SEOUL – Korea Telecom and Japanese investment company Softbank have teamed up to create a $40 million film and TV content investment fund.

          The two companies are each to invest Won20.5 billion ($20 million) in the Global New Media Investment Association, which will develop and acquire animation, movies, TV drama and educational content specifically to run on KT's Internet Protocol TV service, MEGA TV.

          "We're going to differentiate MEGA TV from the traditional network and cable TV Jung Man-ho, KT's director of media business, said. "The fund allows us to plan, finance and produce programs such as high-def and  interactive contents specified for IPTV."

    The fund will be managed by Softbank Ventures Korea, a venture capital subsid of the Softbank Group. Softbank Ventures Korea is currently investing some $100 million of capital in IT, Web2.0 and mobile technologies, and has enlarged its portfolio into the digital content area by purchasing shares in Korean entertainment companies including KeyEast and Jtune.

  The firms plan to expand the Global New Media fund to $60-$100 million later this year.

Korea's largest fixed line phone operator KT has diversified into mobile, Broadband internet and terrestrial mobile TV, which counts millions of subscribers in Korea. The Korean government recently paved the way for deregulation of the IPTV sector, which is expected to lead to an explosion of growth in the sector and a challenge to traditional cable TV.

To fuel these new media ventures with content, KT has previously invested in media companies and content by acquiring a majority stake in movie production shingle SidusFNH and TV producer OLIVE NINE, while cooperating with Disney, Warner Brothers, Fox, Sony, EBS and Naver.

  KT Thursday announced that it would invest another $25 million in a separate fund, taking this week's new media commitments to $65 million.

   "Previously funds invested in media contents couldn't exercise any influence on distribution or international rights.  But we will secure copyrights, exclusive distribution rights and merchandising rights in order to leverage our profitability," Moon Gyu-hak, president of SoftBank Ventures Korea, said.

   "We are going to focus 90% of the fund on Korean content. However, in the movie sector, the fund will acquire foreign content as soon as possible. For Japanese contents, we will secure copyrights to original programs," Moon said.

   "The newly developed contents will be also provided to Softbank's IPTV in Japan. Our partnership will be expanded with the new media business," said Jung.

   KT has had close relations with Softbank, which also owns the Vodafone cellular company in Japan, since 2001 when Softbank expanded into the broadband Internet business.

© Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

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