SM artists are becoming more concerned about their future as the dispute over operation rights between SM’s current management and HYBE.

SM artists are becoming more concerned about their future as the dispute over operation rights between SM’s current management and HYBE continues. Industry experts have stated that SM Entertainment has spent billions of KRW to respond to disputes over SM management rights and are concerned that the artists will leave the company if the feud prolongs.

According to the investment banking (IB) industry on March 1, the current management of SM Entertainment which defined HYBE’s takeover as a “hostile takeover,” is estimated to have spent tens of billions of KRWs to defend management rights. It is known that about 2.5 billion KRW (~1.9 million USD) was invested in hiring the Boston Consulting Group (BCG), a strategy consulting firm. In order to secure voting rights from shareholders, six voting agencies were also hired. This is unprecedentedly large considering that they usually employ one or two companies. There are observations that at least 1 billion to 2 billion KRW (~762,000 to 1.524 million USD) will be paid to each of these companies alone.

With SM Entertainment spending big money on the dispute, many are concerned that the label will not be able to support its own artists’ promotions.

On February 13, SHINee‘s Key held an online live broadcast to commemorate the release of his 2nd repackaged album and expressed his concerns saying, “I want to perform more than anyone else, but I don’t know who I can talk to about this. The company is in an unstable situation right now.

At a fan meeting held on the same day, Red Velvet’s Seulgi also expressed her concerns about the company’s situation. During the fan meeting event, fans were asking Seulgi to dance NewJeans’ “Hype Boy” choreography. However, she responded by saying, “I don’t want to cause trouble through misunderstanding.” This was interpreted that she did not want to create unnecessary misunderstandings in a situation where New Jeans’ agency, HYBE, became a major shareholder of SM. On February 17, Taeyeon also expressed her discomfort regarding the current situation and posted on social media. She wrote, “Everyone lives diligently,” which is a phrase from the movie ‘The Unjust’ or “Unfair Transaction” in Korean.

In the current time of uncertainty for SM, many artists are in a time of contract renewal. In the worst-case scenario, most of the SM artists would leave when HYBE takes over.

KangtaBoATVXQSuper Junior, Girls’ Generation (TaeyeonYoonAYuriHyoyeonSunny), SHINeeEXORed Velvet, NCTSuperM, and aespa are SM Entertainment’s artists. All of the contracts will expire this year or next year, excluding aespa. It is reported that some large agencies have reached out to SM artists whose contracts are nearing expiration to gauge their interest in signing with their label.

An official from the entertainment industry said, “Idols who are already well-known do not have a clear reason to stay in SM in the future, and there is a high possibility that they will find small and medium-sized agencies that support their individual activities and have an advantage in terms of profit distribution.” He added, “Most of the artists who have stayed in SM for a long time will not be happy if the label is absorbed by another large agency because they decided to stay in the company out of loyalty.

On the other hand, there is also an analysis that the departure of artists is not a big problem. Park Da Gyeom, a researcher at Hi Investment & Securities, said positively, “Currently, the main intellectual property (IP) that mainly sustains SM are NCT and Aespa, but if only these two teams are secured, there will be no major problems with the current corporate value. Additionally, there is still the potential of the rookies that will be introduced in the future.”

 

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