CJ ENM halts popular channels on LG U+ video service

CJ ENM halted broadcasting of 10 channels on telecom company LG U+'s video service, U+ Mobile TV, from Saturday as the conflict between the two companies intensify over usage fees.

CJ ENM halted broadcasting of 10 channels on telecom company LG U+’s video service, U+ Mobile TV, from Saturday as the conflict between the two companies intensify over usage fees.

For U+ Mobile TV users, the move blocks access to some of the most popular cable channels owned by CJ ENM, Korea’s largest entertainment company, including Mnet, TvN and Tooniverse.

As is the industry custom, CJ ENM and LG U+ engage in discussions annually to decide how much LG would pay in exchange for using CJ’s TV channels for its services. The conflict arose earlier this year when CJ ENM asked for a much higher raise than usual: A 175 percent increase on year.

CJ ENM's content usage fees have increased over the past years, but this year’s hike rate was excessive, LG U+ claims. In 2020, the on-year increase rate was 24 percent, while in 2019, it was 9 percent.

“As an amicable settlement, LG U+ suggested an increase rate of double digits, twice, but CJ ENM did not back off on its initial request of 175 percent,” LG U+ said in a statement on Saturday.

“Considering the general on-year increase rate of usage fees in the industry is 10 percent, CJ ENM is taking it too far.”

At the opposite end, CJ ENM claims that LG U+ was undercharged until now and that the 175 percent hike is just a push to set things right.

In April, CJ ENM told LG U+ that it would separately charge content fees for U+ Mobile TV apart from what it charged for LG U+’s internet protocol television (IPTV). This served the basis for CJ ENM’s 175 percent increase.

A core question that divides the two is how U+ Mobile TV should be defined.

LG U+ views it as a mobile version of its IPTV service that allows content on the television platform to be available on portable devices like smartphones and laptops. In other words, it’s merely an additional service offered to IPTV subscribers.

CJ ENM, on the other hand, claims U+ Mobile TV is a separate over-the-top service in its own right, like Netflix.

“This service [U+ Mobile TV] has its own set of rates, subscribers and exclusive content, therefore LG U+’s claim to regard it as part of its IPTV is weak,” CJ ENM said in a statement.

The entertainment company noted that LG U+ IPTV subscribers pay an additional fee to use U+ Mobile TV on their smartphones. Even those that do not watch LG’s IPTV can subscribe to use U+ Mobile TV exclusively. The over-the-top service also has exclusive content not available on the TV platform.

CJ ENM also claimed LG U+ refused to answer its repeated questions on the size of viewership of LG U+’s over-the-top service, making it difficult to properly assess usage fees.

“For a long time, mobile carriers have used entertainment content at a cheap price to increase network subscribers — this practice has to come to an end, at least from this moment on,” CJ ENM said.

LG U+, on the other hand, said CJ ENM’s recent decision was a strategic move to boost CJ’s own over-the-top service TVing and to gain an upper hand in upcoming discussions for content usage fees on LG U+’s IPTV.

In their respective statements, the two companies said they are both open for discussions.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]