Signs of 'SM internal division' in Chenbaek... Tragedy born of 'Lee Soo-man's Like Planning'

《Yoon Jun-ho's Kindling the Fire》
We delve into issues across the entertainment industry. Let's talk about the causes of controversy and issues, and what the voices of the entertainment industry are.

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While group EXO members Chen (Kim Jong-dae), Baekhyun (Byun Baek-hyun), and Siu-min (Kim Min-seok) notified their agency SM Entertainment of the termination of their exclusive contracts, SM founder Lee Soo-man's like planning is drawing attention. It is because of the fact that the settlement issue of the entire entertainment activity, not after the renewal of the contract, was revealed.

On the 1st, Chen, Baekhyun, and Xiumin, aka 'Chenbaekshi', raised questions about SM's settlement process. Issues such as the transparency of the details and the legitimacy and validity of the existing and new exclusive contracts have become issues. Law firm Lin, who acted as their legal representative, raised its voice of criticism on several items.

Among them, the focus for the two days was 'request for copies of settlement data and settlement grounds'. The law firm, Lin, requested a copy from SM, but informed that it was not disclosed. What should be noted is that they requested the disclosure of settlement details for all EXO activities, not details of the period after the renewal of the contract.

There are questions in the industry about the provision of the request. Why did Chen, Baekhyun, and Xiumin shoot at the company they had been working for for about 20 years?

The industry cited 'Lee Soo-man's risk' as one of the reasons. Lee Soo-man is the founder of SM Entertainment and has led SM for about 30 years. 'Lee Soo-man's SM Empire', which was announced, collapsed in March. This is because Align Partners (1.1% stake), a private equity fund (PEF) management company, a major shareholder in SM, rebelled.

The problem was Lee Soo-man's personal company 'Like Planning'. Like Planning took 6% of SM's total sales (15% before the change) as royalties. This is the name of royalties for artists who are produced by founder Lee Soo-man. Lee Soo-man has been receiving fees of tens of billions of won every year through royalties payment contracts. As of 2021, the amount Lee Soo-man took to Like Planning amounts to a whopping 24 billion won. This is about one-third of SM's annual operating profit. In the first half of last year, it received 11.4 billion won.

Regarding Like Planning’s non-ideal incentive structure, issues have been raised within SM as well. This is also the reason Align Partners, the 'activism fund', demanded the termination of the contract between SM and Like Planning. As a result, the service contract between SM and Like Planning was terminated. However, the problems caused by Like Planning's contract details have not been resolved.

EXO has been active for over ten years under SM. In other words, EXO's entire settlement details include 'Like Planning's dividend rate'. With Lee Soo-man's influence gone, 'raising the settlement issue' was a predictable scenario. It is also possible to judge that there will be no setbacks in entertainment activities in the future even if the affiliated artist has friction with SM.

In fact, an entertainment official said, “I understand that SM artists expressed dissatisfaction with Like Planning’s dividend ratio during the settlement process.” “Lee Soo-man has left. The fear seems to have disappeared." This claim stemmed from the suspicion that the media activities of the former group JYJ (Kim Junsu, Park Yoochun, and Kim Jaejoong) decreased after the exclusive contract dispute with SM.

Transparency in the contracting process is fundamental. SM, which is called one of the Big 4 (SM, JYP, YG, Hive) in the entertainment industry, cannot ignore this. In the process of renewing the contract, the industry's point of view is that SM rather took advantage of the convenience of its artists.

Naturally, it leads to the question of 'the timing of notification of contract disputes'. Now that EXO's comeback has raised expectations, it's about the decisive reason why Chenbaekshi turned his back on SM. Opinions are still divided, such as the theory that a senior singer resolved the EXO contract dispute and the theory that an entertainment company intervened in a double slander.

Reporter Yoon Jun-ho, Ten Asia delo410@tenasia.co.kr