WHAT’S HAPPENED?
Disputes between record companies and their executives have happened before, but the one that has broken out between K-pop giant HYBE and Min Hee-jin, CEO of HYBE sub-label ADOR, might take the cake for the strangeness of some of the alleged details that have been reported over the past seven days.
Over the past week, South Korea’s music scene has been rocked, again and again, by a series of claims and rumors involving allegations that Min had attempted to sever ADOR from its majority owner HYBE; and that the latter company had “copied” ADOR’s star girl group, NewJeans, for its new girl group ILLIT; that Min had allowed a religious “shaman” from outside the company to influence business decisions; and, most recently, that HYBE is somehow linked to an alleged yoga cult called Dahn World.
HYBE’s share price took a big hit last week when news broke of the conflict between the company and ADOR CEO Min Hee-jin.
The stock fell by nearly 8% on Monday (April 22), to KRW 212,500 (roughly USD $154), the day that news spread around the world that HYBE had launched an audit of ADOR’s CEO and several other executives at ADOR, on suspicion that they had been plotting to sever the company from HYBE.
By Friday (April 26), the stock had dropped 12.6% on the week, closing at KRW 201,500. In all, that wiped about KRW 1.06 trillion ($770 million) off of HYBE’s market cap.
Below, we’ll outline the numerous allegations and claims about ADOR’s Min Hee-jin and HYBE that have exploded in South Korea’s local media in recent days, but before we do, a caveat: Much of what has been reported is either rumor or allegation, so we ask you to take it with a grain of salt.
Where we cite official statements from HYBE or Min Hee-jin, we’ll make that clear. Beyond that, we can’t be sure all (or even any) of what has been reported is accurate; we are simply shedding light on what’s been said.
AN AUDIT, AND CLAIMS OF A K-POP ACT COPYCAT
The drama went into overdrive on April 22, when HYBE publicly announced that it was launching an audit of ADOR CEO Min Hee-jin and several other ADOR executives, over what media reported was an alleged attempt at severing the K-pop label from HYBE, which owns 80% of the company. (Min owns 18%, and the remaining 2% are in the hands of ADOR board members, per news reports.)
At the heart of the issue was an alleged plot (the details of which are still unclear) in which Min sought to make ADOR independent and take along the acts it manages.
“HYBE invoked its right to audit CEO Min Hee-jin and top executives of the company’s affiliate label ADOR, as well as called them to summon a shareholder meeting on April 22,” a HYBE spokesperson told MBW.
Min reportedly refused to convene that shareholder meeting, the purpose of which, for HYBE, was apparently to unseat Min as head of ADOR. HYBE has since filed with the courts to force a shareholder meeting, according to news reports.
Min called the request for an emergency meeting by HYBE illegal, according to sources cited by the Korea Times.
Three people hold voting rights on ADOR’s board: Min, the company’s Vice President, and another director, who has been identified only as Shin and Kim.
In response to the news of HYBE’s audit, Min released a statement through ADOR in which she asserted that the conflict between her and HYBE had to do with ILLIT, a new K-pop girl group that another HYBE-owned label, BeLift Lab, launched earlier this year.
“ILLIT is copying NewJeans in all aspects of entertainment activities including hair, makeup, clothing, choreography, photos, videos, and event appearances… It’s a truly shameful situation,” Min asserted in her statement, as translated by Soompi.com
She added that, as HYBE chairman Bang Si-hyuk produced ILLIT’s debut album, “the copying of NewJeans by ILLIT was not done independently by Belift Lab but also involves HYBE,” and that HYBE ”is blinded by short-term profits and is mass-producing unoriginality by copying successful cultural content without hesitation.”
She called the allegation of her attempt to seize control of management rights for ADOR’s acts a “ridiculous media play,” and suggested that the allegations against her were an attempt to push her out of ADOR.
On Wednesday, April 24, HYBE publicly released the results of its audit, saying it had “confirmed and secured concrete evidence that a plan to usurp management control was established under the direction of ADOR’s CEO.”
The company said one of the audited individuals had provided “digital evidence containing information about the plan to seize management control and contact outside investors, and admitted that they had written documents to attack HYBE during the investigation.
“According to face-to-face investigations and the conversation record from the submitted digital evidence, the CEO of ADOR instructed the management team to devise ways to pressure HYBE to sell the ADOR shares it holds,” HYBE said, according to a translation by Soompi.com.
HYBE said it found evidence that ADOR’s leadership was looking for ways to terminate or invalidate exclusive contracts prematurely.
The communications inside ADOR allegedly included statements such as “pull in global funds and make a deal with HYBE,” “critically counterattack everything HYBE does,” and “think of ways to torment HYBE.”
HYBE said it plans to file a formal accusation against Min, accusing her of breach of trust
A day later, in a live-streamed rebuttal to HYBE’s allegations, Min Hee-jin tearfully denied the claims, saying that it “doesn’t make sense” for her to attempt to seize management rights from HYBE.
“I already have contracted shares, and there is a lot I have received, which I cannot disclose. But the various points disclosed by HYBE now are all advantageous to them. The points listed in detail are all false from my point of view,” she said.
She refuted claims that her complaints about NewJeans being “copied” by another HYBE band were an attempt to get more money out of HYBE.
“If I wanted money, I wouldn’t have made an internal accusation. I can earn at least 100 billion won ($73 million) just by sitting still. But I can’t stand to see what I don’t like, so I have to talk about it,” she said.
At times during the press conference, Min seemed to be under extreme stress. “I wonder if anyone can handle this much distress in a short period of time,” she added. “I am also human, and it’s not confirmed that I’m guilty. I think I’m innocent.”
A SHAMAN AND A YOGA CULT
One of the more unusual allegations that HYBE made against Min was that the audit had revealed that the ADOR CEO had consulted a female shaman on internal company matters, including hiring decisions.
According to the Korea Times, in Messenger messages viewed by HYBE, Min evidently discussed a number of internal matters with this shaman, including BTS members’ enlistment in the military, making statements such as “It would be better for me if BTS goes to the military. Send them.”
(Members of BTS, HYBE’s biggest act and arguably the biggest K-pop group in the world, have been on hiatus since 2022 as members complete their mandatory military service.)
In the Korean folk religion known as musok, there are “shamans,” typically female, known as mudang. For a fee, these mudang will commune with the supernatural world to tell clients their fortunes or identify the source of their misfortunes. There are an estimated 200,000 practicing mudang in South Korea.
However, in her press conference last week, Min denied that she had hired a mudang to help her with ADOR. She said the mudang in question was a personal friend to whom she had reached out for emotional support.
“Is it wrong to have a shaman as a friend? Are shamans untouchables?” she asked, as quoted by the Korea Times.
“It may sound strange, but I asked out of a ‘motherly concern’ for NewJeans, like they were my own children. I was tired of how HYBE was treating me, and I thought perhaps it would be better for us if HYBE’s top act, BTS, were not active,” she said.
She also criticized HYBE for reading her personal Messenger messages, calling it “personal surveillance.”
In a lengthy statement issued on Thursday (April 26), and translated by Soompi.com, HYBE responded to that claim, saying that “an outsider involved intricately in overall management cannot be viewed as a mere friend.”
In the conversation between Min and the mudang, “undisclosed executive stock option amounts along with the management takeover structure including names of potential investors and each investor’s shareholding percentage are being exchanged,” HYBE said.
“Decisions on various management issues were made based on the shaman’s proposals. We cannot regard such a conversation partner as a mere acquaintance,” HYBE added, according to a translation of the statement at Soompi.com.
But wait, it gets stranger yet. In the days that followed, according to reports at Korean and K-pop news sources, social media users began to dredge up claims from years past alleging a link between HYBE and Dahn World, a “yoga cult” founded by a South Korean author named Lee Seung Heon (aka Ilchi Lee), who was described in a 2010 Rolling Stone article as “a Korean guru” who has “created a fanatical following on college campuses that is part Moonies, part New Age boot camp and pure profit.”
Among the claims raised online this past weekend were that members of BTS had attended Global Cyber University, which was founded by Lee; that HYBE’s former girl group, GFRIEND, released a song called Mago, which is also the name of the “goddess of the universe” in the Dahn World cult; and that ILLIT’s song Magnetic shares a name with an exercise developed by Dahn World.
At the same time, stories began circulating alleging HYBE’s involvement in the manipulation of music charts.
According to the Korea Times, in 2017, a person identified only as “A” was sentenced to one year in prison for “using coercive tactics” to market a BTS album. This person alleged they had been coerced into participating in “illicit streaming practices” to boost BTS album sales.
Because both the story about streaming fraud and the rumors about the link between HYBE and Dahn World exploded on social media at about the same time, some observers suspected that this may have been a coordinated campaign designed to retaliate against HYBE for its allegations about Min’s links to a shaman, the Korea Times said.
