News HYBE Now Holds 14%+ of SM Shares (1 Viewer)

[Abeamus]

I thought Nu'est chose not to do much? Tbh, I even thought they disbanded. I was a pretty big fan of theirs thanks to Ren luring me in and Minhyun pretty much wrecked me. I'm a carat and I love how Seventeen can be more them now. I didn't think that Nu'est was being neglected tho x.x

From what I saw Nu'est disbandment seemed to come out of nowhere as Pledis had been planning a big anniversary comeback for them which had to be scrapped indicating Pledis wasn't behind the call.

 

[Wingfrost]

I am dumb, can someone please explain to me what this means exactly?

 

[BlingyBlinger]

Why do I have my fears on HYBE treating the senior SM groups even worse than SM already was. I hope they aren't justified

 

[mysteric]

Just don’t touch the groups I like unless it’s in a good way
I feel like the chance of that is basically zero though

honestly haven’t been giving too much w yyj as of late but I need sm to keep their post production crew, that’s the one aspect that hybe for some reason is godawful terrible with

 

[mysteric]

I am dumb, can someone please explain to me what this means exactly?

basically, a publicly traded company sells portions of itself as shares that can be bought and resold at higher or lower costs; decision making rights about the company are (for the most part) proportional to the amount of shares owned
sm is one, and lsm is the biggest shareholder amongst them all
he's been looking to sell off some of his personal shares for a while
enter align partners who basically went "hey we know your personal company is funneling a lot of sm's revenue, we need to get external auditors (people who verify that the math is mathing and legal basically) to check over sm's financial reports (to pressure lsm's personal company out of sm)" mainly ig so that the financial reports look better then they can sell off their stocks at a higher price than their buying price to make that money
so they got together a coalition of smaller shareholders to do that, and kakao came in buying a significant amount shares -> kakao gets sm shares and in return sm gets some deals off kakao like the seoul arena still being built and possibly more to come
but they did that by creating more shares for kakao to buy, essentially diluting each existing share’s value
with the align partners coup and the kakao entry, they've backed lsm into a corner if he were to continue working in sm as before
and ig lsm sued for being left out of the kakao deal and has reached out to hybe again to see if they'd be interested in buying off some of his shares, hybe went ok sure, now hybe is the biggest single shareholder (owner w the highest % of sm ownership) of sm
so they’ve agreed to go ahead w the management changes in sm 3.0, cut out like production aka lsm’s shell company, and the current ceos are probably screwed because their contract ends in march
for me that means rip smngg

 

[mysteric]

I've already seen elsewhere that they're gonna give LSM executive authority back. Twas a nice fantasy I had of things changing and all their artists, past and present, benefitting. Nice fantasy, all 5 minutes of it

fingers crossed that a reality check at least will help

 

[ani07]

thats like the worst thing happening.
I could have lived with 14%, but an additional 25% means, they have a say in what sm does.

 

[the101]

Hmm.

I’m certainly worried for older groups. While fans of those groups make think the company doesn’t spend a lot on their promos and MVs, they actually do spend quite a bit proportional to their actual sales. And I wonder how this impacts soloist efforts too, insomuch that in the current SM structure, just about every member gets a solo. Is new ownership really gonna be onboard for low selling Xiumin or Onew albums? Taeyeon is a best selling soloist, Hyo not so much.

I’m also worried about the impact to some of SM’s strengths, notably the rock solid emphasis on vocal training, which isn’t terribly important to Hybe or Kakao. I would think that those two companies are in a knife fight to gain SM for its assets and one of its assets is that key point of difference in the market, the famous SM vocals, and so that would remain important in a new SM sub label structure. (I would hope but that also takes time and money and sometimes plays a role in slower launch times for new groups - the main vocalists are often the last to be added to groups because they are looking for a specific type of power to meet the brand expectations.)

