Upon initial examination, it appears to be reasonable. ADOR’s newly appointed CEO, Kim Joo-young, stated in an internal email that former CEO Min Hee-jin would still be responsible for the production of NewJeans, while management and production would be divided.
In apparent reaction, HYBE’s stock experienced a two-day increase after the board of directors at ADOR removed Min Hee-jin from her position on the 27th of last month. The stock rose by 2.94% on the 28th and by 3.02% on the 29th. Many analysts and media outlets have linked this rise to the elimination of management risks following Min Hee-jin’s dismissal.
Despite this, it should be noted that HYBE also announced a share buyback on the same day. This buyback totaled approximately 26.6 billion KRW and coincided with their dismissal of Min Hee-jin. Furthermore, HYBE took action to terminate their shareholder agreement with Min Hee-jin and even filed a lawsuit to confirm the validity of this termination.
Overall, the announcement of a share buyback is typically seen as a positive development for stock prices. Additionally, HYBE’s decision to terminate the shareholder agreement resulted in the elimination of a put option valued at approximately 100 billion KRW that was originally intended for Min Hee-jin. This was due to the company’s repurchase of 26.6 billion KRW worth of shares, which relieved them from the obligation of paying the put option. As a result, it is not surprising that this had a favorable effect on the stock price.
To solely attribute the stock rise to the resolution of management risks, without taking into account these other factors, is equivalent to selective observation.
On the 30th of last month, HYBE’s stock price decreased by 1.65%, while other entertainment stocks showed an increase. This trend continued on the 2nd of this month, with HYBE’s stock price dropping by 2.49%.
This signifies that the market is becoming aware of the shortcomings in these analyses. This realization is not solely based on Min Hee-jin’s statement that the shareholder agreement with HYBE is still valid and that she is rejecting the producer contract offered by ADOR due to multiple unfavorable clauses.
Unless there is a breach, contracts cannot be terminated without the consent of the other party. The court, in responding to Min Hee-jin’s petition for an injunction to prevent the exercise of voting rights, concluded that she had not breached the shareholder agreement with HYBE. Despite the injunction being aimed at stopping the exercise of voting rights, the court did not find any violation of the shareholder agreement as HYBE had claimed.
As a result, the drop in HYBE’s stock price following a brief increase could suggest that the market is recognizing the possibility of a lengthy and expensive legal battle regarding a potential violation of the shareholder agreement. Despite HYBE’s lawsuit to block Min Hee-jin from obtaining an injunction, there is a high likelihood that she will counter with her own lawsuit against HYBE for breaching the shareholder agreement, potentially resulting in significant financial consequences.
There is speculation among industry insiders that Min Hee-jin’s team may bring a legal case against HYBE as soon as this month.
If a lawsuit arises between HYBE and Min Hee-jin regarding the shareholder agreement, the potential risk could endure for a considerable duration. The initial estimate of 100 billion KRW for the put option could potentially rise significantly, especially with NewJeans’ upcoming world tour. Moreover, any additional factors such as Min Hee-jin’s salary and potential penalties for breaching the contract during her tenure could also be taken into consideration. The resolution of the remaining shares that are not covered by the put option will also be a crucial matter to be addressed.
Generally, the initial civil lawsuit process takes approximately one to one and a half years. As it pertains to a monetary dispute, a request for execution can be made based on the outcome of the initial trial without needing to involve the Supreme Court. In other words, unless a settlement is reached, HYBE risks facing a lengthy process lasting at least one and a half years.
Despite the ongoing lawsuit, the stability of NewJeans under the management of HYBE and ADOR could potentially be ensured if Min Hee-jin remains as a producer at ADOR. This could have been a factor in the new CEO, Kim Joo-young’s decision to announce her continuation as producer.
Despite Kim Joo-young’s statement that Min Hee-jin will continue to produce NewJeans, it is doubtful that she will stay at ADOR. This is due to the fact that a re-investigation will be launched into accusations of Min attempting to conceal a previous sexual harassment case within the company. After the investigation, steps will be taken to prevent similar incidents from happening in the future.
Despite being HYBE’s Chief Human Resources Officer at the time of the incident, it is uncertain if Kim Joo-young will change his previous decision to dismiss the case without charges. He may choose to solely address the accusations against Min’s involvement or dismiss the case again as groundless. However, given the damaged relationship between Min Hee-jin and HYBE, it is improbable that she will agree to a re-investigation, which decreases the likelihood of her staying at ADOR.
If Min Hee-jin were to leave ADOR, the company could spin it as a situation where they extended an offer for her to become the NewJeans producer, but she declined.
Meanwhile, Kim Joo-young is tasked with the challenge of effectively managing NewJeans members and staff to stabilize ADOR.
Industry reports state that on the 30th of last month, Kim Joo-young held a meeting with both NewJeans members and their managers, as well as ADOR staff. The purpose of the meeting was to discuss plans for Min Hee-jin’s role as a producer and to establish organizational stability.
The situation took a turn for the worse as issues began to surface. According to reports, ADOR’s recent leadership has raised concerns about copyright violations in regards to the “ETA Director’s Cut”video that was recently posted on the Dolphin Kidnapping Group’s YouTube channel. This group is responsible for producing NewJeans’ music videos.
According to reports, ADOR’s employees informed the new management that the “ETA Director’s Cut”was an older rendition of the finale altered at the request of Apple. This version had previously been approved by Dolphin Kidnapping Group to be released early for NewJeans followers. Additionally, they noted that the music videos for “Ditto”and “OMG”were also later uploaded to the same channel.
Despite this, Director Shin Woo-seok announced on his social media that the “ETA Director’s Cut” of NewJeans, along with all other NewJeans music video content, had been removed from the Dolphin Kidnapping Crew channel. He explained that this was due to a change in ADOR’s policies under new management and that all videos and channels related to NewJeans music videos would no longer be allowed to be shared publicly. Furthermore, he stated that any future collaborations between Dolphin Kidnapping Crew and ADOR would no longer be possible.
Despite ADOR’s rebuttal that the copyright for all content, including NewJeans’ music videos, belongs to them and should be posted on their official channel, it seems that the dispute between ADOR and Dolphin Kidnapping Crew has hit a standstill, as indicated by Director Shin’s comments.
The music videos created by Dolphin Kidnapping Crew have greatly contributed to the success of NewJeans. The Director’s Cuts and behind-the-scenes footage, originally released on ADOR’s official YouTube channel, have also been crucial in promoting the brand. Given this, it is certainly unfortunate that the situation has arisen.
The main concern is whether the removal of Director Min Hee-jin will affect the stability of NewJeans and ADOR. This matter is expected to significantly influence HYBE’s stock value. Both the entertainment industry and other observers are closely monitoring the ability of the new management to effectively guide ADOR’s only artist, NewJeans, in a steady direction.
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