"D Live's Financial Deterioration Sparks Blame on MBK as Major Shareholder"

*This content was translated by AI.

Blame is being placed on MBK Partners and other major shareholders regarding the financial deterioration of cable broadcaster D Live.

In particular, during the Broadcasting, Media, and Communications Commission meeting, discussions arose concerning past large-scale borrowings accompanying acquisitions and subsequent massive dividend payouts related to D Live's financial decline, drawing attention to the role of Kim Kwang-il, MBK Vice Chairman, who has participated in D Live's board of directors for an extended period as a representative of MBK Partners.

According to transcripts of the Broadcasting, Media, and Communications Commission plenary meeting, some commissioners stated that it is difficult to explain D Live's financial deterioration solely by the stagnation of the pay broadcasting market and directly raised the responsibility of major shareholders.

The Broadcasting, Media, and Communications Commission deliberated on the 'Approval of the Plan for Fulfilling Re-licensing Conditions for D Live' during its plenary meeting on the 2nd and decided not to approve it. According to the commission, after reviewing whether to approve the plan to reduce the debt ratio imposed as a re-licensing condition at the time of D Live's re-licensing in 2025, it was judged that the specifics of key tasks such as attracting external investment were insufficient and that fundamental financial improvement measures were also inadequate.

At a briefing held on the same day, the Broadcasting, Media, and Communications Commission announced that it would issue an order to correct the situation, requiring D Live to submit and obtain approval for debt ratio reduction targets and implementation plans, including capital increases, within three months.

According to D Live's corporate registration certificate, MBK Vice Chairman Kim Kwang-il was appointed as a director of D Live in March 2008. He was subsequently reappointed as a director in March 2011, and again consecutively in 2014, 2017, 2020, and 2023. The term of Gi Ta-bi (SVP) director expired on March 30 this year.

This means Vice Chairman Kim has participated in D Live's board of directors for approximately 18 years from the time MBK and others acquired C&M (now D Live) until recently.

Given that the period during which D Live experienced financial deterioration due to borrowing burdens after the acquisition largely overlaps with the period Vice Chairman Kim served as a registered executive, what role he played in improving the financial structure and supervising management as a long-term board member has become a major focus of interest.

It is also noteworthy that Vice Chairman Kim has simultaneously held key positions in numerous companies for an extended period.

According to a report by SustainBest, a voting advisory firm, released in February last year, it was revealed that at the time, Vice Chairman Kim was serving as a registered executive of multiple companies simultaneously, including Homeplus CEO, D Live, Napa, Lotte Card, and Osstem Implant.

SustainBest reported that Vice Chairman Kim concurrently held positions as Hyeon Hwang-eul (CEO) director in one company, co-representative director in two companies, inside director in one company, Gi Ta-bi (SVP) director in 13 companies, and Gi Ta-bi (SVP) director and audit committee member in one company.

It was reported that at the time, SustainBest recommended against the appointment of Vice Chairman Kim as Gi Ta-bi (SVP) director of Korea Zinc, stating, "We judge that there is a concern that he may not fulfill his duty of loyalty as an Gi Ta-bi (SVP) director due to excessive concurrent appointments."

During the Broadcasting, Media, and Communications Commission meeting, remarks questioning the responsibility of major shareholders regarding D Live's financial deterioration followed one after another.

According to transcripts of the 32nd meeting released by the Broadcasting, Media, and Communications Commission, Commissioner Choi Soo-young stated, "The largest shareholder received dividends of 284.6 billion won after the acquisition, but the company is currently in a state of complete capital impairment for two consecutive years," adding, "In this situation, I believe that plans to improve the financial structure solely through cost reduction, asset sales, or forbearance by creditors without specific capital increases or financial support from the largest shareholder are truly castles in the air."

Commissioner Choi continued, "I believe the debt ratio reduction plan submitted by D Live should naturally be rejected. While there are difficulties in the pay broadcasting market, a significant portion of the responsibility for this issue lies with the major shareholders, so I think our commission must handle this matter more strictly."

Commissioner Lee Sang-geun also remarked, "Didn't MBK and Macquarie acquire C&M in 2008?" He added, "Looking at the dividends here, it appears that MBK and Macquarie took away about 300 billion won."

According to the transcript, Commissioner Lee stated, "In my view, the company itself is MBK, which also includes Homeplus. The policy being pursued in the market seems to be acquiring slightly profitable companies and stripping all their assets. I cannot shake off the suspicion that this company has also been subjected to corporate raiding."

He further said, "There is a plan to reduce the debt ratio, but from a corporate perspective, companies with debt ratios of 9,000% or 1,000%, or even those over 200%, are almost all risky enterprises. I think we must convey a strong message to MBK and Macquarie this time."

The labor sector has also raised claims that the leveraged buyout (LBO) method used by MBK and others in the process of acquiring C&M (now D Live) in the past contributed to financial deterioration.

In June last year, the D Live branch of the Public Transport Workers' Union Hope Solidarity held a press conference demanding conversion negotiations with creditors and the company side.

At that time, Shim Bok, D Live Labor Union Jeong Chaek (Director), stated, "D Live has shouldered over 400 billion won in debt since the private equity fund acquisition in the late 2000s, and this burden continues to be passed on to workers even now," adding, "There is no room for investment in technology and equipment, leading to aging communication infrastructure and accelerating subscriber churn."

On the other hand, MBK Partners maintains that directly linking D Live's current financial situation to past major shareholder management or dividend issues is inappropriate.

MBK stated, "D Live has been operated under the actual management and supervision of the major shareholders for the past 10 years since signing a voluntary agreement with creditors in 2016, so no single shareholder can unilaterally dictate management or divert funds."

They further added, "The dividends mentioned were executed to multiple shareholders during a period of normal management over ten years ago, and we understand that the current financial deterioration is a result of structural stagnation in the pay broadcasting market. D Live and the major shareholder group intend to faithfully resubmit concrete debt ratio reduction plans."

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*This content was translated by AI.