LG Uplus Vice Chairman Ha Hyun-hoe (Photo: LG Uplus)

LG Uplus took a step to signal the reshaping of the Korean pay TV broadcasting market. The nation’s No. 3 telecom service provider said on Feb. 14 the company will acquire a 50 percent stake plus one share in the cable TV operator CJ Hello, owned by CJ E&M.

If the acquisition is finalized, LG Uplus will become the No. 2 pay TV operator, a rise from 4th. LG Uplus’s archrivals SK Telecom and KT are expected to follow suit in taking over other cable TV operators, causing upheaval in the pay TV market.

LG Uplus convened a board of directors’ meeting on Feb. 14 and approved a plan to acquire a 50 percent stake plus one in CJ Hello from CJ E&M, which owns a 53.92 percent share in the pay TV operator. A deal on the acquisition whose price stands at 800 billion won, was signed between LG Uplus and CJ E&M.

LG Uplus said, “(LG Uplus) acquired a stake in CJ Hello to secure a competitive edge in the rapidly changing pay TV market and lead an era of 5G.”

On the same day, CJ E&M said the company decided to dispose of a stake in CJ Hello to ramp up the competitiveness of content through choice & concentration in the rapidly changing global content market.

LG Uplus will have 30 days to obtain a go-ahead on the acquisition to become the largest shareholder of CJ Hello from the government in accordance with related acts.

If okayed by the government, LG Uplus will see its ranking on the pay TV market rise to No.2 position from 4th place with the addition of CJ Hello, a 3rd pay TV operator with a 12.8 percent share. It will put LG Uplus just behind the No.1 pay TV operator KT with a 31 percent share, but will surpass current No. 2 ranker SK Broadban with a 14.2 percent share.

According to telecommunications community sources, LG Uplus’s acquisition of CJ Hello is forecast to get the nod from the government. In 2015, the Korea Fair Trade Commission (KFTC)disapproved SK Telecom’s bid to acquire CJ HelloVision, the predecessor of CJ Hello, and merge it with its subsidiary SK Broadband, saying that it would be feared to harm competition in the broadcasting and communication market.

KFTC Chairman Kim Sang-jo said in a recent interview he hinted at taking a positive attitude toward a request for acquiring CJ Hello to give more leverage to broadcasting and telecommunications convergence. LG Uplus signed an MOU to take over CJ Hello in 2017, but negotiations were stalemated over the acquisition price.

The latest acquisition may be construed as the firing of a flare to cause upheavals in the pay broadcasting market that encompasses cable TV, satellite TV and internet protocol TV (IPTV). The cable TV market, once an axis of the pay broadcasting market, remains behind IPTV with obsolescent facilities. D’LIVE, No. 6 cable operator, was put on the market for sale a long day ago. Other cable operators will likely follow suit.

SK Telecom is reportedly weighing its acquisition into another cable TV operator. KT is working on a process of letting its subsidiary KT SkyLife acquire D’LIVE.

Mobile communications industry sources said cable and internet barriers become meaningless thanks to the advancement of technologies. Mobile telecom service providers are poised to stage a fight of economy of scale through M&As of cable TV operators. Public eyes are focused on whether radical changes in the cable TV market would have a spill-over effect to the mobile telecom service market.

LG Uplus is expected to launch aggressive sales activities targeting CJ Hello subscribers to sell the former’s cable-mobile convergence products. Currently, SK Telecom ranks 1st in the mobile telecom service market with a 41.9 percent share, followed by KT with a 26.1 percent share and LG Uplus with a 20 percent share.