Hybe, the biggest entertainment company in South Korea, is planning to take legal action against executives from its sublabel ADOR. They’re accusing them of breaking trust and committing other offenses.
This all started when Hybe, which manages the famous K-pop group BTS, started looking into ADOR on April 22. They were investigating claims that the CEO of ADOR, Min Hee-jin, was trying to make the sublabel independent. Hybe even asked Min to step down from her position.
Min said these claims weren’t true and accused Hybe of copying ADOR’s girl group, NewJeans, for another girl group in a different part of Hybe.
Hybe told CNBC that they have solid proof that Min was trying to take control of ADOR. They said, “The evidence included detailed discussions that Min has ordered the ADOR management to find ways to pressure HYBE into ultimately selling ADOR’s shares.”
They even showed a screenshot of a conversation between Min and ADOR’s vice CEO. In the messages, the vice CEO talked about ways to make ADOR independent, like reaching out to other investors or convincing Hybe to sell its stake in ADOR.
Hybe also mentioned that one of the parties being investigated tried to take control of ADOR’s management and reached out to outside investors. This person even admitted to creating documents to attack Hybe.
When news of the audit came out on Monday, Hybe’s shares dropped by 8%, which was the biggest drop in seven months. But by Thursday, the stock didn’t change much.
Hybe owns 80% of ADOR, while Min has 18%, and the other executives have the remaining 2%.
This situation is happening right when NewJeans is getting ready to release a new single on May 24.
Despite all this, Hybe says they will still take care of NewJeans and support their comeback. They’ll also talk to the group’s legal representatives to figure out how to keep them safe during this time.
Hybe’s “multi-label strategy” suffered a setback
This strategy involves Hybe managing multiple independent labels to ensure a wide range of music and content is produced.
This approach is different from traditional K-pop agencies, which keep all their artists together and mainly rely on a few big names for success.
In a statement from 2022, Hybe mentioned their expectation for growth through cooperation and sometimes healthy competition among their labels.
Hybe is the only company in K-pop that has successfully diversified its intellectual property (IP). Last year, Bernstein also highlighted this as one of Hybe’s strengths in an investor note. Revenue and growth from other labels helped compensate for BTS’ break during their mandatory military service in South Korea.
On the other hand, shares of rival YG Entertainment were unstable after some members of Blackpink didn’t renew their contracts with the agency.
