BLACKPINK Contract Renewal and BTS Military Enlistment: Entertainment Industry Crying and Laughing Amid 'Uncertainty'

YG Surges on Blackpink Exclusive Contract News
HYBE Eases Uncertainty Risk with BTS Military Enlistment
Meanwhile, SM Stumbles Amid Kakao's Legal Risks

"Resolving uncertainty" has emerged as the biggest issue in the entertainment industry. This is because the removal or persistence of uncertainty surrounding issues directly related to corporate activities has led to a series of situations where entertainment companies either rejoice or suffer.

[Image source=Yonhap News]

On the 6th, YG Entertainment announced the signing of exclusive group contracts with the four members of BLACKPINK. BLACKPINK, who debuted in 2016, had their seven-year contract expire this past August. For about four months, no official statement regarding contract renewal was made, leading to rampant speculation. Since BLACKPINK accounts for more than 70% of YG Entertainment’s revenue, market interest was high. All securities firms’ reports pointed out that "resolving the uncertainty of BLACKPINK’s contract renewal is the top priority." Following the sudden announcement of the renewal, YG’s stock price surged 25.63% (closing price on the 6th was 60,300 KRW).

HYBE has also shown an upward trend in stock price after recently announcing the enlistment plans of four BTS members (RM, Jimin, Jungkook, V). Lim Su-jin, a researcher at Daishin Securities, said, "We evaluate this positively as the uncertainty risk has been resolved," adding, "BTS members are expected to be discharged by June 2025 and likely to resume activities from the end of the year, with unprecedented revenge consumption anticipated." HYBE is also projected to achieve record-high performance with sales of 2.4657 trillion KRW and operating profit of 324 billion KRW. The multi-label (record planning company) system, which has taken root to build a revenue structure not dependent on specific artists, was positively evaluated.

On the other hand, SM Entertainment is receiving a cold market response as the "judicial risk" of its parent company Kakao Entertainment shows no signs of being resolved. SM’s stock price, which reached a peak of 161,200 KRW during the acquisition battle, has halved to 86,900 KRW as of the 6th. The decline rate from the peak is the highest among the four major entertainment companies. The investigation, which began with allegations that Kakao and Kakao Entertainment manipulated the market price during the acquisition of SM Entertainment, is spreading rapidly. The prosecution plans to summon Kim Beom-su, former chairman of Kakao’s board, for questioning soon. Controversy also arose when it was revealed that actress Yoon Jeong-hee holds SM Entertainment stocks worth 5 billion KRW. Her husband, Lee Junho, head of Kakao Entertainment’s investment strategy division, is under investigation for breach of trust.

Meanwhile, Daishin Securities forecasts combined sales of 4.848 trillion KRW and operating profit of 778 billion KRW for the four major entertainment companies in 2024. This year’s consensus (average estimate by securities firms) is 4.402 trillion KRW and 711 billion KRW, respectively. This implies an expected growth of about 10% in the K-pop industry.

This content was produced with the assistance of AI translation services.