Korean series were originally produced in house by the television channels themselves, but have been outsourced to independent production companies since the 2000s. In 2012, as much as 75% of all K-dramas were produced this way. Competition is fierce among these companies; out of 156 registered firms, only 34 produced dramas were actually aired in 2012.[30] The budget of the production is shared between the producing company and the broadcaster, with the broadcasting channel covering around 50% of expenses usually. If top stars and famous scriptwriters are employed, they may cover even more. The rest of the budget has to be brought in by the production company with the help of sponsors. In the case of product placements, income is shared by the producer and the channel. The channel keeps 100% of the advertisement income during airtime; this could amount to ₩300–400 million. A typical Korean drama may cost as much as ₩250 million per episode, and historical dramas cost more than that. For example, Gu Family Book cost ₩500 million per episode.[30]
In Korea, much of the budget is spent on the appearance fees of top stars since they are heavily dependent on celebrities' popularity.[2] In some cases, the actors may take up as much as 55–65% of the whole budget, while it is 20–30% in Japan, and roughly 10% in the United States as dramas there tend to avoid casting famous actors when starting off.[30] Everything else, including salaries of lesser-known actors, extras, and technical staff, location rent and other expenses, have to be covered from the remaining amount. Often, production companies overrun their budgets and cannot pay salaries. In 2012, actors held a demonstration in front of the headquarters of KBS, expressing their concerns. Actors are usually paid after the last episode is aired at the end of the month. In series made by smaller production companies for cable channels, there have been cases where the companies went bankrupt and could not pay their actors and crew, while the channel denied all responsibility, claiming all liability was with the bankrupt production firm.[31] Producer Kim Jong-hak spent as much as ₩10 billion on Faith, which was considered a commercial failure, resulting in the inability of Kim to pay crew salaries and other overheads. Kim, who had produced successful dramas such as Eyes of Dawn and Sandglass, committed suicide after he was accused of embezzlement.[32][33] The biggest stars may earn as much as ₩100 million per episode.[34] Bae Yong-joon, the star of Winter Sonata, reportedly received ₩250 million per episode for The Legend in 2007.[30]
