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Newsletter | August 2015, Issue 2
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TECHNOLOGY, MEDIA & TELECOMMUNICATIONS
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Amendments to the Broadcasting Act and IPTV Act Permit US Companies to Indirectly Invest in Korean Program Providers
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In accordance with the Korea-U.S. Free Trade Agreement, amendments to the Broadcasting Act and the Internet Multimedia Broadcast Services Act (“IPTV Act”) became effective as of March 15, 2015. These amendments now permit U.S. companies to make indirect investments in Korean program providers (“PP”).
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Under the previous version of the Broadcasting Act, “foreigners” (including Korean companies whose stock or capital is at least 50% owned by foreign companies or whose largest investor is a foreign company) could not hold more than 49% of the shares in domestic PPs. To enter the Korean PP market, a foreign company had to establish a joint venture company with a domestic Korean company. However, even then, the foreign company could not get managerial control of the joint venture company as it could not own more than 49% of the joint venture company’s shares.
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Today, with these amendments in place, U.S. companies may acquire 100% of the stock or capital of a domestic PP (excluding general service, news, and home shopping channels) through a wholly-owned Korean subsidiary. Moreover, as PPs in general also hold the status of “content providers” under the IPTV Act, the IPTV Act was similarly amended to permit indirect investment by U.S. companies.
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For U.S. companies, these amendments not only eliminate the requirement to partner with a domestic company, but also provide opportunities to invest more freely in Korean broadcasting businesses by acquiring managerial control.
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