The BTS Effect: HYBE Capital Breaks $4.2 Billion, Set to Join Major Corporate Group

HYBE, the powerhouse behind BTS’s global ascent, is poised to ascend to conglomerate status within the Korean entertainment sphere, boasting assets surpassing 5 trillion won ($4.2 billion).

Since its public debut in October 2020, HYBE has embarked on a relentless acquisition spree, both domestically and internationally, diversifying its portfolio and exponentially expanding its scale. The company’s meteoric rise has ignited a trend among industry observers, who marvel at its unprecedented growth and remark, “There’s no other conglomerate like it.”

According to the Fair Trade Commission (FTC), fair assets encompass the combined total assets of a conglomerate’s non-financial subsidiaries and the total capital of its financial affiliates. Companies exceeding 5 trillion won ($4.2 billion) in such assets are officially recognized as publicly announced business groups.

HYBE’s asset trajectory showcases significant growth, escalating from 4.7 trillion won ($3.9 billion) in 2021 to 4.8 trillion won ($4 billion) in 2022. In 2023, the company achieved a remarkable milestone, surpassing 5.3 trillion won ($4.5 billion) for the first time since its inception. Should the FTC designate HYBE as a conglomerate, Chairman Bang Si Hyuk, who holds a 31.57% stake, is poised to be designated as the CEO of the conglomerate.

An industry insider remarked, “The potential designation of HYBE as a conglomerate marks a significant shift within the entertainment industry, traditionally associated with operating in challenging environments. This encouraging development highlights the systematic growth and organization of the K-POP industry, driven by major planning entities.”

Another expert emphasized, “HYBE transcends the traditional boundaries of entertainment businesses, incorporating diverse business sectors such as artist IP-based platform development and gaming. Thus, it defies classification solely as an entertainment planning company.”

The designation as a conglomerate for HYBE was anticipated, with even the renowned American music magazine Billboard acknowledging that “HYBE has transcended its original focus on the K-POP industry and geographic constraints,” underscoring its significant global impact.

Despite criticisms of neglecting its core business during expansion into peripheral industries, HYBE implemented a multi-label system to fortify its foundation. Before its public listing, the company completed total acquisitions of Pledis Entertainment, home to Seventeen, Source Music, which belongs to LE SSERAFIM, and KOZ Entertainment, which Block B’s Zico established. Additionally, it launched a new label, ADOR, led by Min Hee Jin, a former SM Entertainment staff member who trained f(x) and SHINee, and fully acquired Belift Lab, housing ENHYPEN and ILLIT.

The multi-label system, characterized by each label’s autonomous operation, is a central strategy for HYBE. Unlike traditional agencies, artists trained under each label were free to pursue activities without constraints, breaking away from the notion of a shared pool of resources. This approach streamlined the artist activity cycle, fostering an efficient environment where all talents could be utilized seamlessly without gaps.

HYBE also prioritized autonomy in the production realm.

Public records reveal Chairman Bang Si Hyuk’s involvement in TOMORROW X TOGETHER (TXT) music from Big Hit Music, LE SSERAFIM from Source Music, and ENHYPEN and ILLIT from Belift Lab. Min Hee-jin, ADOR’s representative, is exclusively dedicated to NewJeans. Master Professional Han Sung Soo oversees seventeen, Hwang Min Hyun, and TWS from Pledis, while KOZ Entertainment is led by Zico, maintaining his distinct artistic identity. Some voices have raised concerns regarding the minimal synergy of integrating labels with separate operational styles.

The HYBE Labels Concert, initially touted as a signature brand performance, evolved into the festival-style WeverseCon due to challenges in achieving a unified appearance amidst some teams’ non-participation. Nonetheless, from a corporate standpoint, the shining achievement undoubtedly lies in successfully implementing the multi-label system.

In 2023, HYBE reached unprecedented sales figures, totaling 2.1 trillion won ($1.77 billion).

Sales figures for each label last year were remarkable, with Big Hit Music leading at 552.3 billion won ($466 million), followed by Pledis at 327.1 billion won ($276 million), ADOR at 110.2 billion won ($93 million), Belift Lab at 91.2 billion won ($77 million), Source Music at 61.1 billion won ($51.6 million), and KOZ Entertainment at 19.4 billion won ($16.4 million). Each label’s sales were comparable to those of small to medium-sized companies. Moreover, all labels recorded positive operating profits, with figures standing at 177.5 billion won ($150 million), 76.9 billion won ($65 million), 33.5 billion won ($28.3 million), 13.1 billion won ($11 million), 11.9 billion won ($10 million), and 9 billion won ($7.6 million) respectively.

With all labels actively contributing, HYBE fills the void left by BTS’s military service. Seventeen clinched a remarkable achievement, topping domestic artist album sales with 15.93 million albums sold last year. TXT secured the third position overall with 6.5 million albums, while NewJeans followed closely in fourth place with 4.26 million. ENHYPEN claimed sixth place with 3.88 million albums; LE SSERAFIM ranked 16th with 1.95 million albums sold. Six of HYBE’s idols impressively made it into the top 20 domestic artist album sales chart.

Experts anticipate HYBE’s first-quarter performance to lag behind the robust results of the fourth quarter of last year. This projection is attributed to substantial expenses associated with the debut of two new groups, TWS and ILLIT, and the limited comeback of only one team, LE SSERAFIM. However, momentum is expected to increase from the second quarter onwards as core artists ramp up their activities, sparking optimistic forecasts.

Starting with TOMORROW X TOGETHER’s comeback on the 1st, Seventeen, ENHYPEN, NewJeans, and other artists are gearing up for their comebacks. With a flurry of performances slated both domestically and internationally, anticipation is high for promising sales figures ahead.

Previously, worries arose regarding stock price fluctuations triggered by challenges such as failed re-contracting with group singers and military enlistment. However, the volatility in stock prices shows signs of recovery, led by positive news surrounding the debut of a new group. The securities market perceives this as a signal that stock prices for entertainment planning companies, HYBE included, have reached a potential low point and are now on an upward trajectory.