Report: Commercial Breaks during Programs Will Be a Huge Profits Generator

According to a research report on Tuesday, TV advertisement shares would increase by 459.3 billion won if terrestrial TV allows commercial advertisement to be shown midway through TV programs and implements an ad quota system.

Meanwhile, the cost of online advertisements is expected to decrease by 121.5 billion won and the cost of commercials on cable TV is expected to decrease by 66.8 billion won.

The research report, titled ‘A Study on Plans for the Broadcasting Advertisement System,’ was received by Grand National Party Rep. Shim Jae-cheol from the Korean Broadcasting Commission.

The advertising quota system means the system that allows broadcasting companies to fill an advertising quota regardless of the time, the length and the number of commercial ads.

The Digital Broadcasting Special Act that was passed in this April favors raising KBS’ receiving fee, implementing TV commercials during programs, and implementing an advertising quota system. Opponents say that these violate TV viewers’ rights, however.

TV commercials midway through programs are allowed on cable TV. Two ads are allowed for 45-59 minute-long programs, and four are allowed in programs over 60 minutes long.

According to the report, if terrestrial television broadcasting without an advertising quota system implements a similar advertising model, advertisement sales will increase by 4% initially, and a 117 billion won annual increase in 2015 when the system is fully implemented. Meanwhile, the cost of online advertisements will decrease by 31 billion won, and the cost of cable TV ads will decrease by 17.1 billion won.

It is expected that income from terrestrial advertisement will increase by 1.9% even if only half the number of commercials on cable TVs are allowed.

Professor Han Eun-gyeong at Sungkyunkwan University, who lead the research team, said, “Easing restraints on terrestrial TV ads may threaten other media including cable TV. Broadcasting advertisement reform should not focus on maximizing profit, but find ways to make the media more diversified.”

Moreover, television advertisements during programs should be allowed only in TV dramas and entertainment programs on terrestrial TV, and a system which regulates commercials starring the main actors of a program should be implemented, the team claimed.

Some suggested that if KBS raises its receiving fees, the introduction of television advertisements during programs should carefully be reviewed because the BBC and NHK, which are both public broadcasters, prohibit commercials to be shown midway through their programs.

kimhs@donga.com