SEOUL-When South Korea's first cable TV channels start telecasting to an estimated 4.2 milion Korean homes in 1995, it could be the answer to advertisers' prayers.
"There has been a lot of interest in [cable] among clients because the demand for TV advertising is so high," said an account director at a major Seoul agency.
Fewer than 10 Korean companies, the likes of Samsung and Hyundai, control 95% of the commercial time, leaving little or none at all for major foreign multinationals, such as Coca-Cola, IBM and McDonald's.
Not only will the start of the 20 new channels, the country's first private TV, mean more commercial time, cable also is expected to take a more liberal approach to both programming and advertising. Currently, there are four national state-owned channels broadcasting about 13 hours a day with ad time limited to six minutes per hour. Each cable channel will be able to offer 10 commercial minutes per hour.
Korea's TV industry has been criticized for outdated regulations regarding commercial time limits, media costs, media contracts and the process of approving commercials, done only after production is completed.
Restrictions on government stations, for example, include a ban on feminine hygiene products spots, considered distasteful, and cosmetics and pet food ads, considered too luxurious.
But as Asia's second largest ad market behind Japan opens up more generally to foreign interests, marketers and agencies-multinationals in particular-appear to be succeeding in pushing for clearer and fairer practices. None would discuss their activities, however, for fear of repercussions.
Although welcomed, cable will take a few years to become established. Estimates are that the channels will bring in only $125,000 during their first year of operation. But by the end of next year at least 10% of all Korea's 12 million households will subscribe.
"When the subscription rate surpasses 30% of the population, [cable] will be a very attractive medium for advertising," said Hahn Tae Youl, vice chairman of the Korean Cable Communications Commission, a government agency overseeing content of programming and advertising on cable. "This will take five years at most."
Citing pent-up demand, some believe income will soar to $10 billion by 1998. TV spending for the first nine months of 1993 was $556 million, according to A.C. Nielsen, less than one-third total spending in measured media of $1.66 billion.
The 20 companies designated as program suppliers will also be responsible for selling advertising and setting ad rates for their channels. Although no figures have been set, it's believed advertisers will be willing to pay top dollar for a channel that delivers viewers. Currently, the state channels charge about $7,660 for a 30-second spot in prime time while the cheapest time slots go for as low as $744.
Despite the ready-made market, it won't be easy. "We have to compete with the existing TV channels, which have much greater resources, so we have to be on our toes," said an executive at one cable channel.
Like their over-the-air brethren, the cable channels will focus on news and information programming, movies and sports. The Yonhap News Channel will telecast 24 hours a day, while most others have committed to around 12 hours each weekday and more on weekends. Among those assigned channels are two ad agencies, Cheil Communications, associated with the Samsung Group, and Diamond Ad, with the Hyundai Group.
Although foreign shows are limited to 30% of program time, some of the channel operators are signing up with international suppliers. For example, Cheil has signed an exclusive contract with the U.S.'s Discovery Channel to operate a cultural channel. And Diamond Ad plans to produce its own dramas, comedies, talk shows, cooking programs for its Hyundai Family Network. It is working on a link-up with the Family Channel for its U.S.' general entertainment programs.
The involvement of the ad agencies of two major conglomerates has led to concern that the agencies will favor their own clients over others. But Mr. Hahn said it will be impossible to reserve all the time on their stations for their clients.
Diamond Ad is forecasting that Hyundai ads will account for 60% of commercial time on its channel.
The surplus of ad time is expected to allow longer spots than the 15- to 30-second commercials commonly seen. And since the channels won't fall under the authority of the controversial Korea Broadcasting Advertising Corp. (KOBACO), a government agency that sets rates and agency commissions, the channels will be freer to innovate.
"We plan to have clients selling luxury goods such as diamonds on CATV because this is completely impossible on TV," said one industry executive, noting that under Korea's current unofficial policy, advertising for luxury goods doesn't fit with the image of frugality the government is trying to instill among the populace. In fact, the government has called dog food-made only by foreign manufacturers-a luxury item that could incite class stuggles because there are Koreans who don't have enough to eat.
The requirement for post-production screening by Korea Cable Communications, another government agency, remains in place, but cable regulations do not contain the catch-all clause banning commercials which "go against the sentiments of the people." This philosopny is what has been used to prohibit TV advertising of pet food and luxury goods in the past.
