Shares of major K-Pop management agencies experienced a decline on Wednesday following reports that South Korea’s antitrust watchdog, the Korea Fair Trade Commission (KFTC), had initiated investigations into potential infractions of subcontracting rules related to the production of albums and merchandise, Reuters reported.
The KFTC dispatched investigators to the offices of HYBE, SM Entertainment, and YG Entertainment on Tuesday, aiming to examine whether the agencies engaged in unfair practices such as verbal contracts, delayed payments, or unfair contractual terms with their subcontractors. While no specific charges have been brought forth yet, the market responded with decreased share prices for the agencies involved.
According to industry sources cited by Yonhap news agency, the KFTC’s investigation focuses on potential violations of subcontracting rules by K-Pop management agencies. The commission is particularly interested in examining practices such as using verbal contracts without written documentation, unfair contractual terms, and delayed payment to subcontractors. However, the KFTC declined to comment on the specifics of the ongoing investigation, maintaining confidentiality. HYBE, SM Entertainment, and YG Entertainment refrained from making immediate comments in response to the reports.
Shares of HYBE, the management agency responsible for the global K-Pop sensation BTS, dropped by 2.1 per cent during early morning trade. Similarly, SM Entertainment and YG Entertainment shares experienced declines of 1.5 per cent and 0.4 per cent, respectively. However, YG Entertainment managed to reverse its losses and traded 2.23 per cent higher.
HYBE, in its financial report for the January-March quarter, disclosed sales amounting to 410.6 billion won ($315.9 million). Of this, approximately 44.9 per cent came from album sales, while 16.8 per cent originated from merchandise and intellectual property. Shinhan Investment & Securities released a report cited by Reuters providing these figures. On the other hand, YG Entertainment, known for managing the girl group Blackpink, initially experienced a minor loss of up to 1.49 per cent but later reversed the trend to trade higher.
(With Inputs from Reuters)
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