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KOREA: Revised Bill Regulates Newspaper Market Share

Experts question regulation of newspaper market, say it is much stricter than that of other businesses

The Korea Times
Friday, December 31, 2004

By Jung Sung-ki

A revised bill, which was approved by a parliamentary subpanel Thursday, is aimed at regulating the market share of the country's newspaper companies.

The bill, originally proposed by the ruling Uri Party, stipulates that any company with 30 percent of the total market share or more, or the top three whose combined market share exceeds 60 percent, would involve sanctions such as penalty money as monopolistic businesses under the Fair Trade Act. The market share is supposed to be calculated based on print circulation instead of sales distribution by the Korea Audit Bureau of Circulations (ABC).

The subject of the revised bill includes 138 nationally distributed newspapers as general interest, economic, sports and English-language dailies. Three dailies - Chosun Ilbo, Dong-A Ilbo and JoongAng Ilbo - currently account for 44 percent of the market share and hence are not subject to sanctions under the revision. If a newspaper is found to have violated the law, it will be fined corresponding to 3 percent of sales.

The governing party had originally pushed for plans that aim to control the market shares of 11 national dailies only, which was construed as a "biased-policy" targeting at the three conservative vernacular dailies. According to the original plan, the combined market share of the "big three" would have been 68 percent.

Under the revised bill endorsed by a subpanel of the National Assembly Culture and Tourism Committee, newspaper companies are recommended to sign editorial contracts and form editorial and readership committees under a discretionary provision of the bill, which was one of the disputed articles between the ruling party and main opposition Grand National Party (GNP). The ruling party had pressed for it being a mandatory rule while the GNP accused it of being a fundamental violation of the freedom of the press.

The bill also requires that newspaper companies report print circulation, fixed-price sales circulation, subscription rates and advertising rates to the Ministry of Culture and Tourism. The ruling party initially wanted the report of newspaper companies' internal management materials, including financial statements, business reports and details on stock share changes.

The ruling and opposition parties also edited out the controversial article for limiting advertisement on the total pages of a paper to 50 percent. The GNP and major dailies had opposed the provision, saying the article would be against the Constitution in terms of enterprise rights.

The proposal of the GNP to allow a newspaper company to run broadcasting stations was not included to the revised newspaper bill and the plan calling for a government-funded newspaper distribution corporation was also erased. But the latter will be replaced with a plan to establish a public service corporation, funded by newspaper companies, to jointly distribute newspapers.

Reasonable levels of free distribution and gift giving are also permitted under the proposed bill. According to the Korea Free Trade Commission's newspaper regulations, newspaper companies are allowed to engage in free distributions and gift giving within a limit of 20 percent of sales.

Despite the agreement on the bill, however, many experts have raised questions over its constitutionality, as the regulation on newspapers is much stricter than that on other businesses. Currently, corporations are allowed to hold a 50 percent market share, or three companies with a combined share of 75 percent under the Fair Trade Act.

Asia Institute