Kpop fans may complain about NCT or SuperM, but both are tremendously successful, so I don’t see new ownership walking away from either of those. I know Kpop fans like to worry about charting and the GP etc etc but if Jaehyun has enough brand power to be featured in the global brand campaign for Prada and NCT can make 7 billion won in sales from NCT-Sanrio pajamas and shirts (with 3.5 billion in the first 3 days of sales) that are only available in Korea and Japan, no company actually gives af that they’ve never cracked the top 20 on Melon, let’s bffr.

All of this info is available in SM’s financial reports, but SM has traditionally relied on one massively successful group for about half of its business, while the remainder is split between other groups. This is a healthy business model with a diversified portfolio and healthier than many of the other labels that are much more reliant on just one group. What makes this even stronger from a business perspective is that the current majority group (NCT) actually has several strands of revenue with the sub-units + the full group + soloist potential. EXO was the previous majority group.

SM’s financials say the order of revenue is albums, then merch, then CFs, then tours (although with this year’s touring, I expect touring to move up in the rank), so again as much as Kpop fans pooh-
album sales, that shit matters on financial reports.

I don’t think Hybe or Kakao would disband EXO or RV, which are still comfortably profitable groups BUT I do think fans need to brace themselves for the idea new ownership isn’t going to spend more on these groups either. RV has solid album sales but with the numbers 4th Gen gg are pulling, new ownership would be focused on investing $$ and resources to be bigger players in that market. Even if they had more promos and distro, RV is not going to pull what a LSF or Ive is doing rn, sheerly for the emphasis in gg sales and trends around what’s newer (and sadly younger). If anything they’d also be investing more to promote aespa more regularly, not RV.

Similarly, EXO is stable but new leadership would be focused on NCT at the peak of their brand power and heading into solo power and creating new 4th Gen groups. (This was kind of the struggle I had when luvies and my own fandom EXOLs talked about how they should leave SM rather than resigning - where would they go? Both have brand power and solid fanbases but Hybe and JYP are very focused on building their 4th Gen brands and particularly at Hybe they’d be fifth or sixth banana. So that takes you into the Kakaos and other labels. GOT7 may have gotten their independence but that cb kinda came and went quietly under Warner Music. Again, both groups are solid but new companies aren’t gonna drop a NJ or Ive style marketing blitz against it, IMO, altho they would certainly do a better job of organizing things!)

 

[the101]

basically, a publicly traded company sells portions of itself as shares that can be bought and resold at higher or lower costs; decision making rights about the company are (for the most part) proportional to the amount of shares owned
sm is one, and lsm is the biggest shareholder amongst them all
he's been looking to sell off some of his personal shares for a while
enter align partners who basically went "hey we know your personal company is funneling a lot of sm's revenue, we need to get external auditors (people who verify that the math is mathing and legal basically) to check over sm's financial reports (to pressure lsm's personal company out of sm)" mainly ig so that the financial reports look better then they can sell off their stocks at a higher price than their buying price to make that money
so they got together a coalition of smaller shareholders to do that, and kakao came in buying a significant amount shares -> kakao gets sm shares and in return sm gets some deals off kakao like the seoul arena still being built and possibly more to come
but they did that by creating more shares for kakao to buy, essentially diluting each existing share’s value
with the align partners coup and the kakao entry, they've backed lsm into a corner if he were to continue working in sm as before
and ig lsm sued for being left out of the kakao deal and has reached out to hybe again to see if they'd be interested in buying off some of his shares, hybe went ok sure, now hybe is the biggest single shareholder (owner w the highest % of sm ownership) of sm
so they’ve agreed to go ahead w the management changes in sm 3.0, cut out like production aka lsm’s shell company, and the current ceos are probably screwed because their contract ends in march
for me that means rip smngg

This is a great summary! SM has assets that still make it extremely appealing to the industry and there’s a power play here to get them by the big companies. Hybe is still too reliant on BTS and Kakao doesn’t enough artists in its portfolio. Both of these companies can pick up ready made, healthy brands and artists, in addition to tech and merch capabilities.

