Blackpink label YG to sell drama production unit

K-pop sensation Blackpink’s label YG Entertainment Inc. is slated to sell 60% of its drama production subsidiary Studioplex later this year, the South Korean entertainment agency said on Tuesday.

YG holds a 99.86% stake in the drama series producer, which the K-pop label established in 2017 to diversify its revenue streams heavily concentrated on the music businesses.

The entertainment agency’s holding in Studioplex will decline to 39.86% if it succeeds in selling the controlling stake to a buyer, widely expected to be a content creator, according to industry insiders.

YG said on May 7 that it is continuing its efforts to increase profitability through a healthy and competitive business structure focused on the entertainment agency’s core business. The deal will secure Studioplex’s financial soundness by improving the unit’s content production environment, YG added.

The K-pop agency is understood to have decided to sell the subsidiary as the drama producer’s earnings have deteriorated amid a series of controversies over claims of historical distortion, posting a nearly 800% debt-to-equity ratio as of the end of 2023, sources said.

Studioplex logged 800 million won ($588,235) in revenue and 16.3 million won in net losses last year. The earnings compared with 16.6 billion won in revenue and 2.1 billion won in net losses in 2021.

COMPLAINTS OF HISTORICAL DISTORTION

YG aimed to foster Studioplex into a Korean content production leader, hiring drama series director Park Hong-kyun who directed Korean popular Korean TV series such as Queen Seondeok in 2009 and The Greatest Love in 2011.

Studioplex has co-produced fiction drama series in historical settings such as Mr. Queen, Joseon Exorcist and Snowdrop and romantic series including Love Alert.

But some of its content sparked a boycott among Koreans who complained that some elements of the series were historically misrepresented. 

Mr. Queen, released in 2020, raised controversy over a line in the series that demeaned the Annals of the Joseon Dynasty, a set of records listed in UNESCO's Memory of the World registry that covers Korean history from 1392 to 1863. The drama production team officially apologized, saying that it didn’t intend to negatively reflect the Korean national treasure.

Joseon Exorcist, written by Mr. Queen writer Park Kye-ok and released in 2021, was canceled after only two episodes amid uproar over the series' inaccurate historical setting. The cancellation was a blow to Studioplex as it had invested more than 32 billion won in the drama production.  

The 2021 drama series Snowdrop, which starred Blackpink member Jisoo and popular actor Jung Hae-in, drew criticism over its depiction of Korea’s democracy movement in the 1980s.

All these instances affected sponsorship and advertising and damaged the reputation of the drama production company.

Write to Ik-Hwan Kim at lovepen@hankyung.com

Jihyun Kim edited this article.