People walk past the HYBE headquarters in Yongsan District, Seoul, Tuesday. HYBE initiated an audit of its subsidiary Ador, alleging an attempted takeover by Ador CEO Min Hee-jin and others. Min responded by officially accusing BELIFT LAB, another subsidiary of HYBE, of copying NewJeans' concept. Yonhap

The K-pop industry is currently abuzz with the escalating dispute between HYBE, the largest K-pop agency housing BTS, and its subsidiary label Ador, which manages the girl group NewJeans.

The conflict ignited when HYBE's Chairman Bang Si-hyuk initiated dismissal procedures against Ador's CEO Min Hee-jin, accusing her of attempting to usurp management rights.

In response, Min vehemently denied these allegations and countered by accusing HYBE of copying NewJeans' concept, leading to a full-blown confrontation.

HYBE, with an annual revenue of approximately 2 trillion won ($1.5 billion), and Ador, valued at an estimated 2 trillion won by Hana Securities, are facing internal strife that could potentially cast a shadow over the K-pop industry.

In light of these developments, the key issues at the heart of this conflict are summarized in questions and answers as follows:

Belift Lab's girl group ILLIT / Courtesy of Belift LAB

Q: What is happening between the parent company HYBE and its subsidiary Ador?

The core issue revolves around the allegation that CEO Min and her close associate, identifed only as "executive A," attempted to seize control of Ador.

HYBE claims to have detected this attempt on Oct. 22 and subsequently secured computer assets that reportedly contain at least three documents supporting their claims.

One document, created by the executive A on Sept. 23, outlines terms for "contract changes" and plans for "attracting external investors." Another document from Sept. 29 includes statements about "ultimately escaping" and ensuring "no one can touch us."

HYBE views these documents as evidence that Min was pressuring for the sale of HYBE's Ador stake to gain control, or to take NewJeans and form a separate company.

In response, A countered, stating that these documents were merely "personal memo-level notes" and unrelated to Min.

On April 22, Min claimed that the recent debut of the girl group ILLIT by another HYBE subsidiary, Belift Lab, plagiarized NewJeans' concept, sparking the conflict.

HYBE interprets this as an attempt to hold HYBE accountable for terminating its contract with Ador. HYBE CEO Park Ji-won denied on April 23, stating, "The attempt to take over Ador's management was planned before ILLIT's debut."

The truth behind these accusations is expected to emerge from the audit, and if unresolved, the matter could escalate to a legal battle.

HYBE Chairman Bang Si-hyuk / Yonhap

Q: Why did Bang Si-hyuk and Min Hee-jin, once on the same team, part ways?

The current discord between HYBE and its subsidiary, Ador, spearheaded by Min, can be traced back to the strategic transformations within HYBE, originally known as Big Hit Entertainment.

Founded in 2005 by Chairman Bang, HYBE soared to global prominence following the unprecedented success of BTS. Anticipating BTS members' military enlistment and aiming to diversify revenue, HYBE expanded rapidly by establishing Belift Lab in collaboration with CJ ENM, and acquiring Source Music and Pledis, among others.

This growth spurt led HYBE, which rebranded from Big Hit in the following year, to introduce a multi-label system that propelled the company to surpass 2 trillion won in revenue last year, a first for a South Korean entertainment agency.

Bang's recruitment of Min, a former executive at SM Entertainment known for her successful branding of groups like Girls' Generation, f(x), Red Velvet, SHINee, and EXO, occurred in July 2019 as preparations to acquire Source Music were concluding.

Initially, Min was to lead the production of a new girl group under Source Music, but differences with Bang led to a pivotal shift.

"Initially, Min was expected to head the production of a rookie girl group at Source Music and take on a leadership role in the new label," said an insider from HYBE. "However, divergences with Chairman Bang resulted in him launching Le Sserafim with Source Music, while Min took charge of Ador, founded by HYBE, and introduced NewJeans."

Both Le Sserifim and NewJeans debuted within two months of each other in 2022, sparking competition. NewJeans quickly changed the K-pop landscape by hitting No. 1 on the U.S. Billboard album chart within their first year.

Following their debut, several rookie groups released music and adopted concepts reminiscent of the NewJean's "easy-listening" songs, witha tip of the hat to the late 1990s to early 2000s pop aesthetics, a testament to the young girl group's influential debut.

Financial analysts predict Ador's corporate value might reach 2 trillion won. Industry observers suggest that beyond the ILLIT controversy, HYBE's interference in Ador and Min's perceived lack of adequate compensation are among the key factors intensifying the conflict.

Ador CEO Min Hee-jin / Courtesy of Ador

Q: In the standoff between HYBE and Min Hee-jin, who holds the advantage?

HYBE has called for a shareholder meeting to demand the resignation of Ador's CEO Min, signaling an intent to overhaul its management.

Should the board, currently controlled by Min and her close associates, refuse to convene the meeting, HYBE may seek legal action to enforce it, a process that could take about two months.

Industry and legal experts believe that Min's chances of securing control over Ador are slim. The likelihood of HYBE selling its shares is low.

While there have been discussions about Ador drawing in private equity funds (PEP) to issue new shares for a third-party allocation increase, thus gaining a majority stake, considering HYBE's substantial assets, this does not seem feasible.

Min could potentially set up a separate company with NewJeans by proving mistreatment by HYBE or by paying a penalty to HYBE. It has been reported that Min recently met with the parents of NewJeans members to discuss various matters.

Ador girl group NewJeans / Yonhap

Q: What is the future of NewJeans?

Despite the internal conflict at HYBE, the company is determined to move forward with NewJeans. HYBE has assured stakeholders that NewJeans' upcoming comeback next month will continue as planned. HYBE CEO Park urged the company's employees, stating, "Please give your utmost effort to ensure the success of new NewJeans' release next month and their continued growth."

Music critic Kim Do-hun said, "NewJeans already has a well-established concept and color, so even without Min Hee-jin's direct involvement, their activities should not face significant difficulties for some time."

Still, he said that maintaining this in the long term could pose challenges.

The dispute within HYBE led to a rapid decrease in stock value, with approximately 850 billion won lost in just two days.

Nonetheless, analysts believe the impact of this conflict on NewJeans' activities will be minimal.

"NewJeans has an exclusive contract with Ador, and as HYBE owns 80 percent of Ador's shares, NewJeans is considered HYBE's intellectual property," said Ahn Do-young, an analyst at Korea Investment Securities. "Since neither party wishes to damage the NewJeans IP, the likelihood of the scheduled May album release being affected is low."

This article from the Hankook Ilbo, sister publication of The Korea Times, was translated by generative AI and edited by staff of The Korea Times.