Where are singers and fans in SM's management dispute?

SM Founder Lee Soo-man, left, and HYBE Chairman Bang Si-hyuk / Courtesy of SM Entertainment, HYBE

'K-pop singers and fans used as shields in ongoing battle'

By Dong Sun-hwa

The battle for management control over K-pop powerhouse SM Entertainment has entered a new phase after the company canceled a contract to issue new shares and convertible bonds to tech giant Kakao.

The deal could have made Kakao the second-largest shareholder of SM with a 9.05 percent stake, but it was rendered obsolete following a court ruling siding with SM founder Lee Soo-man, who filed an injunction against the pact last month. After terminating his contract with SM as chief producer, Lee sold his 14.8 percent stake to rival HYBE, home to K-pop titan BTS. HYBE is now the largest shareholder of SM, holding approximately 20 percent of the company's shares.

It remains to be seen whether HYBE will succeed in acquiring SM from the minority shareholders. However, according to experts, two key stakeholders are being overlooked in this long-standing dispute: K-pop singers and their fans.

"I wonder if people have ever discussed the ongoing row from the perspectives of singers, who led the beginning of all K-pop content, and their fans, who support them," Lee Dong-yeun, a professor of Korean traditional arts at the Korea National University of Arts, said during a debate titled "How to View the SM Entertainment Management Dispute?" at Seoul National University in southern Seoul, last Friday.

The event was co-hosted by Seoul National University Asia Center and activist group Cultural Action.

"It is true that many professional creators, management officials and shareholders have contributed to K-pop's global competitiveness and that artists and their fans are not the only factors to be considered in this ongoing discourse," the professor said. "But in my eyes, they have been alienated ... Fans may be able to run a movement as minority shareholders (after purchasing SM's shares) and speak for themselves in SM's upcoming shareholders meeting scheduled for March 31, or declare they will take collective actions to support their singers."

Echoing this sentiment, music critic Kim Do-heon pointed out that artists and fans have been used as shields in the current brawl.

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A debate titled "How to View the SM Entertainment Management Dispute?" takes place at Seoul National University, Friday. Korea Times photo by Dong Sun-hwa

"In SM's case, it insisted that its artists will be negatively affected if the company becomes HYBE's sub-label," he said.

On March, SM sent a letter to its minority shareholders, claiming that HYBE will assign good songs and talented idol trainees only to its other sub-labels like Big Hit Music and ADOR, as it has more shares in them compared to SM.

"SM should have consulted its artists and followers prior to taking any action if they were so concerned about them," Kim said. "But it appears to me that it did not. It looks more like it is using singers and fans as its shield in the battle against HYBE."

Lee Dong-joon, a visiting researcher at Seoul National University Asia Center, agreed. He noted that fans and shareholders should not be grouped together.

"The 'SM 3.0' vision seems to put fans and shareholders in one category, but they have different interests," he stressed.

The SM 3.0 vision refers to a set of plans unveiled by SM in February ― shortly before HYBE became its largest shareholder ― in which SM says it will become a company dedicated to fans and shareholders.

"The SM 3.0 vision does not seem to provide sufficient information about their artists as well, who are the company's original intellectual property," he added.

But Cho Young-shin, head of growth strategy department at SK Broadband, acknowledged that it can be difficult for the K-pop industry to win over the hearts of every fan.

"From a business standpoint, an attempt to satisfy every individual can bring uncertainty. Certain business decisions can hurt people, but sometimes it is inevitable for a company to proceed first and then try to reorganize things and discover a new market," he said.

"I cannot guarantee that HYBE-SM collaboration will create greater synergy than the Kakao-SM alliance because it will depend on how things will work out at the operational level. Although their business portfolios reveal that the two can join forces in diverse areas, we first have to wait and see what actions they will actually take in the days to come."

Friday's debate was also attended by music critic Seo Jeong Min-gap, Seoul National University of Science and Technology instructor Lee Jong-im, Seoul National University associate professor Kim Soo-ah and Lee Jee-heng, a Ph.D. researcher at the Institute for Gender and Affect Studies of Dong-A University. Hong Seok-kyeong, a professor of communication at Seoul National University, presided over the debate.