FWIW, this would accelerate SMNGG, I’d think. SM is missing the boat on the 4th Gen gg boom. A lot of this is a bandwidth issue in the current structure so would be addressed in a reorg/management changes. There are huge bottlenecks in the current structure plus a lack of focus IMO. Worry about getting out 2 cbs a year for your most lucrative artists not a sustainability initiative or an AI artist. Also optimize your artist roster - not everyone needs to be focused on Korean promos if that’s not where the market is. Invest in those regions instead and if new regions open up, look at those too. Choose partners to help you grow in those regions instead of half assing it with mediocre partners or your own self made crap (cough Avex cough Label V cough).

 

[mysteric]

immediately fascinated pls dm me more

can't really dm so putting this under a spoiler

Spoiler: lots of Thoughts warnings

what I find really interesting about cyx is just the sheer amount of contradictions she has: is what we're presented her, or are we overthinking?
as a pro gamer and the first and only (in the novel's scope) female captain, she's presented with more masculinity than basically all the girls of the king's avatar save tang rou -- she smokes quite often, has a lot of banter with other male characters, plays a fairly aggressive class
like she is the female character who is presented as having the most "feminine" traits: she loves her gossip, loves her dramas, etc, but also those negative stereotypes like being soft and "emotional" (as in the state of her performance highly depends on her emotional state), chokes in high-pressure matches, "lacks a competitive drive" and that that sort of sexist point of view runs rampant within the fans of the pro league
however, in nearly every instance she appears, the main character ye xiu, who is an absolute god in the game, has to mention how he really and truly respects chu yunxiu as a player, and the first time we actually meet her is at all-stars when another younger female pro challenges her, saying that all female players look up to her as a pillar of strength
she debuts as captain, and immediately brought misty rain to a level where they are consistent contenders to enter playoffs, which up until her debut, had been basically a pipe dream for the team so we know she's absolutely not weak
what's interesting is that her so-called weakness of choking never gets shown: we only see her perform at her personal best performance; any time she truly chokes it's always something like "as for the other matches tonight, chu yunxiu choked so blue rain won 8-2" type passing commentary
we never see her actually choke so it makes you wonder, does she actually choke so much or is that a false perception that's been repeated so often in the novel but never shown that we're simply meant to believe it?

and then there's the whole issue with management (common motif around, first with ye xiu vs excellent era, whatever was going on w hundred blossoms post-zhang jiale (who's also a really interesting, tragic, almost character), fang rui vs wind howl, etc)
basically, everyone in her team, minus the healer and her vice-captain, are ranged attackers
now management got this promising set of new, young, pretty twins and want to push them to increase misty rain's commercial value, building on top the value of the partnership between her and her vice-captain
only thing is, it's completely unfeasible of a plan for management to force those 2 pairs to be playing at the same time and win; either the twins need to be split, or the captain/vice-captain partnership to be split
and for her (and all the other players in the league who are actually decent people) it's huge source of stress almost, she's handling all these unreasonable demands from management while facing the public scrutiny for the obvious stupidity in team battle lineups

there isn't a lot of meta around her, which is fair given how big the cast of tka is, but I really enjoyed this

Spoiler: lots of Thoughts warnings

character study fic that's been translated

 

[mysteric]

This is a great summary! SM has assets that still make it extremely appealing to the industry and there’s a power play here to get them by the big companies. Hybe is still too reliant on BTS and Kakao doesn’t enough artists in its portfolio. Both of these companies can pick up ready made, healthy brands and artists, in addition to tech and merch capabilities.

