Photo Credit: Mathew Schwartz
HYBE has completed its acquisition of a 14.8% stake in SM Entertainment, held by SM’s Founder and former Chief Producer, Lee Soo-man.
HYBE also announced it resolved the ‘governance issue’ between Lee and SM. “SM will be moving to become a company with a transparent governance that prioritizes shareholder value,” the press release reads. HYBE is seeking to develop what it calls “a truly global entertainment platform.”
Earlier this month, SM Entertainment CFO Jang Cheol-hyuk took HYBE to task in a 15-minute YouTube video titled, “The reason why SM is against HYBE’s hostile takeover.”
“As soon as SM’s new vision, SM 3.0, was announced the largest shareholder sold his stake and a hostile takeover attempt by a competitor started,” Jang Cheol-hyuk says in the video. “This is an attempt that ignores not only the fierce delibration and efforts of the 600 SM employees who have dreamed of becoming the number-one entertainment company in the world, but also the values and pride of SM, which is has pursued together with the fans and artists,” he continues.
The CEO of HYBE addresses this in the acquisition. “I am aware of the concerns that fans, artists, employees, and shareholders of SM have, due to rumors and speculations about the company. HYBE fully respects the direction laid out in SM 3.0 growth strategy, as well as the value and vision SM’s employees and artists have created,” says Jiwon Park.
“I would like to express my regret to SM artists in particular, who may have been troubled by the turn of events. We respect SM’s artists as much as we do our artists at HYBE. Leveraging the expertise we have accumulated, we will do our best to create a brighter future for all artists under SM. This is an era of change for both companies. We wish any short-term business decisions or prejudgement by some leaders would no longer cause confusion and uncertainty. I hope the management can come to a wise and reasonable conclusion to ensure that our shared visions and business directions are on the right track.”
Jang Cheol-hyuk said that K-pop’s fanbase would suffer under this acquisition due to its monopoly status. “SM charges reasonable prices for concert tickets to allow a broader scope of fans to enjoy cultural performances. Meanwhile, HYBE has taken advantage of its position in the K-pop market to almost double the price of concert tickets. The consolidation of SM and HYBE will accelerate ticket price increases, adding burden to fans who love and support K-pop.”