SM Entertainment Denies EXO-CBX’s Claims Regarding Settlement Breach + Accuses Trio Of Distorting Facts

SM Entertainment has countered the claims made by EXO-CBX’s representatives.

On June 10, EXO-CBX’s representatives held a press conference to announce SM’s suspected violation of the settlement agreement.

EXO-CBX to Promote Under Baekhyun's Company + Official Statement
(Photo : News1)
SM Denies EXO-CBX's Claims Regarding Settlement Breach + Accuses Trio Of Distorting Facts
(Photo : Naver)

According to the trio’s agency INB100, SM did not fulfill the terms of the agreement made between the two parties, resulting in the agency demanding a portion of the sales.

As a response, SM issued a statement in order to deny the allegations presented during the conference.

Please read the entire statement provided below:

“Hello. This is SM Entertainment.

We would like to express our deep regret over INB100’s manner and content in the emergency press conference held today, and we would like to convey our position as follows.

MC Mong and Cha Ga Won denying actions of tampering and claiming to be more than family

Firstly, we would like to clarify that the essence of this whole incident is an unfair tampering on the part of MC Mong and Cha Ga Won against our artists. For a long time, MC Mong and Cha Ga Won have been approaching various artists who have valid exclusive contracts with us.

After that, CBX began to make accusations to nullify the renewal of the contract that had been validly signed. