South Korean entertainment company SM Entertainment has released a new statement video addressing what it describes as a “hostile takeover” from competitor HYBE after the latter became the label’s largest stakeholder.
The video, uploaded on SM Entertainment’s YouTube channel on Monday, details the company’s concerns, such as a potential monopoly market.
In the 15-minute video, SM Entertainment CFO Jang Cheol-hyuk reveals that after HYBE became the largest shareholder of the company with a 14.8% stake bought from SM Entertainment founder and former CEO Lee Soo-man, the competitor also has plans to acquire a 40% stake through a “tender offer” that is currently underway.
If the two companies are integrated, the combined entity would create a monopoly by taking 66% of the total market revenue. Furthermore, as of Q3 2022, the two companies’ combined profits from albums/digital music account for 70% of the market. Regarding concert/performance profit, the two companies took up as much as 89%. As a result of an integration, over 60% (64%) of the top-ranking artists by album sales would be under a single company, undermining the diversity of the K-pop market.
Jang further notes that the “acquisition is unfair” as it would undermine the market’s fair competition. The CFO also argues that K-pop would “lose opportunities for a greater advancement forward” if HYBE takes control of the market’s majority share and acquires SM’s managerial rights.
Another issue Jang notes is that a monopoly would likely mean an increase in concert ticket prices.
Ultimately, K-pop fans will be the ones that will be most affected by the monopoly. SM puts reasonable prices to concert tickets to allow…
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