[INTERVIEW]

The second season of tvN's hit 2016 series "Signal" and Disney+'s Korean original series "Knock-Off" have one thing in common: both projects were indefinitely postponed due to controversies surrounding featured stars.

While the exact scale of financial damage has not been publicly disclosed in either case, industry sources estimate that the potential penalty fees and damage compensation in such cases can cost up to hundreds of billions of won, offering a stark glimpse into the financial exposure producers face when a star-driven project is derailed by scandal.


In the case of “The Second Signal,” uncertainty loomed over its release after its lead actor, Cho Jin-woong, was found to have committed multiple offenses as a minor and subsequently retired from the industry.

The fully preproduced drama, reportedly made with a budget in the tens of billions of won, was excluded from tvN’s first 2026 lineup announcement despite earlier assurances that the broadcaster was seeking the “best possible solution.” Legal sources say Cho could face penalties ranging from 2 billion won to 5 billion won ($1.38 million to $3.46 million) for his appearance fee alone, giving a rough idea of the total damage the production house may have to suffer.

A similar fate was also cast on Disney+’s “Knock-Off.” T he Walt Disney Company Korea announced early last year that it would “pause plans” for the series after its main lead, Kim Soo-hyun, was embroiled in allegations that he had dated the late Kim Sae-ron when she was underage.

With approximately 60 billion won reportedly invested and production on a second season already underway, filming came to a full halt. Local reports suggested potential compensation claims could range from 18 billion won to as much as 180 billion won, depending on contractual terms and the series’ circumstances.

Most recently, comedian Park Na-rae stepped down from all her programs after being accused of workplace abuse against her former managers. The controversy cast uncertainty over the release of Disney+’s fortune-telling survival show “Battle of Fates.” The Walt Disney Company ultimately went ahead with the Feb. 11 premiere, stating that the show centers on the contestants and that Park, as a member of the observing panel, would not be edited out. Public sentiment in Korea, however, has been far less receptive to the decision.

With more projects adopting fully preproduced models, production teams increasingly find themselves exposed to sudden and severe fallout from personal controversies involving cast members. Even if compensation is sought, it is highly unlikely that the production will be able to fully recover its losses. The legal process of detailing each element of the potential damage is neither simple nor swift. In many cases, therefore, delaying the release ultimately becomes the more practical option rather than canceling the project altogether.

“It’s not easy [to simply forgo the release altogether and move straight to seeking damages]. Filing a claim for damages is not that simple," said attorney Lee Yong-hae at YH&CO, a law firm that focuses on legal matters within the entertainment industry.

"People often assume that once you file a claim for damages, compensation will automatically follow. But in reality, every element of the loss must be proven. You have to demonstrate, step by step, what specific damages occurred and how they were caused. It’s far from simple.”

So, how protected are production companies in reality — and are laws, regulations and contracts adapting to these new challenges? To explore the legal realities behind these disruptions, the Korea JoongAng Daily sat down with Lee, who worked for 20 years as a television producer and served as a legal assistant at Netflix Korea.

More risks emerging

Cast-related risk is not a new subject in the industry. But it does appear to have grown — or at least become more visible — compared to the past.

“When I was actively producing dramas 10 or 20 years ago, the production cost per episode was around 100 to 300 million won,” Lee said. “Now it’s more like 2 to 3 billion won per episode. And some projects have total budgets of 50 or 60 billion won.”

One of the key drivers behind risks being more visible is the rise of social media and global content platforms. Today, information can be discovered and shared across borders within seconds. For instance, when allegations involving Kim Soo-hyun and the late Kim Sae-ron first emerged, related photos cited as evidence, including images of the two together, quickly spread across social platforms within minutes.

“Once [controversies] spreads on social media — and because Korean content has gone global — it no longer remains a domestic issue,” Lee said. “The conversation itself becomes global. That’s why these situations seem to escalate much more quickly than they used to.”

Another factor that frequently sparks controversy is the high moral expectations of Korean audiences. In particular, allegations involving school bullying, drunk driving, drug use or even questions about a celebrity’s attitude tend to draw intense public scrutiny here. As a result, stars who become entangled in school bullying allegations, even at the investigative stage, often find themselves sidelined from the industry.In this environment, even relatively minor personal scandals are rarely treated as isolated matters and can directly influence a project’s reception, future success and release schedule.

