South Korean courts are consistently ruling that production companies must bear contract risks in disputes over broadcast scheduling and revenue settlements for dramas and films. Legal experts say these rulings highlight the need for production companies to more thoroughly review scheduling and settlement terms at the contract stage and establish risk-sharing mechanisms.
According to legal sources on May 8, the 46th Civil Division of Seoul Central District Court (Presiding Judge Kim Hyung-chul) ruled against SR Pictures in January in a lawsuit seeking approximately 5 billion won in unjust enrichment claims and sponsorship agency fees from KBS.
SR Pictures had been preparing to produce the drama "School 2021" but the broadcast was canceled. The production company filed suit claiming "an implied production contract had been established and the contract was terminated without justifiable reason after trust was given based on the premise of contract execution." However, the court ruled in favor of KBS, citing the absence of a confirmed broadcast contract.
"Production costs are a critical element of the contract, yet there is no evidence of specific agreement between the parties or standards and methods to determine this in the future," the court stated. "It is difficult to conclude that the broadcaster refused to execute the contract without reasonable grounds."
Content production disputes also occur in the film industry. Previously, a dispute arose between Lotte Cultureworks and Coupang over the release of a director's cut during exclusive OTT distribution contract negotiations for the film "Hansan: Rising Dragon." Subsequently, Bigstone Pictures, the production company behind "Hansan," filed a lawsuit against investor and distributor Lotte Cultureworks claiming success bonus settlements. The court ruled against the plaintiff, stating "since the OTT distribution contract was terminated and fees were not actually paid, no settlement occurred."
Legal experts view these rulings as exposing vulnerabilities in content contract structures. Many contracts are designed to favor distributors and OTT platforms, leaving production companies to bear most production risks, analysts say.
"Rather than relying on industry practices or verbal promises as in the past, copyright and revenue structures must be clearly stipulated in contracts," said Noh Jong-eon, managing partner at Law Firm Jonjae. "Production companies need to restructure their contracts by setting settlement standards based on 'revenue recognition' rather than 'cash receipt basis.'"
