KDB eyes partners; startup costs are around $230 mil

SEOUL — A consortium led by state-run Korea Telecom is facing the daunting challenge of getting a direct satellite broadcasting service off the ground by the end of the year. KT won the national license in December following a bruising battle against a telecom rival.

Now the consortium — Korea Digital Satellite Broadcasting (KDB) — is playing catch-up by lining up partners, even though foreign ownership is limited to 33% by law. U.S.-based EchoStar Communications Corp. is set to agree to an investment of up to 5% within a month.

Startup costs are around 300 billion won ($230 million), with investment reaching $1.8 billion over the next four years. Target aud is 4 million subs, but breakeven point is 2 million, which should be achieved after year four.

While U.S. programming is important, KDB management director Lee Byung-hyo says, “We want a diversity of cultures.” Lee plans content from Russia, Japan, China, Europe and Africa.

KDB officials are keen to point out the advantages of their service over cable TV, which has struggled to find a footing since starting up in 1995. The sat service will offer more than 100 channels, compared with cable’s 54. KDB will also offer up to 10 pay-per-view channels, while cable has none.

“Our marketing strategy is differentiation,” says KDB broadcasting director, Chang Yun-taek. In addition to PPV, 74 channels are dedicated to video, 30 to audio and 15 to data. Interactivity will set it apart from cable as well as using convergent technology through mobile phones and other devices.

Three market surveys have already been conducted to pinpoint what Korean consumers want. Unsurprisingly, sports and movies came out on top, Chang says.

Home installation costs will be kept low to encourage subscribers.

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