SK Telecom’s acquisition of CJ Hellovision, the nation’s No. 1 cable TV company, may be construed as part of the nation’s largest telecom service provider’s strategy to solidify the media business the company seeks to nurture as a next-generation growth engine. The acquisition will likely earn synergic effects from CJ Hellovision’s merger with SK Broadband, SK Telecom’s media business subsidiary. 

If the acquisition process is completed, SK Telecom expects to see its presence in the Korean paid broadcasting business threaten to approach the level of KT, the biggest company of the paid broadcasting market. SK Broadband’s membership of 3.35 million people and CJ Hellovision’s membership of 4.15 million clients add up to 7.5 million clients, a little lower than 8.5 million subscribers with KT and KT Skylife. The domestic paid broadcasting market will likely be realigned with two juggernauts KT and SK Telecom teams.

SK Telecom’s expanded investment into the media business is linked to the company’s strategy to secure a new growth engine, departing from the conventional telecom business arena. The Korean media market is growing fast. In particular, broadcasting and communications firms as well as one-person broadcasting platforms such as YouTube and AfricaTV have recently made strides. 

Naver and Kakao have begun to strengthen their presence in the video business market. Korean companies are competing for the hegemony of the paid broadcasting market as Netflix, the world’s largest paid video streaming company, is to make inroads into Korea early next year.   

On the other hand, the Korean telecom market is suffering a setback in business performances. The market is shifting fast from the conventional voice-based call to a data-base paradigm, so telecom service providers’ performances hinge on consumers’ data utilization amounts and they feel threatened to their survival unless they secure a competitive edge in video and other media business arenas. 

Telecom industry analysts said the media business will play a pivotal role in whether or not they secure a competitive edge in the date-based mobile telecom service industry. This is the reason telecom service providers are scrambling to jump on the wagon and follow a trend of investment into the media business industry. 

SK Telecom has begun hiring experts from several walks of life through SK Broadband to expand its presence in the medial business arena. Yoon Suk-am, former head of TV Chosun Channel’s broadcasting schedule division, moved to SK Broadband. Yoon, who once served as president of Channel tvN, held such positions as schedule & production division head of TV Chosun Channel. 

Earlier, SK Broadband employed former senior executive vice president Yoon Sang-chul of  SAMG Animation, who is now in charge of the animation business of SK Broadband. SK Broadband took over the video on demand business brand “Hoppin” from its brother company, SK Planet, to expand the size of the media business division. 

SK Telecom is expected to achieve synergic effects in the cheaper smartphone business market by acquiring CJ Hellovision, which is the No. 1 business leader in the area with a membership of 850,000 clients. SK Telecom has come up with products connected with SK Broadband. SK Telecom’s acquisition of CJ Hellovision will likely bring more diverse convergence products, business analysts said. 

A coalition of SK Telecom, SK Broadband and CJ Hellovision will also have a great impact on the domestic mobile telecom market, they said. 

SK Telecom’s acquisition of CJ Hellovision is unprecedented, so there are many hurdles to be overcome, including a go-ahead from the government. SK Telecom’s rival companies will likely oppose the acquisition, citing antitrust laws.