FWIW, this would accelerate SMNGG, I’d think. SM is missing the boat on the 4th Gen gg boom. A lot of this is a bandwidth issue in the current structure so would be addressed in a reorg/management changes. There are huge bottlenecks in the current structure plus a lack of focus IMO. Worry about getting out 2 cbs a year for your most lucrative artists not a sustainability initiative or an AI artist. Also optimize your artist roster - not everyone needs to be focused on Korean promos if that’s not where the market is. Invest in those regions instead and if new regions open up, look at those too. Choose partners to help you grow in those regions instead of half assing it with mediocre partners or your own self made crap (cough Avex cough Label V cough).

the thing I'm worried about is that chris lee's contract ends in march and do we really think they're going to keep him around in that capacity afterwards? chris lee is teh one spearheading smngg, and they're set to debut in q2
there's been some movement on the trainee side I think but would they be able to get them done and ready to debut within that timeframe if the guy leading the project might not last long enough?

 

[the101]

the thing I'm worried about is that chris lee's contract ends in march and do we really think they're going to keep him around in that capacity afterwards? chris lee is teh one spearheading smngg, and they're set to debut in q2
there's been some movement on the trainee side I think but would they be able to get them done and ready to debut within that timeframe if the guy leading the project might not last long enough?

It depends on how they position them. Ive were a very polished rookie group at launch. New Jeans was a very rough looking rookie group at launch (and still often looks awkward and uncomfortable in performances), but it works with the group’s positioning of “not like other gg, more authentic just girl next door girls having fun.” I constantly saw people forgiving that lack of polish because of the premise and being rookies while simultaneously blasting aespa over their rookie year for being awkward.

 

[Moguri]

I bet Navis is also calling right now!

that girl is literally on the phone all day

 

[Moguri]

I've already seen elsewhere that they're gonna give LSM executive authority back. Twas a nice fantasy I had of things changing and all their artists, past and present, benefitting. Nice fantasy, all 5 minutes of it

so LSM made a deal with hybe, that he sells them their shares, but for that they give the power back to him?

But how does this work out, how does LSM ensure they keep their word after he sold the shares? Is he just trusting them?

Also you should see the bright side, while you will live the rest of your life in dismay and anguish, at least you have those beautiful 5 minutes of peace you can always look back to

 

[Moguri]

If you're worried about SuperM, you should be

I assume you saw Bang PDs post too, how much he hated the avengers

 

[Wingfrost]

basically, a publicly traded company sells portions of itself as shares that can be bought and resold at higher or lower costs; decision making rights about the company are (for the most part) proportional to the amount of shares owned
sm is one, and lsm is the biggest shareholder amongst them all
he's been looking to sell off some of his personal shares for a while
enter align partners who basically went "hey we know your personal company is funneling a lot of sm's revenue, we need to get external auditors (people who verify that the math is mathing and legal basically) to check over sm's financial reports (to pressure lsm's personal company out of sm)" mainly ig so that the financial reports look better then they can sell off their stocks at a higher price than their buying price to make that money
so they got together a coalition of smaller shareholders to do that, and kakao came in buying a significant amount shares -> kakao gets sm shares and in return sm gets some deals off kakao like the seoul arena still being built and possibly more to come
but they did that by creating more shares for kakao to buy, essentially diluting each existing share’s value
with the align partners coup and the kakao entry, they've backed lsm into a corner if he were to continue working in sm as before
and ig lsm sued for being left out of the kakao deal and has reached out to hybe again to see if they'd be interested in buying off some of his shares, hybe went ok sure, now hybe is the biggest single shareholder (owner w the highest % of sm ownership) of sm
so they’ve agreed to go ahead w the management changes in sm 3.0, cut out like production aka lsm’s shell company, and the current ceos are probably screwed because their contract ends in march
for me that means rip smngg

Oooh

 

[the101]

Hybe released a press release that said he LSM wouldn’t touch production in SM or Korea for three years, not could he hire SM employees during that period, and wouldn’t be taking a percentage nor having any role in management at Hybe. Now cynical me says gloves are off at the end of three years, so he signed everything away for a minute but not for eternity.

