The headquarters of Hybe in Seoul in this Sept. 25 photo. Yonhap
HYBE, a major K-pop powerhouse, on Tuesday reported a decline in both sales and operating profits for the third quarter of this year, impacted by distractions from the Paris Olympics and a protracted feud with Min Hee-jin, the former CEO of its subsidiary label Ador.
HYBE’s regulatory filing showed an operating profit of 54.2 billion won ($39 million) for the quarter, a 25.4 percent decrease year-on-year, falling short of 55.7 billion won forecast by Yonhap Infomax, the financial data firm of Yonhap News Agency.
Revenue dropped 1.9 percent to 527.8 billion won, while net profit plunged 98.6 percent to 1.4 billion won.
HYBE, however, noted a significant improvement in its operating profit margin, which rose from 4 percent in the first quarter to 7.9 percent in the second quarter and 10.3 percent in the third quarter as the company nears “the final stage of building infrastructure for new business projects.”
It also reported that this year’s accumulated sales exceeded 1.5 trillion won as of the third quarter, putting it on track to achieve 2 trillion won in annual sales for the second consecutive year.
By sector, sales from “direct participation” activities by its artists, including digital music and albums, concerts, commercials and appearance fees, reached 323 billion won, down 18.8 percent from the previous year.
The drop in digital music, albums and concert revenue was particularly notable.
“Indirect participation” activities, such as merchandising, licensing, content and fan community platforms, generated 204.9 billion won, up 31.8 percent. Among them, content sales alone surged 63.6 percent, contributing significantly to the growth.
“There was a global event, the Olympics, so no albums were released during this period,” the company explained, citing the impact on the “direct participation” category.
The ongoing dispute with Min Hee-jin is also seen as a contributing factor to the decline.
In April, HYBE launched an audit of Ador, accusing Min of attempting to seize control of the sublabel and its flagship group, NewJeans. Min denied the claims, arguing that HYBE’s audit was retaliatory following her earlier criticism of another of HYBE’s sublabel’s new girl group, ILLIT, for allegedly imitating NewJeans. Ador’s board, largely composed of HYBE executives, later dismissed Min from her CEO role.
Former Ador CEO Min Hee-jin speaks during a press conference in Jung District, Seoul, May 31. Korea Times file
The conflict escalated to court, where on Oct. 29, a judge dismissed Min’s injunction seeking reinstatement. The following day, Ador’s board voted against her return, further intensifying the internal strife impacting HYBE’s business outlook.
Despite these challenges, the company maintained solid earnings, supported by strong album sales from Enhypen and Boynextdoor, NewJeans’ milestone of achieving a million-seller with its debut Japanese single, and positive chart performances by BTS member Jimin and Le Sserafim. HYBE expects sales from “direct participation” activities to improve in the fourth quarter with anticipated new album releases from BTS’ Jin, Enhypen, Le Sserafim and Boynextdoor.
In October, Seventeen launched its new world tour in Goyang, just north of Seoul, following record-breaking sales of 3.16 million copies of its 12th EP, “Spill the Feels,” within the first week of release.
Speaking during a conference call on third-quarter earnings, HYBE CEO Lee Jae-sang pledged to “calmly continue” the business with a focus on “fundamental values.”
He also emphasized the company’s commitment to supporting the continued growth of NewJeans. (Yonhap)
