August 2004
Reception fees and advertising revenue are major financial resources of Korea's state run station, Korean Broadcasting System, or KBS. KBS started airing programs with commercials to secure revenues in 1980, when the station merged TBC, Tongyang Broadcasting Company, and launched their second channel, KBS-2. After the merger, KBS's advertising revenue skyrocketed and finally the annual amount of advertising revenue surpassed that of reception fees in 1984. In 1998, the station had to suffer a severe decline in advertising due to the Currency Crisis in Asia, but apart from that, KBS's advertising revenue remains higher than reception fees, hovering at proportion of 6 to 4 in recent years (see Table 1.)
One of the factors to this tendency is that KBS has not raised reception fees for 23 years after its hike to 2,500 won, about 250 yen in current exchange rate (see Table 2.) For these years, KBS relied on TV commercials to secure revenue source. As a result, share of entertainment programs that can expect high ratings has been increasing at KBS-2, which broadcasts sponsored programs. KBS has been severely criticized as being “commercial,” and its existence as public broadcaster has been challenged.
In addition, KBS is pressed to invest nearly 1 trillion won, about 100 billion yen, in total by 2010 to rebuild infrastructure to disseminate digital terrestrial broadcasting. This amount is nearly as big as KBS's annual budget. To overcome the difficulties, the top management led by the reform-oriented KBS president, Jung Yun-Joo, hammered out a policy to revise the reception fees once they succeed in internal reform and rationalization. This month's report features KBS's financial system, its current status, and various opinions from people concerned and experts on the revision of reception fees.