 

[velvet]

 

[Yelena_Belova]

I’ll take a chance card.

 

[Moguri]

Hmm.

I’m certainly worried for older groups. While fans of those groups make think the company doesn’t spend a lot on their promos and MVs, they actually do spend quite a bit proportional to their actual sales. And I wonder how this impacts soloist efforts too, insomuch that in the current SM structure, just about every member gets a solo. Is new ownership really gonna be onboard for low selling Xiumin or Onew albums? Taeyeon is a best selling soloist, Hyo not so much.

I’m also worried about the impact to some of SM’s strengths, notably the rock solid emphasis on vocal training, which isn’t terribly important to Hybe or Kakao. I would think that those two companies are in a knife fight to gain SM for its assets and one of its assets is that key point of difference in the market, the famous SM vocals, and so that would remain important in a new SM sub label structure. (I would hope but that also takes time and money and sometimes plays a role in slower launch times for new groups - the main vocalists are often the last to be added to groups because they are looking for a specific type of power to meet the brand expectations.)

Kpop fans may complain about NCT or SuperM, but both are tremendously successful, so I don’t see new ownership walking away from either of those. I know Kpop fans like to worry about charting and the GP etc etc but if Jaehyun has enough brand power to be featured in the global brand campaign for Prada and NCT can make 7 billion won in sales from NCT-Sanrio pajamas and shirts (with 3.5 billion in the first 3 days of sales) that are only available in Korea and Japan, no company actually gives af that they’ve never cracked the top 20 on Melon, let’s bffr.

All of this info is available in SM’s financial reports, but SM has traditionally relied on one massively successful group for about half of its business, while the remainder is split between other groups. This is a healthy business model with a diversified portfolio and healthier than many of the other labels that are much more reliant on just one group. What makes this even stronger from a business perspective is that the current majority group (NCT) actually has several strands of revenue with the sub-units + the full group + soloist potential. EXO was the previous majority group.

SM’s financials say the order of revenue is albums, then merch, then CFs, then tours (although with this year’s touring, I expect touring to move up in the rank), so again as much as Kpop fans pooh-
album sales, that shit matters on financial reports.

I don’t think Hybe or Kakao would disband EXO or RV, which are still comfortably profitable groups BUT I do think fans need to brace themselves for the idea new ownership isn’t going to spend more on these groups either. RV has solid album sales but with the numbers 4th Gen gg are pulling, new ownership would be focused on investing $$ and resources to be bigger players in that market. Even if they had more promos and distro, RV is not going to pull what a LSF or Ive is doing rn, sheerly for the emphasis in gg sales and trends around what’s newer (and sadly younger). If anything they’d also be investing more to promote aespa more regularly, not RV.

Similarly, EXO is stable but new leadership would be focused on NCT at the peak of their brand power and heading into solo power and creating new 4th Gen groups. (This was kind of the struggle I had when luvies and my own fandom EXOLs talked about how they should leave SM rather than resigning - where would they go? Both have brand power and solid fanbases but Hybe and JYP are very focused on building their 4th Gen brands and particularly at Hybe they’d be fifth or sixth banana. So that takes you into the Kakaos and other labels. GOT7 may have gotten their independence but that cb kinda came and went quietly under Warner Music. Again, both groups are solid but new companies aren’t gonna drop a NJ or Ive style marketing blitz against it, IMO, altho they would certainly do a better job of organizing things!)

I did not know all SM artists are guarnteed to get a solo

I'm not an expert on the sales stuff, but from what I gathered it seems like RV had their first year in 2022 where they sold way past a million albums, compared to usually 500k or less they did before, so maybe their position is a bit stronger than it seems!

I also always find it very weird how keen fans are on making their artists leave their original label, naivly assuming everything will be perfect, once they leave the label.. I wonder if there is any example of a group leaving and everything being better aftewards. Certainly some aspects will improve, but I feel like fans never want to see all the downsides too.