Broadcasting ad market faces upheaval

By Lee Hyo-sik

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The broadcasting advertising market is expected to undergo major changes as four new TV channels operated by conservative dailies here will directly secure ads independently, not via the state-run advertizing agency.

The Korea Broadcast Advertising Corp. (KOBACO), established in 1981, has been acting as an agent for Korea's three terrestrial broadcasters - KBS, MBC and SBS - and regional broadcasters.

Under the Broadcasting Law, businesses and individuals seeking to place ads on TV have to go through KOBACO, which distributes commercials to each broadcaster in accordance with its guidelines.

In what marks a significant transition, KOBACO's monopolistic role in the TV advertisement sector has recently come to an end as the Constitutional Court declared its function unconstitutional.

In 2008, Korea's highest court suggested that the National Assembly revise the current law that allows only KOBACO and its subsidiaries to act as an advertising agent for broadcasters by the end of 2012.

The governing Grand National Party (GNP) and the main opposition Democratic Party (DP) have begun discussing how the law should be amended, but they remain poles apart on the issue.

The GNP argues that to boost the competitiveness of Korea's media industry, broadcasters should compete against one another to secure ads on their own by introducing high-quality media content.

In disagreement, the DP and other opposition parties insist that the excessive competition to acquire commercials among TV stations would distort the ad market and weaken media diversity as it will be a fatal blow to smaller broadcasters.

While lawmakers wrangle over how to change the law, four new channels, which launched services Thursday, have declared that they will directly procure ads, independent of KOBACO.

Each channel will use the country's cable, satellite and Internet broadcast networks to air news programs, shows, dramas and documentaries. They will provide services 24 hours a day and air commercials throughout one show rather than in between shows.

Not only these channels, but also terrestrial broadcasting firms are moving to set up private advertizing agencies to claim a larger share in the saturated TV commercial market. SBS said it will not rely on KOBACO for advertizing revenue but instead operate its own ad agency from this month. MBC also plans to roll up its sleeves in January to secure more commercials.

Despite this, smaller private broadcasters in provinces, media workers unions, newspapers and progressive civic groups are opposing the direct marketing by large broadcasting firms. Opponents claim that KOBACO has played a positive role in preventing collusion between broadcasters and advertisers.

They say if TV stations are allowed to freely seek advertisements, they will be heavily influenced by large business groups and other advertisers. They also say broadcasters could refrain from airing news and programs critical of major advertisers; stressing broadcasting firms should not be permitted to conduct private ad marketing.