Broadcasting Fund Levy Rate Overhaul: Will Pay-TV Burden Be Eased?

The payment method for the Broadcasting and Communications Development Fund (BCDF) is slated for reform. Pay-TV companies have consistently argued that their current payment amounts are excessive compared to company profits, and attention is focused on whether this reform will alleviate their burden. The Korea Communications Agency (KCA) has launched a study to explore improvements to the fund contribution method and strategies for increasing revenue.

This study aims to establish new criteria and ratios for fund imposition based on the type of business, considering the current broadcasting market landscape, and to ensure all businesses contribute to the fund equitably. Measures for managing exemptions and reductions, as well as the possibility of attracting voluntary donations from other companies, will also be reviewed. The KCA seeks to establish new systems for efficient fund collection and stable operation, adapted to the rapidly changing media environment.

The BCDF is a statutory fund jointly managed and operated by the Korea Communications Commission (KCC) and the Ministry of Science and ICT to promote the broadcasting and communications industries. Terrestrial broadcasters, general programming channels, home shopping channels, and pay-TV operators pay a certain percentage of their annual revenue as contributions. However, controversies over fairness have persisted due to differing imposition standards and collection rates among these operators.

Furthermore, there have been criticisms that the current system does not adequately reflect the evolved media landscape, as new media service providers like over-the-top (OTT) services and YouTube are excluded from the imposition targets. A KCA official stated that the current study focuses on a comprehensive review of the existing collection system.

Based on the study's findings, the KCC and KCA will set directions for system improvement and pursue revisions to the relevant public notice next year. The KCC typically imposes contributions on broadcasters based on the previous year's performance in August each year; however, this year, the existing standards were maintained due to the tight schedule for revising the public notice. The revamped system is expected to be applied from August of next year.

The pay-TV industry hopes for a reduction in the current 1.5% collection rate to 1.3% and the establishment of an exemption or reduction system for deficit-incurring businesses. In reality, some cable TV operators (SO) have paid contributions exceeding their operating profit, with the contribution-to-operating-profit ratio reaching 168% in 2024, demonstrating that fund payments pose a significant burden on companies operating at a loss.

The review also covers whether revenue diversification measures for the BCDF will extend to OTT services. Concerns exist that imposing the BCDF on global OTTs like Netflix could lead to trade disputes. Additionally, it is pointed out that it would be practically difficult to place new burdens on domestic OTTs that continue to incur losses. Instead, discussions are ongoing regarding expanding the collection targets to include multi-channel program providers (MPPs) or internet news service providers (portals).