© Reuters. FILE PHOTO: SM Entertainment’s logo is seen at its headquarters in Seoul, South Korea, March 9, 2023. REUTERS/Kim Soo-hyun
SEOUL (Reuters) – Stocks in K-pop management agencies tumbled on Wednesday after South Korea’s anti-monopoly watchdog launched investigations into possible breaches of subcontracting rules when outsourcing album production and merchandise, Yonhap reported.
The Korea Fair Trade Commission (KFTC) sent investigators to the offices of HYBE, SM Entertainment and YG Entertainment on Tuesday, Yonhap News Agency reported, citing unnamed industry sources.
Yonhap said the FTC is examining whether the agencies have engaged in any practices with subcontractors such as oral contracts without issuance in writing, unfair contracts or delays in payments. No specific charges were filed.
KFTC declined to comment on any specific investigation.
HYBE, SM, and YG did not immediately respond to a request for comment.
Shares in HYBE, the management agency for K-Pop sensation BTS, fell 2.1% in early morning trading, against a broader flat market. Shares of SM Entertainment and YG Entertainment were also down 1.5% and 0.4%, respectively, as of 0015 GMT, though YG later reversed its losses.
HYBE reported 410.6 billion won ($315.9 million) in sales for the January-March quarter. Of that, 44.9% came from albums and 16.8% from merchandise and intellectual property, according to a Shinhan Investment & Securities report Tuesday.
($1 = 1,300.0000 won)