LG U+ expected to acquire CJ Hello this week
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LG U+’s plan to acquire cable TV company CJ Hello could be finalized as early as this week. Progress with the deal has been slow since Korea’s smallest mobile carrier first began considering the acquisition early last year. Industry sources said Monday that the deal is mostly finalized and, with a board meeting scheduled on Thursday, is likely to be concluded this week.
With the acquisition, LG U+ will become the second-largest player in the domestic paid TV market. KT, with both an internet protocol TV (IPTV) service and satellite subsidiary KT Skylife, is currently the market leader.
Paid TV services in Korea include cable TV, satellite TV and IPTV.
LG U+ will likely acquire a 53.92 percent stake in CJ Hello from CJ’s entertainment arm CJ ENM. The cost is expected to be around a trillion won ($888.6 million).
The acquisition would give the mobile carrier more negotiating power when acquiring or producing content. The carrier could also be in a strong position to lure CJ Hello’s 4.16 million subscribers, as of the first half of 2018, to its mobile service by offering favorable rates.
LG U+ is already using its partnership with Netflix to attract more customers to its mobile and IPTV service.
“LG U+ will likely acquire a 53.92 percent stake in CJ Hello from CJ’s entertainment arm CJ ENM.”
Once the mobile carrier decides to go ahead with the deal, it then needs to be approved by the Fair Trade Commission (FTC), the Ministry of Science and ICT and the Korea Communications Commission. In 2016 when SK Telecom tried to acquire CJ Hello, then CJ HelloVision, the deal fell through as the antitrust body disapproved on the grounds that the acquisition could hurt fair market competition.
This time, though, FTC head Kim Sang-jo hinted during a recent interview that the commission would take a more positive stance regarding the deal considering the rapid changes in the media market. Kim questioned whether broadcasting and telecommunications can be considered completely separate in a quickly changing market.
It is still to be seen whether LG U+ will more explicitly announce its intent to acquire CJ Hello and expand its paid TV services. The carrier is holding a press briefing for the launch of a new IPTV service targeting senior citizens in Seoul. Many questions are expected to focus on the acquisition deal and future IPTV strategy.
Competitors KT and SK Telecom are also considering acquiring cable broadcasting companies to counter LG U+’s move. KT is reportedly interested in acquiring cable broadcasting company D’Live, which has a 6.45 percent share of the Korean paid TV market as of the first half of 2018. KT and KT Skylife control more than 30 percent of the market while CJ Hello owns 13 percent and LG U+ has 11.41 percent.
Questions & Answers
Q.What is the expected cost of LG U+'s acquisition of CJ Hello?
What is the expected cost of LG U+'s acquisition of CJ Hello?
The acquisition of a 53.92 percent stake in CJ Hello from CJ ENM is expected to cost around a trillion won, which is approximately $888.6 million.
Q.How will this acquisition change LG U+'s position in the paid TV market?
How will this acquisition change LG U+'s position in the paid TV market?
With the acquisition, LG U+ will become the second-largest player in the domestic paid TV market. Their combined market share with CJ Hello would exceed 24%.
Q.Which regulatory bodies need to approve the deal once LG U+ decides to proceed?
Which regulatory bodies need to approve the deal once LG U+ decides to proceed?
The deal needs approval from the Fair Trade Commission (FTC), the Ministry of Science and ICT, and the Korea Communications Commission after LG U+ finalises its decision.
Q.What happened when SK Telecom previously attempted to acquire CJ Hello?
What happened when SK Telecom previously attempted to acquire CJ Hello?
SK Telecom's attempt to acquire CJ Hello in 2016 failed because the antitrust body disapproved the deal, citing concerns that it could harm fair market competition.
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