Virus outbreak to affect BTS' label IPO plan
K-pop band Bangtan Boys perform during their concert at Citi Field in New York on Oct. 7, 2018 (KST). / Courtesy of Big Hit Entertainment
By Kim Jae-heun
Bang Si-hyuk, Big Hit Entertainment co-CEO
The Bangtan Boys' (BTS) seemingly-unstoppable domination of K-Pop has been interrupted by the outbreak of the coronavirus.
BTS released its fourth full-length album “MAP OF THE SOUL : 7,” last Friday, ready to kick off a world tour starting in Seoul on April 11. However, with the virus spreading across the country, Big Hit Entertainment decided to cancel all four BTS concerts in Korea.
The entertainment company said the measure was to protect both the musicians, and approximately 200,000 spectators who bought tickets to watch the shows.
The group's next stop on the world tour is Santa Clara in California between April 25 and 26. The boy band is scheduled to hold concerts in seven more venues in the United States.
However, Big Hit Entertainment is unsure if BTS will be able to continue with the concerts.
“Nothing has been confirmed officially about the concerts abroad. We will have to see. The Seoul concerts have been canceled because they were only one month away,” a company official said.
Fortunately, BTS's concerts in Japan are still on-track be held in late June, mid-July and early September, giving at least four months for the COVID-19 outbreak to subside there. Japan has confirmed over 900 patients and nine casualties from the new coronavirus as of Friday ― the third largest number in the world.
Holding concerts overseas is very important for entertainment companies. With most fans now listening to music online for free, or very cheaply, it is large concerts that have become their main source of revenue.
This is said to be one reason that YG Entertainment continues to tour one of its most popular boy groups, BIG BANG, year after year with each album release.According to global accounting and consulting firm PwC's 2019 report, the global live concert industry is expected to see a 3.11 percent revenue increase every year between 2018 and 2023. The report said profits earned from concerts around the world recorded $27.02 billion in 2018, and will soar to $31.49 billion by 2023.
The Financial Times, however, said the live music industry is already facing a revenue risk due to the ongoing, global spread of the coronavirus, and advised investors to pay attention to the breakaway of concert audiences.
American global entertainment company Live Nation's stock price went down to $60.76 Wednesday, down 13.2 percent compared to four months ago.
One of Korea's big three entertainment companies SM Entertainment also saw a 12.3 percent stock price plunge in the same period.
One of SM Entertainment's most popular musicians, Taemin from the boy band SHINee, also canceled three solo concerts scheduled for March 13, 14 and 15 at the Olympic Park in Seoul.
In addition, YG Entertainment announced the cancellation of Akdong Musician's three March concerts nationwide due to the government's raising of the country's alert level to the highest recently.
The situation faced by the live music industry, however, is even worse in parts of China, where the virus first broke out in December last year. Over 20,000 concerts in the country have been canceled, and most large-scale auditoriums in major cities have closed. Nearly 79,000 patients have been confirmed with the virus there, and 2,788 have died.
Because Korea has also now risen as a danger zone for the coronavirus, it is expected that live music audience members from overseas will also decrease.
Meanwhile, if the situation continues, it may also affect Big Hit Entertainment's plans to go public this year.
According to security business circles, the company has chosen NH Investment & Securities, Korea Investment & Securities and JP Morgan as underwriters for their IPO this year with the aim of raising nearly $1 billion. It is said the label's total valuation could go as high as $4.93 billion ― a sharp increase on the $1.64 billion to $3.29 billion it was previously valued.
Big Hit Entertainment may postpone plans due to the current instability of the stock market.
“(The change) will definitely not be in the first half of this year because they will not get a good float price. Perhaps it will happen in the second half of the year, depending on the coronavirus situation,” a financial insider said.
Big Hit Entertainment declined to comment on the company's listing issue, saying it was a sensitive matter.