What is BTS's boss planning when gradually taking over SM Entertainment?

HYBE becomes SM's largest shareholder

According to Soompi, on February 10, HYBE Entertainment officially confirmed the acquisition of 14.8% of SM Entertainment's shares from the company's founder - Lee Soo-man, for 422.8 billion won (about 334.3 million USD).

This also makes HYBE the largest shareholder in this major entertainment company.

HYBE chairman Bang Si-hyuk (right) and SM Entertainment founder Lee Soo-man (left)

“SM and HYBE decided to join hands to position both companies as game changers in the global music industry.

Together, we will optimize the competitiveness of Kpop worldwide and strive towards a sustainable, trendy, future-oriented business,” HYBE stated in the latest announcement.

The transfer is expected to be completed on March 6.

Lee Soo-man threatened to take legal action against SM executives. The reason is that the executives sold 9.05% of the company's shares to Kakao, making the Korean tech giant the second largest shareholder.

Lee called the move illegal and sparked a management dispute. The executives had previously decided to terminate Lee Soo-man's contract as chief producer.

Soompi predicts that it seems that HYBE's purchase of shares from Lee Soo-man is his way of eliminating Kakao.

It should be noted that before selling shares to HYBE, Lee Soo-man was only a shareholder without a position at SM Entertainment.

In addition to the deal with Lee Soo Man, HYBE also announced plans to purchase additional shares of SM Entertainment from minority shareholders, which will also increase their stake in the company.

See now from the million dollar deal of two "big guys"?

According to Korean media, Lee Soo-man's decision completely changed the fate of SM in particular and Kpop in general.

The collaboration between two "giants" poses many problems for the Korean music industry.

Supporters of the HYBE and SM collaboration say the decision will take K-pop to new heights.

Another group believes that it could lead to monopoly, power grabs, and weaken Kpop due to loss of diversity.

On The Korea Times, Kim Jin-woo - a professor at the Seoul Institute of the Arts, commented that HYBE manages Korea's top music group BTS, and the company HYBE also owns several prominent names such as Le Sserafim or TXT.

Meanwhile, SM Entertainment manages many names such as TVXQ, Super Junior, Girls' Generation, EXO, Red Velvet, NCT, aespa... SM Entertainment is also famous in Japan, as the pioneer Kpop company to explore this market.

Especially in the near future, when BTS limits its activities because members are enlisting in the army, bringing back successful SM groups could be a solution for HYBE to maintain its strength.

"Thanks to BTS's success, HYBE has accessed the global music market supply chain. If HYBE uses SM Entertainment's products, such as the group NCT, both will create synergy and capture a larger market share globally," said Kim Jin-woo.

NCT group

However, Lee Gyu Tag - professor of cultural studies at George Mason University in Korea, is not really confident that this cooperation will become a stepping stone for the development of Kpop.

With SM becoming HYBE's new subsidiary, Lee predicts that HYBE will likely follow in the footsteps of multinational music companies such as Sony Music Entertainment (SME) and Universal Music Group (UMG).

“That is, HYBE will focus on marketing and distributing the music produced by its subsidiaries, while the subsidiaries handle the main tasks, such as selecting and training trainees. The subsidiaries will have less ability to develop the K-pop system. People may have to wait and see what consequences this method will bring,” he said.