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.
Since the two companies are the two biggest entities leading the South Korean music market, Jang claims this move would create a monopoly in which HYBE would take the lion’s share of the generated revenue.
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 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 concert ticket prices.
He also notes that HYBE has previously raised concert ticket prices for the other labels the company previously acquired.
Jang reiterates that SM “will continue to oppose” the takeover by “certain major shareholders/groups whose business interests may adversely affect SM.”
Additionally, Jang says they will “do their best to protect shareholder rights by establishing a sound and transparent governance structure.”