K-Pop Label SM Entertainment Expands Reach With New Acquisitions

EXO closing ceremony olympics
David Ramos/Getty Images

EXO perform during the Closing Ceremony of the PyeongChang 2018 Winter Olympic Games at PyeongChang Olympic Stadium on Feb. 25, 2018 in Pyeongchang-gun, South Korea.  

K-pop behemoth SM Entertainment announced its purchase of Keyeast Entertainment and FNC Add Culture earlier this week, two prominent smaller labels focused primarily on acting and media production, respectively.

On Wednesday, March 14, Korean outlet Yonhap reported that SM, the home of popular K-pop acts including EXO and Red Velvet, revealed through a regulatory filing on the Korean Securities Dealers Automated Quotations (KOSDAQ) that it will purchase a controlling stake of just over 25% in Keyeast from label head Bae Young-joon, a popular actor-turned-businessman. SM reportedly will pay around $47 million, splitting the transaction between cash and stock shares.

Keyeast represents many popular South Korean stars, including actor Kim Soo Hyun, iconic Korean diva Uhm Jung Hwa, and Sohee, formerly of Wonder Girls. The label has faced some difficulties in recent years, due in part to waning interest in Korean content from China due to THAAD as well as multiple legal issues revolving around the singer-actor Kim Hyunjoong, who rose to popularity throughout Asia in the late 2000s due to his work with the boy band SS501 and his role in the hit 2009 TV show Boys Over Flowers.

The same day, SM announced that it will purchase just over 30% of FNC Add Culture stock to become the largest shareholder. A subsidiary of FNC Entertainment, known for acts including CNBLUE, FTISLAND, and AOA, recent posts on FNC Add Culture’s Facebook page reveal that the company is involved heavily in merchandise production and packaging.

The largest Korean entertainment label, SM Entertainment and its subsidiary SM C&C have diversified their portfolios and acquired multiple specialized companies over the past few years, including the indie-pop label Mystic Entertainment and Woollim Entertainment, which houses the likes of INFINITE and Lovelyz.