NewJeans Faces Controversy Over Potential Family-Run Management Amid Contract Dispute with ADOR

Speculation is mounting in the music industry that NewJeans, who recently declared the termination of their exclusive contract with ADOR, may establish a family-run company to manage their activities.

According to industry insiders on the 13th, there is growing talk of NewJeans setting up a separate family company, with the 'family company establishment theory' gaining traction. Concerns about penalty lawsuits, trademark risks, and potential popularity decline have made it difficult for NewJeans to attract investors. Moreover, with the validity of their exclusive contract still in question, no agency has been willing to take them on.

An industry insider told TenAsia, "There is widespread talk in the industry that NewJeans members and their families are planning to establish a management corporation. Since they have notified ADOR of the contract termination, they need physical and human resources for new schedules, prompting them to consider and pursue a family corporation."

However, the entertainment and legal sectors largely view NewJeans' actions as a "ploy that won't work." The claim of contract termination is solely NewJeans' assertion, and they are still bound by the exclusive contract with ADOR.

Under the current exclusive contract, any personal entertainment activities by the members or through a third party constitute a breach of contract. This includes external agencies as well as family companies established by the members or their parents.

According to the Ministry of Culture's standard exclusive contract clauses 2, 6, and 14, all entertainment activities of an artist must be conducted through the agency. During the contract period, artists cannot negotiate appearances or provide cultural services independently or through a third party without prior approval from the agency. Entering into similar contracts with third parties without the agency's consent, thereby nullifying the contract's effectiveness or unfairly infringing on the agency's contractual interests, is also prohibited.

Establishing a personal or family agency, or engaging in independent entertainment activities without an agency, all constitute breaches of the exclusive contract. The scope of exclusive management rights extends worldwide unless otherwise specified. Third parties actively involved in breaching an artist's exclusive contract can also face civil and criminal liability.

A legal expert stated, "An exclusive contract requires that all entertainment activities be conducted exclusively with the agency. If exclusivity is not maintained, artists can gain recognition through the company's investment and then pursue independent activities, reaping the benefits. The recent issue of tampering is related to this context."

Previously, on the 28th of last month, NewJeans held an emergency press conference to announce their contract termination with ADOR, citing a breakdown in trust due to management changes and director replacements. They also addressed the astronomical penalty fees, stating, "We have never violated the exclusive contract, so the responsibility lies with ADOR and HYBE." NewJeans expressed their desire to continue using their group name and mentioned, "If possible, we would like to work with CEO Min Hee-jin."

Meanwhile, Min Hee-jin faces tampering allegations. A media outlet reported that Min Hee-jin allegedly orchestrated NewJeans' live broadcasts and Hani's National Assembly appearance to attempt a return as ADOR's CEO. The report included photos and conversations suggesting Min Hee-jin met with Company D to discuss investment opportunities.

Min Hee-jin has not provided an explanation for the detailed allegations but has confirmed the filing of a lawsuit. As tampering has been a central issue in the ongoing conflict between HYBE and Min Hee-jin since April, there is a growing demand for a proper explanation and rebuttal.