MBC hurting from Kobaco feud fallout

A feud has broken out between Korea's largest commercial TV network, the

state-owned Munhwa Broadcasting Co (MBC), and KOBACO, the government

agency that sets advertising rates and acts as exclusive sales agent for

all the commercial networks.

Events were triggered by an MBC news programme in January, criticising

KOBACO's monopoly and arguing that MBC should set its own advertising

rates and sell for itself.

The following day KOBACO suspended sales of MBC airtime and posted

notices at its headquarters barring MBC representatives from

admission.

The notices had a defiant tone, stating: "We will fight back against the

treacherous MBC."

Sales of airtime in MBC's "Special Programmes", which are booked at

short notice rapidly declined.

The blow was severe as it came before Korea's Lunar New Year holiday,

traditionally a high point for ad sales in a slow month.

According to MBC, sales of airtime in its "specials" hit zero on January

20 and 21, while KOBACO sold more than 85 per cent of available airtime

for the rival KBS2 network and more than 97 per cent for the SBS

network.

In the same period last year, KOBACO sold virtually 100 per cent of MBC

airtime.

MBC then broadcast news of what was happening, obliging KOBACO to

recant, resume sales, and change the managers of the sales division,

servicing MBC.

But that proved small comfort to MBC, which filed a complaint with

Korea's Fair Trade Commission and asked compensation for lost sales,

estimated at four billion won.

"We believe that KOBACO is still hurting our business by manipulating

prices and failing to pass on airtime orders," said Mr Seong-Che Chong,

MBC's director of advertising planning. "We are waiting for the FTC's

findings and then we will decide whether to take KOBACO to court and sue

for damages," Mr Chong added.

KOBACO declined comment.