The headquarters of Hybe in Seoul in this Sept. 25 photo. Yonhap

Leading K-pop company HYBE reported a decline in both sales and operating profits for the third quarter of this year amid a protracted legal feud with Min Hee-jin, the former CEO of its sublabel Ador.

HYBE's regulatory filing showed an operating profit of 54.2 billion won ($39 million) for the quarter, a 25.4 percent decrease year-on-year, falling short of 55.7 billion won forecast by Yonhap Infomax, the financial data firm of Yonhap News Agency.

Revenue dropped 1.9 percent to 527.8 billion won, while net profit plunged 98.6 percent to 1.4 billion won.

By sector, sales from "direct participation" activities by its artists, including digital music and albums, concerts, commercials and appearance fees, reached 323 billion won, down 18.8 percent from the previous year.

However, "indirect participation" activities, such as merchandising, licensing, content and fan community platforms, generated 204.9 billion won, up 31.8 percent. Among them, content sales alone surged 63.6 percent, contributing significantly to the growth.

The backdrop to HYBE's Q3 performance includes an ongoing dispute with Min.

In April, HYBE launched an audit of Ador, accusing Min of attempting to seize control of the sublabel and its flagship group, NewJeans. Min denied the claims, arguing that HYBE's audit was retaliatory following her earlier criticism of another of HYBE's sublabel's new girl group, ILLIT, for allegedly imitating NewJeans. Ador's board, largely composed of HYBE executives, later dismissed Min from her CEO role.

The conflict escalated to court, where on Oct. 29, a judge dismissed Min's injunction seeking reinstatement. The following day, Ador's board voted against her return, further intensifying the internal strife impacting HYBE's business outlook. (Yonhap)