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Music and entertainment

HYBE’s music unit split-off plan ignites shareholder concern

Apr 13, 2021 (Gmt+09:00)

HYBE Chairman and CEO Bang Si-hyuk (Courtesy of HYBE)
HYBE Chairman and CEO Bang Si-hyuk (Courtesy of HYBE)

HYBE Co., the label behind BTS, will attempt to split off its music business as a separate entity at its general shareholder meeting on May 14.

According to industry sources on Apr. 14, HYBE will hold the shareholder meeting next month to create a new entity, tentatively to be called Big Hit Music Company.

The move is igniting widespread concern among individual shareholders, as 40% of the company’s revenue comes from its music business, which includes album and record sales.

The product and licensing business makes up the company’s next biggest revenue portion with 32%, followed by the content business segment with 17%.   

HYBE will also change its public trading name from Big Hit Entertainment Co. to HYBE, following its corporate name change approved during the last general shareholder meeting on Mar. 30.

Individual shareholders have been vocal in criticizing HYBE’s plan, including on the online community bulletin board of the country’s largest portal Naver Corp.

Most of their online postings surround fears that HYBE will become an “empty shell” as its music business spearheaded by BTS is the company's revenue engine.

They also emphasize that the current shareholders do not receive the new company’s shares in a split-off, whereas they would receive the new entity’s shares in a spin-off.

This is not the first case in the country’s stock market history where a split-off decision had ignited opposition among individual shareholders.

LG Chem’s battery split-off is a good example; LG’s plan went through despite opposition from the country’s influential National Pension Service at its shareholder meeting.

Immediately following the split-off on Oct. 30 of last year, LG Chem’s share price fell by more than 6% on that day to 611,000 won ($540). The company’s share price has since recovered, closing at 868,000 won ($770) on Apr. 13.    

On the other hand, securities firms are focusing more on HYBE’s acquisition of the global label Ithaca Holdings.

“HYBE’s portfolio is now diversified, expanding into different genres outside K-pop, and its dependence on BTS will gradually weaken,” said DS Investment & Securities analyst Lee Ji-hyun.

Write to Tae-hoon Lee at beje@hankyung.com

Daniel Cho edited this article.

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