K-Pop Agency Hybe’s Internal Strife Wipes Out $873 Million Value

Sohee Kim and Shinhye Kang, Bloomberg News

Photos of J-hope, a member of K-pop boy band BTS, at a cafe near the Hybe Co. headquarters in Seoul, South Korea, on Sunday, Feb. 19, 2023. Hybe is scheduled to report earning results on Feb. 21. Photographer: SeongJoon Cho/Bloomberg , Bloomberg

(Bloomberg) -- Hybe Co.’s shares tumbled Friday as internal strife between the K-pop giant and ADOR, the Hybe-owned label behind popular girl group NewJeans, deepened.

The company, which manages artists including BTS and Seventeen via more than 10 labels in South Korea and overseas, dropped as much as 5.8% in early Seoul trading. A total of 1.2 trillion won ($873 million) of market value has been wiped out since the saga started earlier this week.

On Thursday, Hybe said it would report Min Hee-jin, chief executive officer of label ADOR, to Korean police over a breach of trust and other related allegations. The parent company had said Monday that Min and other ADOR executives faced an internal inquiry over an alleged attempt to seize control of the label.

Min held a two-hour press conference Thursday denying allegations that she had tried to take control of ADOR and accusing Hybe of mismanaging the label. The event was streamed live on YouTube and attracted significant public attention in South Korea.

Following the presser, Hybe refuted Min’s arguments and urged Min to resign immediately. A forthcoming album from NewJeans — one of Hybe’s most popular bands, whose work Min produces — will launch as planned, Hybe said in a statement Friday.

Hybe owns 80% of shares in ADOR, while Min holds an 18% stake. The parent company’s probe examines allegations that ADOR executives sought to raise new funds reducing Hybe’s stake in the label and consulted with external investors and analysts.

“Regardless of whether her claims are true, suspicions about Hybe’s management ability of [its] multi-label system will become dominant,” said Yoon Joonwon, a fund manager at DS Asset Management.

Min became CEO of ADOR in 2021 and is credited with creating NewJeans, an internationally successful five-member group whose projects include luxury fashion collaborations as well as music. The group is expected to release new songs starting from Saturday, and will perform at the Tokyo Dome in June.

ADOR contributed 5% of Hybe’s consolidated sales last year, said Doyoung Ahn, analyst at Korea Investment & Securities.

--With assistance from Youkyung Lee.

(Adds details of Min’s career.)