K-Pop
Mastermind Surprised BTS Break, Dealt $2.6 Billion Blow
For
the seven-member Korean pop sensation BTS and its throngs of admirers around
the world, it was intended to be a day of joy rather than sadness.
The
organisation was riding higher than it had ever been as it approached its
annual "Festa" in many respects. They visited the White House in
their finest black-tie attire, performed for more than 200,000 people in Las
Vegas, and issued the album "Proof," which served as a tribute to
their biggest successes and brought in millions of dollars for their sponsors.
Around
a table surrounded by a large number of purple balloons, the pop singers
chatted, ate, drank, and remembered for more than 30 minutes. J-Hope, the
group's multi-talented rapper, dancer, and vocalist who had just made history
by being designated the headliner at Chicago's Lollapalooza festival, dropped
the bombshell that all seven of the members were leaving the group after being
made fun of for appearing drowsy.
The
group's fervent following, known as the BTS Army, viewed the break as the end
of an era. Bang Si-hyuk, the South Korean millionaire who founded the boy band
that captivated the globe, saw his fortunes decline along with it.
Following
BTS's statement, shares in Bang's Hybe Co. fell 25% in a single day, prolonging
the company's months-long decline and reducing Bang's wealth by $2.6 billion
since its November peak to $1.2 billion, according to the Bloomberg
Billionaires Index. Hybe Co. was created by Bang. Even though BTS has stated
that they will one day rejoin, the stock touched a record low on Wednesday.
According
to widely read K-Pop journalist Jeff Benjamin, "Hybe is the mansion that
BTS created." "Even if it might not be that different, people will
worry when the flagship artist or product changes."
After
working as a music producer, Bang, who owns 31.8% of Hybe, started the
business. Before the local group 8Eight's song "Without a Heart" from
2009 gave it its first hit, the company nearly went out of business in its
early years. 2013 saw the debut album from BTS.
After
the business' IPO in 2020, when BTS had already collaborated with Halsey, Nicki
Minaj, and Steve Aoki, made appearances on "The Tonight Show Starring
Jimmy Fallon" and "Saturday Night Live," and had fans camped out
for days before a free concert for "Good Morning America," he
unexpectedly became a billionaire. The band members, who were all in their 20s,
also received interests worth millions of dollars through the IPO.
Online
videos, streaming services, and record sales allowed BTS to prosper during the
Covid-19 shutdowns, as well as the entire industry. After the virus subsided,
the madness intensified. Four live concerts were recently held in Las Vegas and
drew admirers from all around the world. All of the tickets were purchased by
ARMY members before they were made available to the general public. ARMY
members pay a fee to gain access to exclusive pre-sales, special items,
content, and more. As attendees stocked up on themed caps, t-shirts, and light
sticks, known as the Army bomb, desperate fans paid up to $15,145 for premium
seats on the secondary market.
According
to Meritz Securities Co., Hybe's sales increased by 58 per cent last year to
close to 1.3 trillion won ($1 billion), with the label that manages BTS
accounting for about 70% of its operating profit. From their 2020 listing until
a climax in November, the shares more than quadrupled.
Concerns were raised about Hybe's reliance on BTS
The corporation has made an effort to
diversify by bringing on new artists and going into new markets. In order to
sell non-fungible tokens, it collaborated with the owner of South Korea's
largest cryptocurrency exchange and acquired Ithaca Holdings, a US media
company that represents artists including Justin Bieber and Ariana Grande. The
collaboration handed both musicians millions of dollars' worth of Hybe shares
last year.
BTS's
break is still a loss even though it's too early to tell how successful these
other endeavours are. The operating profit forecasts for Hybe were reduced by
SK Securities Co. by 9% to 234.9 billion won for 2022 and by 24% to 273.2
billion won for 2023. When the separate projects of BTS's members begin,
according to analyst Hyo-ji Nam, the projections could grow.
Attempts
to reach a Hybe representative for comment were unsuccessful
Even
if Hybe reforms, the musicians' two years of mandatory military service raises
questions about the band's future. Compared to the agencies JYP Entertainment
Corp., SM Entertainment Co., and YG Entertainment Inc., the company's shares
are down 60% this year.
Hyunyong
Kim, an analyst at Hyundai Motor Securities Co., said of Hybe, "It's not
about how they will minimise their need on BTS," adding that the two are
too intertwined to be separated. It depends on how effectively they will handle
any risks associated with serving in the military.