Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Entertainment stocks fluctuate over artists' contract statuses
K-pop girl group BLACKPINK speaks on stage at the 2022 MTV VMAs at Prudential Center in Newark, New Jersey, U.S. on Aug. 28, 2022. AFP-Yonhap
By Anna J. Park
YG shares drop over 25 percent in 2 months
The stock price of K-pop powerhouse YG Entertainment has been on a steep dive during the past two months, since its seven-year contract with superstar girl group BLACKPINK officially expired in early August.
The share price finished at 60,100 won ($44.5) on Friday, which is more than a 26 percent fall from the closing price of 81,700 won on Aug. 9. It is also the lowest price of the entertainment company since late April.
In particular, the company's stock price plummeted 13.28 percent in a single trading session on Sept. 21, when local media outlets reported three ― Lisa, Jennie and Jisoo ― of the four members of the group would not renew their contracts with the label. YG has yet to come up with a clear position on the highly-rumored status of the members' contracts.
As the share price continued to nosedive, retail investors berated the company for not resolving the uncertainties surrounding the contract status of the various members. The firm has repeatedly stated that it is currently in discussions with the artists over the matter.
Some of the angry investors have been urging the financial authorities to strengthen the disclosure obligations of entertainment companies, as the revenues of such firms are highly dependent on the contract statuses of their respective top-tier artists, which constitute a key source of information that should be disclosed to the shareholders of listed companies.
During the past several years, major entertainment companies in Korea have been trying to overcome their reliance on individual stars. Yet, their stock price fluctuations show that K-pop companies remain highly dependent on their artists' statuses, because the results of album sales and concert revenues directly impact the earnings of these entertainment companies.
For instance, YG Entertainment's earnings in the second quarter stood at 28.9 billion won, a 209 percent rise from the same period last year. Despite the good performance, tumbling share prices afterward demonstrate that the Korean entertainment powerhouse is extremely vulnerable to the contract status of its artists.
K-pop group BTS / Courtesy of BigHit Music
The share price move of HYBE, the agency behind the mega-success K-pop group BTS, also shows the entertainment company's overwhelming dependence on its artists. HYBE has also been focusing on creating a multi-label system through active M&As throughout recent years. Yet, the stock price is hugely subject to the status of the contracts of BTS members.
When the group members casually announced in their video last June that they are going on a hiatus, the stock price of HYBE plummeted 24 percent during the next trading session, with 2 trillion won of their market cap evaporating.
Similarly, the recent news that all seven members renewed their contracts with the firm in late September, did not result in the share price rising. This is because it will take two more years for the group to complete mandatory military service in Korea and start engaging in active music performances.