For example, after actor Kwak Do-won was convicted of DUI in 2022, he stepped back from the industry and kept a low profile. Projects he had already completed at the time were subsequently delayed: the film “Firefighter” (2024) premiered two years later than originally scheduled, while the drama “Villains” (2025) was ultimately released in December last year.

“It does seem that Korea tends to be more sensitive to the moral risks surrounding talents compared to Western markets,” said Lee. “In Hollywood, for example, serious crimes like sexual offenses are, of course, treated as major issues. But when it comes to things like drug use, they are often perceived as a part of a person’s private life and seen as separate matters from their professional work.”

“In Korea, however, even relatively minor personal controversies or small moral missteps are taken very seriously, and their personal lives are often closely tied to the commercial success of a project.”

'Morality clause'

While Korean audiences tend to hold celebrities to high moral standards, contracts between production companies and actors are not always as strict despite the industry’s rapid growth.

One of the major issues in contracts between producers and talent is the use of vague terminology, such as morality clauses.

A typical statement often included in contracts regarding morality is “in the event that the artist causes public controversy.” Lee stated that this clause is generally more abstract in Korea than in the United States, the world's leading content industry.

“In Korea, the standard contract does typically include what’s known as a ‘morality clause.’ It often states that action can be taken when the talent causes public controversy,” he said. “The problem is that these terms are highly abstract, like what exactly can be defined as public controversy.”


He also pointed out that, in most cases, the contracts do not clarify matters such as who determines whether an issue qualifies as a public controversy or even the procedure for resolving it.

“[It usually doesn’t specifically state] who determines whether something counts as public controversy,” he said. “Should a ‘public controversy’ be determined based on public opinion or by the contracting party or a government authority? Or does it require a formal criminal investigation or conviction to be seen as a public controversy?”

Despite this, Lee said, many production teams are hesitant to include such detailed definitions, fearing they could create obstacles in moving projects forward.

“It’s actually difficult for production companies to include detailed definition clauses,” Lee said. “Although they can include them, in practice, it’s rarely done. And talents are also often reluctant to agree to putting very specific language in the contract from the beginning.”

While the contracts are generally vague, another blind spot exists: timing — specifically, when the alleged incident occurred.

“The issue generally becomes legally relevant only if the controversy arises after the contract has been signed,” Lee noted.

This even affected the court’s decision in actor Seo Yea-ji’s damage compensation case in 2023, after she was embroiled in allegations of school bullying and gaslighting her ex-boyfriend.

The court sided with Seo, citing, “Although the allegations were raised during the contract period, they occurred before the contract. Even if the allegations are true, it cannot be considered a breach of contract by Seo or her agency.”

The attorney explained, “In many cases — like recent instances, such as Cho or in typical school bullying allegations — the incidents often date back many years. They occurred before the contract was executed. In those situations, the contract's morality clause doesn’t necessarily address the issue. There’s a structural limitation.”

More specifically, a better future

A contract is a “measure to protect the industry,” Lee said. For the industry to be a safe place where both talent and creators can freely expand their creativity, he emphasized the importance of “detailed” contracts and “transparency” from both parties.

“The first thing creators should take into consideration is drafting contracts more carefully,” Lee stressed. “They should make them more precise and detailed.”

Regarding morality clauses, he suggested specifying each term in-depth, including categorizing different types of conduct.

“There needs to be a clearer framework that categorizes different types of conduct and clearly spells out what procedures should be followed in each case,” he elaborated.


With many productions being halted due to the past actions of stars, which are often not covered in the contract and are totally unpredictable for the creator, the attorney stressed the importance of strengthening representation warranties and specifying the procedures, including penalties, when they are violated.

A representation warranty is a statement in which the talent guarantees certain facts, such as not having been involved in any past wrongdoings.

“Korean contracts tend to place relatively less emphasis on the representation warranty,” Lee said. “However, in the United States, they are considered extremely important.”

“[By strengthening the representation warranty,] when it turns out to be untrue, the consequences can be immediate. The contract may be terminated, and it doesn’t stop there, and also leads to claims for damages.”

While specifying morality clauses and strengthening representation warranties can address most issues when controversies arise, Lee added that introducing a limited duty of disclosure regarding pre-contract conduct can reduce unpredictability.

Under this approach, the talent must disclose any past controversial actions to the creator in advance, while the creator must maintain strict confidentiality regarding the disclosed information.

Lee also recommended introducing a completion bond to protect creators against production delays or budget overruns caused by factors such as replacing an actor or other talent.


BY KIM JI-YE [kim.jiye@joongang.co.kr]