On February 20, 2023, SM Entertainment’s CFO, Cheol Hyuk-jang took to the official YouTube channel of the multinational entertainment agency, ‘SMTOWN’, to address the turbulent issue at hand – HYBE’s takeover. Ever since rumours for the same have been in the air, the fans of the company, that has built over a generations’ worth of legacy in the entertainment industry, felt cornered. The agency is no different when it comes to this dilemma.
In the 15 minute video released earlier, Cheol Hyuk-jang first breaks down the foundations of the situation and how it ignores not only the efforts of the 600 SM employees “who have dreamed of becoming the No. 1 entertainment company in the world”, but also “the values and pride of SM” that the agency has sought to retain during its run with the fans and artists alike. The all hell broke loose on February 9, when the founder and executive producer of the company, Lee Soo-man, gave up his major stake of 14.8%, only for it to be acquired by HYBE to take his position as the largest stakeholder.
This may later amount to about a 40% takeover by HYBE “through a tender offer” ongoing at the moment, which has been declared to be a “hostile attempt” by the CFO. What the employees of SM, and even the fans, fear the most right now is that HYBE will eventually usurp the control held by the company, further endangering the decision-making chain held in control by SM at the moment.
While HYBE’s CEO has ensured the other side that no such steps will be taken, and rather, SM’s independent management will still be in place, it feels like an “empty promise” to them. What may soon result in subjecting SM to “weak governance” is then again laid out visually for the audiences to decipher in the form of powerpoint flowcharts.
The major drawbacks that would hamper the flow of governance in SM if HYBE succeeds taking over 40% of the reins are listed as such – since the two agencies are competitors in the market, and the latter would take charge as the ‘parent company’ in this case, the banes would be borne by the artists as the number of K-pop comebacks would rise significantly and approximately round up to a whole century, risking SM’s end of being neglected.
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Various fan platforms in place that help directly connect the artists and their supporters would narrow down to SM’s artists entering into HYBE’s enabled platform – Weverse. The data collected so far dictates that this will result in lowering SM’s corporate value, in turn rendering a loss of new business opportunities as HYBE’s 100% owned subsidiaries are likely to be prioritised.
Via an anonymous platform, BLIND, SM employees have already submitted their votes regarding this swift reversal of hierarchy, where 85% of them (259 votes) have opposed HYBE’s takeover, considering that this move will deny SM’s tradition and history. SM’s partnership with Kakao is still in-talks, and will be revealed in the next announcement segment.
Even though the business side of it may not be as clear as a crystal to some fans, they’ve still opted to side along with SM, or not, for the time being especially since they’ve been vocal about the need for better amendments to take shape in the management sector.
The company already harbours a consequential number of artists and K-pop groups (like EXO, NCT, Red Velvet, aespa, SHINee, Super Junior, SuperM and more, plus several cross-units of the existing groups as well) who’ve constantly been denied proper schedules, that has often led to clashes between the pre-existing chain of actions.
This has ultimately pushed the fans to believe that certain groups under SM’s umbrella are being prioritised over the others. On the one hand, a major section of the public believes it to have been a better alternative than Kakao taking over SM, but now that SM employees have unanimously come out with their opinion, this is bound to stir things up more.
Watch SM Entertainment’s Take On the Matter
Fan Reactions and Memes that Somehow Liven Up This Debacle
As always, fans find their coping mechanism in memes to go through the pain. The majority of the reactions recorded on Twitter so far are also calling out SM’s general trend of neglecting its own artists. Through these responses, the fans are once again turning the mirror to face SM’s side, in hopes of them wanting the company to reflect on its own failing responsibilities.
Head over to the SMTOWN YouTube channel to keep abreast of the negotiations and announcements on this matter.
What is your take on this issue? Do you think that SM’s artistic legacy will be tarnished with HYBE’s takeover, or would it result in better implementation of the action-command chain? Let us know your thoughts in the comments section below.
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