And HYBE was having none of it. The company’s sub-label Big Hit Music, which represents BTS, released a statement making it clear that it sees the recent online allegations as part of an effort to tarnish its reputation and damage its intellectual property.
“The suspicions raised are completely unfounded. We will take legal action against violations of artists’ rights and interests,” Bighit said in a statement, as quoted at K-pop news site KPopStarz.
“Recently, several organized movements aimed at defaming and slandering BTS have been detected. At the same time, malicious slander, creating rumors, spreading false information, and indiscriminate insults and ridicule toward artists are going too far.
“We believe that this matter is a serious infringement on the artists’ reputation, and in addition to the existing regular legal action, we plan to respond sternly by appointing a separate law firm.”
The label added that it’s collecting “malicious posts directed at artists” for the purpose of “evidence,” and that it will take a “zero tolerance” approach to the spread of these kinds of rumors.
To borrow a popular phrase these days: That went south fast.
A FINAL THOUGHT…
But is all this actually a big problem for HYBE? By and large, analysts don’t seem to think so.
The onslaught of news reports and online rumors that have swelled up over the past week have certainly been a drag on HYBE’s stock price, shaking the confidence of some investors.
Yet this stock price slump should be put into perspective. For one thing, HYBE shares – like those other South Korean entertainment companies – have been under pressure for much of this year.
Year to date, HYBE stock was down more than 15% as of market close on Monday (April 29), and this isn’t unique to HYBE. Its largest competitor in the K-pop space, SM Entertainment, was down 13.8%, year to date, as of Monday.
It’s been a sector-wide slump, and in fact, HYBE’s stock was actually lower in late March than it has been during this period of strife and public controversy. The stock bottomed out at KRW 187,900 ($136.50) on March 7, about 9.3% lower than its closing price of KRW 205,000 ($149) on April 29.
And while analysts see some volatility in HYBE’s stock price ahead due to the bizarre stories in the press, they see little impact from all of this on the company’s revenues or its stock price in the long run.
“The reason for the fall in share prices can be attributed to concerns about interruptions in the future activities of NewJeans… as well as concerns about the potential departure of Min Hee-jin from Hybe, who is a key producer there,” stated an analysis from NH Investment & Securities, as quoted by the Korea Herald.
NH analyst Lee Hwa-jeong noted that ADOR makes up a relatively small portion of HYBE’s revenues.
“Ador’s contribution to HYBE’s earnings was 11% last year,” Lee said, as quoted by the Korea Times. While he expects that number to rise to 14% this year, he sees it declining in the years after that, once BTS “resume their activities.”
Meanwhile, Korea Investment & Securities researcher Ahn Do-young predicts that the controversy between HYBE and ADOR will die down as May approaches, given that’s when NewJeans is scheduled to make a comeback with the release of a new EP, How Sweet. The following month, the group will be making their Japanese debut with the release of a mini-EP titled Supernatural.
“Both HYBE and Ador would not want to damage NewJeans’ IP, so it is unlikely their musical activities (anticipated in May) will be impacted by the dispute,” the Korea Times quoted Ahn as saying.
Nonetheless, if this bizarre controversy spirals out of control (and so far, there’s little sign of it coming to an end), it could further impact HYBE’s stock price and reputation, and that, in turn, could affect the company’s global expansion plans.
HYBE has been making various moves in the global music business outside K-pop. In 2021, it acquired Scooter Braun’s Ithaca Holdings, giving HYBE a foothold in the US music industry. Ithaca Holdings, rebranded as HYBE America, acquired Atlanta-headquartered rap empire Quality Control in early 2023, and in late 2023, HYBE acquired Exile Music, marking its move into the Latin music space.
However, another acquisition attempt last year – that of rival K-pop company SM Entertainment – went sour for HYBE. The company found itself embroiled in a bitter dispute for control of SM with South Korean telecom giant Kakao, which eventually prevailed, and won control of SM.
In the wake of that fight, allegations of potential wrongdoing emerged, including potential stock price manipulation by Kakao during that fight, which resulted in a raid on SM Entertainment’s headquarters by South Korean securities regulators.
While HYBE seems clearly blameless in that incident – and in fact, had brought the accusation forward to authorities – it does seem like drama follows this K-pop company.
All the same, HYBE’s global expansion might require a change in approach from this giant of K-pop, lest it risk becoming a K-drama giant instead.
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