(LEAD) SM to invest 1 tln won to create production centers in U.S., Japan, Southeast Asia

(ATTN: UPDATES with SM’s acquisition of its stocks, reaction from Hybe, more background info in last 5 paras)


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SEOUL, Feb. 23 (Yonhap) — SM Entertainment, a K-pop powerhouse, said Thursday it will inject 1 trillion won (US$767.8 million) into programs to facilitate its artists’ advance into the global market and build a unified K-pop fan platform.

The plan was included in the global expansion and investment strategy announced by the company on its YouTube channel as part of its broader “SM 3.0” development blueprint.

The company earlier announced the vision and other strategies on establishing a multi-production and label system, and using the intellectual property rights of its artists also for products other than music, such as merchandise and games.

The 1 trillion-won budget will be used to create production centers in major overseas markets, such as the United States, Japan and Southeast Asia, and launch new K-pop groups composed of local talent there.

SM plans to debut NCT Tokyo in the second half of the year and one more Japanese K-pop group and a U.S.-based group in the second half of 2024.

An exterior view of SM Entertainment's headquarters in Seoul (Yonhap)

© Provided by Yonhap News English
An exterior view of SM Entertainment’s headquarters in Seoul (Yonhap)

“We will establish a joint venture with (Kakao Entertainment) to establish a global production center in the Americas and will also push for the acquisition of a local star agency to stabilize it quickly,” SM said in a YouTube video.

“We will not only have Korean artists work in the Americas but also debut singers cast and trained there.”

Based on the global strategy, SM promised to build seven domestic multi-production centers and three overseas production centers by 2015 to generate an additional 260 billion won in sales. Including this, it said it would record 1.8 trillion won in sales and 500 billion won in operating profit that year.

“Our goal is to make the stock price of SM 360,000 won per share in 2025,” CFO Jang Cheol-hyuk said. The stock was priced at 123,600 won as of 11 a.m.

“We will stand as the No. 1 K-pop company through ‘SM 3.0.,'” he said, adding he hopes the 3.0 vision will help resolve doubts about issues stemming from the company’s governance structure and mid- and long-term strategies.

SM, meanwhile, bought a total of 25,000 shares in the company from the local stock market for about 3 billion won the previous day and was to buy 31,194 more stocks Thursday, according to a public notice from the local bourse.

Its largest shareholder and rival K-pop company Hybe, however, said it has sent an open letter to SM’s board members to warn the company against further purchases.

“The act of buying its own stocks using a large amount of company funds cannot be seen as a pure purpose of ‘supporting stock prices and enhancing profits by shareholders,'” Hybe said, adding the purchase could constitute stock price rigging prohibited by law.

The company became SM’s largest shareholder by completing its acquisition of a 14.8 percent stake from its founder Lee Soo-man on Wednesday despite SM’s criticism of the purchase as a hostile merger and acquisition to control the firm.

Hybe is seeking to buy a further 25 percent of SM shares from other investors to increase its total stake to almost 40 percent.



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