If you want a big Korean corporate drama to watch, I recommend reading about the SM Entertainment battle royale.
HYBE, the management agency behind superstar boy band BTS, will become the biggest shareholder of its K-pop rival, SM Entertainment.
The move strengthens HYBE’s dominance in South Korea’s music industry, where it is already the biggest player, even as it seeks to expand abroad with the recent acquisition of a US-based hip-hop label that features artist Lil Cherry.
The South Korean entertainment giants announced the deal Friday, with HYBE set to pick up a 14.8% stake in SM Entertainment for $334.5 million from its founder and largest shareholder Lee Soo-man.
Meanwhile, HYBE Labels intends on acquiring up to 40% of total shares in SM Entertainment by March 1 with strong support from founder Lee Soo Man, setting its sights on re-acquiring significant control of SM Entertainment’s operations.
This is in response to co-CEOs Lee Sung Soo and Tak Young Joon’s sale just three days ago of newly issued shares to internet/media giant Kakao for a 9.05 % stake in the company. That transaction is now a subject of a lawsuit by Lee Soo-man to void it. Likewise, the co-CEOs are challenging the HYBE transaction as a “hostile takeover.”
SM was founded by legendary music producer Lee Soo-man, who is widely referred to in South Korea as “the godfather of K-pop.” The company is known for representing hit artists, such as NCT 127, EXO, BoA and Girls’ Generation. However, in recent years he came under fire for being the “sole producer” of all acts of the company, reaping millions of dollars in fees directly for himself. When he was pushed out of CEO, he maintained a long term multimillion dollar fee arrangement that new managers believe is unconscionable.
Bernie Cho, a Seoul-based music industry executive, said the two deals announced were unlike anything he’d seen This “may be the biggest one-two power punch I’ve ever seen or heard [of] in the history of the K-pop industry,” said Cho, president of DFSB Kollective, a music artist and label services agency. He said the deals had the potential to put HYBE in the same league as the “big three” major record labels: Sony(SNE), Universal and Warner Music.
Meanwhile, Kakao has aggressively diversified from its beginnings as being the number one messaging app to a conglomerate media company.
Open Thread #799
Source: Buzz Pinay Daily
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