 1 in the
Asia-Pacific region. As of early 2006, there were 46 terrestrial television stations, 59 cable operators, and 190 relay
cable operators in the country. The top three public broadcasters—Korea Broadcasting System (KBS), Educational
Broadcasting System (EBS), and Munhwa Broadcasting Corporation (MBC)—all maintain national coverage. Of the
three, KBS maintains the largest market share and produces the most original content. KBS’ programs are also
available in the United States, China, France, Japan, the Philippines, Mongolia, and Vietnam. 2
Cable, pay TV, and digital satellite operators are also well established in the Korean market. Cable operators,
Taekwang, C&M, CJ, and HCN, garnered the largest market shares in Korea, with Taekwang accounting for almost
3 million subscribers or 21 percent of the national cable television market in 2006. Since 2004, the largest cable
operators in Korea have been positioning themselves to consolidate the overcrowded market through partnerships with
various foreign investors. 3 Most recently, in 2006, Korean cable operator HCN, Korea’s fourth-largest cable company,
sold a 33.5 percent stake of its shares to the U.S. private equity firm, The Carlyle Group, for $171 million, making
Carlyle the second largest shareholder in the company.
Motion Pictures
Overall, the Korean film industry is dominated by domestic, and, to a lesser extent, U.S. motion pictures, with the two
combining to account for almost 95 percent of the market share in 2006. 4 The top three Korean motion picture
companies—CJ Entertainment, Showbox, and Cinema Service—were responsible for producing and/or distributing
almost 82 percent of the films seen in Korea in 2006. 5 Moreover, seven of the top ten films at the Korean box office
in 2006 were domestically produced; the other three were U.S. produced.
Internationally, 208 Korean films were exported to 53 countries in 2006. Japan, the United States, and France were
the top three export destinations for Korean films with receipts totaling $10.4 million (42 percent), $2.0 million
(8 percent), and $1.3 million (5 percent), respectively.
1 Globally, the Korean broadcasting and cable market is recognized as a leader in the development and
commercialization of new media technologies such as IPTV and mobile television. As of 2006, there were more
than one million free-to-air mobile television subscribers in Korea.
2 Internationally, Korean drama series and variety shows tend to be most well-received.
3 Foreign investors are currently permitted to hold stakes of up to 49 percent in Korean cable companies and 33
percent in satellite broadcasters. Through the FTA, these quotas would eventually be lifted and 100 percent
foreign ownership would be allowed in these sectors.
4 U.S. films accounted for about 35 percent of the films shown in Korea.
5 CJ Entertainment is also a majority shareholder in Cinema Service.
Sources: Korean Film Council, “Review of the Korean Film Industry in 2006”; Mergent, The Asia-Pacific Media
Sectors, March 2007; and Screen Digest, Global Cinema Exhibition Trends, October 2006.
4-21