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HYBE houses multiple labels behind globally renowned groups
including BTS and Seventeen, and its shares fell nearly 8% on
Monday largely due to the internal dispute.
A HYBE representative told Reuters in an email on Wednesday that
the audit was launched earlier this week on suspicion that Min
Hee-jin, CEO of sub-label ADOR, was plotting to become
independent, and take over management rights of the artists the
label represents.
Min is credited with creating popular girl group NewJeans, and
together with other executives owns a 20% stake in ADOR.
NewJeans is set to release a new single next month.
Earlier this week, Min denied HYBE's allegations in a statement
to local media, and accused the company of infringing on her
intellectual property rights.
The law firm representing Min declined to comment.
The dispute is one of several to hit the industry in recent
years as it continues to grow globally.
Last year, the takeover of SM Entertainment by South Korean
social media giant Kakao triggered an internal battle over
management.
Fifty Fifty, a girl group behind TikTok hit "Cupid," also saw
their career fizzle out following a legal battle with its agency
Attrakt in 2023.
The K-pop industry is suffering "growing pains" which are
affecting its shares in the short-term, said Soo-jin Lim, an
analyst at Daishin Securities.
"After going through this process, things might move in a
direction where agencies can better protect their artists and
intellectual properties," Lim said.
In a report on Tuesday, analyst Oh Ji-woo at eBest Investment &
Securities, said HYBE shares will be volatile for some time
following the audit.
K-pop is one of South Korea's biggest cultural exports,
accounting for nine out of the 10 most-sold albums in 2023 and
selling tens of millions of units, according to the
International Federation of the Phonographic Industry (IFPI).
(Reporting by Hyunsu Yim; editing by Miral Fahmy)
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