South Korea's Broadcast Media Telecommunications Commission issued a corrective order to cable operator D'Live for violating re-licensing conditions. It ordered D'Live to prepare within 3 months a plan to cut its debt ratio, including measures such as increasing capital. The commission again demanded improvements to D'Live's financial structure after it fell into complete capital impairment.

The commission held its 40th plenary meeting on Oct. 7 and voted to impose a corrective order on D'Live under Article 99, Paragraph 1, Item 2 of the Broadcasting Act. The case concerns D'Live's violation of a re-licensing condition related to submitting and obtaining approval for a debt-ratio reduction plan.

When D'Live was re-licensed last year, it was required to prepare a debt-ratio reduction plan and obtain the commission's approval. D'Live submitted implementation plans twice, in October last year and January this year, but the commission did not approve them on Sept. 2.

At the time, the commission judged that key tasks proposed by D'Live, including attracting external investment, lacked sufficient detail and were also inadequate as fundamental financial improvement measures. It required D'Live to resubmit within 3 months debt-ratio reduction targets and detailed implementation measures, including a capital increase, and obtain approval.

D'Live requested through its submission of opinions on the day that the compliance period be extended from 3 months to 6 months. It cited the need for time to review the size and method of capital expansion, hold consultations with investors and creditors, and carry out external advisory work and internal approvals.

The commission rejected the request, considering that a significant amount of time had passed since the re-licensing condition was imposed and that D'Live had already had two opportunities to submit implementation plans.

D'Live must therefore, within 3 months from the day it received the corrective order, prepare debt-ratio reduction targets and an implementation plan that includes a capital increase. It must submit the plan to the commission and obtain approval.

D'Live's financial structure has deteriorated in recent years. As of the end of last year, D'Live's consolidated total equity was minus 74.1 billion won, putting it in a state of complete capital impairment. It recorded net losses for seven consecutive years from 2019 through last year, and last year's net loss was tallied at 89.6 billion won.

As the cable TV market has contracted amid changes in media consumption toward IPTV and online video services, D'Live has also failed to find a clear breakthrough in a long-running sale process. It is currently continuing operations under the lead of a creditor group made up of financial institutions, and the need has grown for financial restructuring improvements accompanied by capital expansion.

The commission said follow-up measures under the Broadcasting Act are also possible if the corrective order is not carried out.

Ko Min-su (고민수), vice chairperson of the commission, said that if the corrective order is not implemented, measures under the Broadcasting Act are possible. He listed possible steps including cancellation of the licence, full or partial suspension of operations, a halt to advertising, and a shortening of the licence validity period, and urged faithful implementation of the order.

Kim Jong-cheol (김종철), chairperson of the commission, said broadcasters' financial soundness is directly linked to providing stable broadcasting services, fulfilling public responsibilities and protecting viewers' rights. He called for an effective plan to improve the financial structure.