SK Broadband's plan to carve out its artificial intelligence data center business has entered a formal government review.
The Korea Media and Communications Commission held its 44th meeting at the government complex in Gwacheon, Gyeonggi Province, on the 23rd and approved a basic screening plan for the change in licensing of SK Broadband's internet protocol television (IPTV) and cable broadcasting businesses following the corporate split.
SK Broadband applied for the license change on Sept. 1 in order to separate its AI data center business. Under the split ratio, the surviving entity, SK Broadband, accounts for 84% and the newly created entity, SK Horizon, for 16%. After the split, SK Telecom plans to hold 100% of SK Broadband and 51% of SK Horizon. The remaining 49% stake is to be secured through financial investors at a later date.
"Now that the basic screening plan has been approved, we will form an expert review committee and screen the matters under a fair and objective process before deciding whether to grant the license change," a commission official said. The review committee is expected to focus in particular on whether SK Broadband can sustain its capacity to operate its broadcasting business and meet its public responsibilities after the split. The commission will carry out related procedures through November, including gathering viewer opinions and forming and operating the review committee, and plans to notify the company of the outcome around December.
Most commissioners who attended the plenary session backed the basic screening plan but stressed the need to closely examine how the split would affect the financial soundness of SK Broadband's broadcasting business and its content investment. Commissioner Choi Soo-young said, "We respect a company's choice to raise its business expertise and efficiency," while adding, "The review must look at whether separate usage fees will have to be paid once facilities are transferred to the new entity, and whether those fees are appropriate." Choi also said, "Payments for content must not be reduced."
Commissioner Ryu Shin-hwan said, "This appears to be a split aimed at raising business efficiency in line with the growth of the AI industry, but we need to examine whether internet data center operations serving the broadcasting business are also being separated or outsourced." Ryu added, "If the split significantly undermines the financial base of SK Broadband's broadcasting business, we have no choice but to assess it negatively," and said, "If necessary, we should also review commitments of financial support from the new entity or third-party remedies."
Commissioner Lee Sang-keun, who voiced opposition, raised concerns about the impact the AI data center split would have on the existing IPTV and system operator (SO) businesses. "SK Horizon serves as a cash cow, and if SK Broadband and SK Horizon are divided, the existing business will have weak growth momentum while Horizon becomes the new growth driver," Lee said. "We need to monitor and supervise whether the profits of the new entity are concentrated among a few."
Commission Chairman Kim Jong-chul said, "This license change review is a procedure for comprehensively assessing whether the public responsibilities and operational capacity of the existing broadcasting business can be sustained," and asked staff to "take every precaution to ensure the fairness and objectivity of the review."
Separately, the commission decided the same day to impose a 30 million won fine on program provider IHQ, in lieu of a suspension of operations, for violating registration change obligations under the Broadcasting Act. IHQ split off and registered Eyeshow Media on June 8 without obtaining a registration change from the commission. The commission also ordered YTN and Yonhap News TV, which failed to comply with corrective orders related to their CEO recommendation committees, to remedy their Broadcasting Act violations by Dec. 19.