South Korean media giant CJ ENM Co Ltd and broadcaster JTBC have delayed the launch of their over-the-top (OTT) streaming service due to a prolonged antitrust review, and are now having difficulty securing financial investors.

Existing OTT service business unit Tving will now be split off from CJ ENM on October 1, industry sources said on Wednesday (August 12). The two companies agreed to establish a joint venture in May based on the Tving platform and applied for a Fair Trade Commission (FTC) review, but it has taken longer than expected.

FTC reviews initially take 30 days, but this can be extended to 90 days or longer if necessary, including time spent on document preparation. An antitrust review of Wavve, a video streaming platform jointly set up by SK Telecom and broadcasters KBS, MBC and SBS, took more than six months.

Despite the delay, industry insiders expect the establishment of the joint venture to go smoothly. JTBC and CJ ENM plan to continue using the Tving brand, and it is not expected that their OTT platform will fall behind services offered by domestic competitors like Wavve and Watcha, given their ability to create original content.

CJ ENM will have a controlling stake in the new company through its in-kind contribution of Tving. The two partners are reportedly considering an investment of 20 billion won ($16.9 million) by JTBC, making it the second largest shareholder, and will raise tens of billions of won from financial investors for content production.

Most OTT service providers are moving to distinguish themselves from rivals by creating original content, but need to raise money to cover the big expenditure, as well as marketing costs.

The delay in splitting off Tving will also mean a lag in securing financial investors. A marketing campaign for Tving hasn’t begun in earnest and investors that were cautiously approached by CJ ENM and JTBC are giving a tepid response. A number of private equity firms that have shown interest in domestic OTT service providers have also opted to invest in production companies instead because the FTC review is still underway.

PE firms may get another opportunity after the JV is established in October. CJ ENM and JTBC could provide a guarantee on investment returns and put options if there is still a lukewarm response, but this means financial investors will have to bear lower returns.

“With the entire contents market being reshaped, led by global OTT service providers like Netflix and production companies, existing broadcasters and local OTT service providers have been put in a disadvantageous position,” said an official from a PE firm. (Reporting by Ik-hwan Choi)