Photo Credit: DearU’s Bubble chat app
K-pop music powerhouse SM Entertainment has acquired an additional 11.4% stake in DearU, the company behind an artist-fan chat app.
SM Entertainment announced the acquisition in a regulatory filing on Friday that it purchased 2,711,351 shares of DearU for 50,000 won ($34) each, for a total of 135.6 billion won ($9.2 million). The Korean entertainment giant gained nearly 2 million shares from fellow major Korean entertainment company JYP Entertainment. The remaining shares came from DearU’s chief executive officer and other senior executives.
All told, SM Entertainment now owns a 45.1% stake in DearU. The latter’s earnings will be reflected in the former’s consolidated earnings report, beginning in Q2. The addition is expected to improve SM Entertainment’s overall earnings, given DearU’s solid performance with 25.4 billion won in operating profit from 74.8 billion won revenue last year.
Further, SM Entertainment anticipates greater synergy between its global entertainment business and DearU’s fandom platform and mobile app Bubble. The chat-based app enables artists to communicate directly with fans in one-on-one conversations. SM also plans to expand its IP business by bolstering fan service platforms.
Launched in February 2020, Bubble is a paid service — meaning fans purchase a monthly subscription to communicate with their music idols. DearU is preparing to launch Bubble in China in partnership with Tencent Music Entertainment, China’s largest music platform company, in the first half of the year.
That launch is expected to rake in tens of billions of won in additional revenue for the Korean company. In turn, such revenue growth is expected to help SM Entertainment see a significant increase in its consolidated annual revenue.
Korea Investment & Securities Co. has revised the target price of SM Entertainment stock to account for the anticipated improved corporate value, up to 130,000 won from the previous 110,000 won. SM Entertainment shares also traded up nearly 2% on Monday, exceeding 107,000 won.
Content shared from www.digitalmusicnews.com.