What’s the drama? A breakdown of the SM takeover

HYBE group Le Sserafim pose for fans at a fansign event on June 2, 2022. Photo credit: MinguriLOVE0205, CC BY-SA 4.0, via Wikimedia Commons

As of March 12, SM Entertainment – a groundbreaking K-pop company – is being sold to Kakao, a popular Korean internet company.

SM Entertainment is part of K-pop’s “Big Three,” companies that have revolutionized the K-pop industry and introduced it into the mainstream, Western media. The corporations gained fame for their experimental music tracks turned hits, like “I Got a Boy” by SNSD.

With its long-standing role in the K-pop industry, SM Entertainment has struggled to launch new groups and establish themselves in recent years. Though their more popular contemporary groups, like NCT and Aespa, have experienced more success, they have failed to stand up against industry giants like BTS, BLACKPINK and TWICE.

SM Entertainment has become irrelevant in the entertainment industry. As an organization that relies heavily on commercial success, they inch closer and closer to filing for bankruptcy.

Within the last month, Lee Soo Man, SM Entertainment’s former CEO, announced he was stepping down from his position. Additionally, a portion of the company’s shares were sold.

The K-pop community was shocked to learn that SM Entertainment was not sold to Kakao as originally believed. Hybe Entertainment, a K-pop company with acquisitions such as BTS, Seventeen and NewJeans, will now also own SM Entertainment.

In recent years, Hybe Entertainment has purchased numerous music companies in South Korea and become a modern leader of the industry. They now own Big Hit Music, the subsidiary that started BTS, Pledis and Ador. Still, the purchase of SM Entertainment could spark them towards a monopoly on the K-pop industry.

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This possibility led to fears from fans about the future of the artists and K-pop in general.

“I’m wondering what’s going to happen to the style of NCT, how they continue to add subunits, how that will change with this issue and also if there’s going to be any changes to SM’s style in general,” Katherine Stewart, a freshman majoring in management, said.

When Hybe Entertainment announced that they would purchase SM Entertainment, they also announced the end of NCT’s infinite expansions. This aspect of the popular boy group means continually adding new members and sub groups to it. Stewart’s opinion seems to echo that fear.

It’s a fear that led to a lot of backlash from the K-pop fans and led to people voicing their concerns against the hostile takeover. It didn’t help that Lee Sung Soo, brother of Lee Soo Man, released a video voicing these same opinions and heightening the hysteria around this issue.

Others don’t exactly feel the same.

“I think they’re going to prioritize whoever makes the most money,” first-year media scoring and production major Jaeyoung Lee said.

Hybe Entertainment has managed to have success with their companies and make money despite their growing number of subsidiaries. However, the current fears against Hybe Entertainment have not lessened and it has led them to sell the shares they previously bought to Kakao as originally planned and they will halt the acquisition process.

Only time will tell if this decision to sell to Kakao will end well. Kakao has had a couple of popular K-pop groups like Ive, STAYC and The Boyz. They’ve gained more traction in the last couple of years, so if this doesn’t end well, SM Entertainment could become a victim of time and money as it loses relevance.