Wednesday, August 16, 2006

Digital Broadcasters|Korea KBS, MBC vs SBS

In Digital Broadcasters News, an unprecedented dispute is developing between Korea's top three TV broadcast networks, KBS, Munhwa and SBS.

The dispute is over SBS being accused by KBS and Munhwa of breaking a two-month old written agreement for all three broadcasters to work together on major international sports contracts and not pursue exclusive television broadcast rights individually.

Until recently the "big three" were part of the 'Korean Broadcasters Pool' that negotiated international television broadcast rights collectively.

What sparked the very public dispute was the August 1 statement, by SBS - South Korea's privately-owned digital terrestrial commercial broadcaster that it had signed a four-Games agreement with the International Olympic Committee (IOC). The dispute is now further aggravated by a fresh announcement by SBS that it will have exclusive rights to FIFA World Cup rights in 2010 and 2014.

The Korean Broadcasters Association (KBA) described the deal as "an immoral, behind-the-back move that harmed national interests", as the Korea Pool was also negotiating with the IOC at that time.

According to KBS and MBC, the SBS president, An Guk-jeong and his KBS and MBC counterparts Jung Yun-joo and Choi Moon-soon had signed an agreement to simplify the negotiations over the rights to relay the international sports events, and not to unilaterally act, but SBS moved on its own.

SBS is reported to have stated that while acknowledging it had exclusive Olympics agreements, South Koreans will be able to view the events through KBS and Munhwa as they will be offered the broadcast rights.

Where does that leave the status of these agreements?

KBS and Munhwa are taking legal advice.

[The IOC Agreement]

The SBS IOC agreement covers full rights on any audiovisual medium in the territory of the two Koreas. This is the first formal IOC TV agreement covering both the Republic of Korea and the Democratic People’s Republic of Korea.

The agreement, is in two parts. A payment of USD 33 million covers the Vancouver Winter 2010 and London Summer 2012. A second tranche covers USD 39.5 million for the 2014 (to be announced in 2007 in Guatemala City) and 2016 Games (2009 in Copenhagen).

The SBS fees are up 109 per cent from the current broadcast rights agreement (2002 – 2008) paid by the Korean Pool which runs until the Olympic Games in Beijing.

The IOC says the SBS deal is in line with the IOC’s policy to ensure maximum coverage and exposure for the Olympic Games broadcast, the agreement ensures that 250 hours of the Olympic Games and 150 hours of the Olympic Winter Games are broadcast on Korean free-to-air channels, along with an “Olympic Games’ Daily Highlights” program, which will be shown in prime time.

Commenting on the deal, IOC Executive Board member Richard CarriĆ³n, who led the TV rights negotiations in Korea, said: “Korea is arguably the world’s most advanced media market in terms of broadband penetration and early adoption of new technologies. This new contract with SBS will allow the deployment of a full spectrum of new media rights as well as extending the coverage of Olympic Games into North Korea. The financial aspects are also favourable for the Olympic Movement. We are very pleased with this outcome.”

[The World Cup Deal]

SBS is quoted in the Korean Media as saying that the SBS-affiliated SBS International won the right for an exclusive broadcast license for the 2010 and 2014 World Cup games. There has been no confirmation the deal had been signed.

The Los Angeles-based SBS International is a full subsidiary of broadcaster SBS, and is primarily concerned with buying programming content for its parent company.

SBS International signed a contract with Dentsu Inc., which had obtained permission to resell Asian broadcasting rights for the 2010 and 2014 World Cup from the international soccer federation FIFA.

The fee paid is quoted as being around USD 130 million compared to USD 35 million for the 2002 Korea-Japan World Cup and $25 million for 2006 German World Cup.

[Digital terrestrial TV Broadcasters in Korea are facing intense competition, not only with each other, but the need to find attractive content to service the new digital distribution methods that are also new sources of generating revenue. Prices paid now for digital broadcasters sporting events, will look comparatively inexpensive a few years hence, when the events happen.]

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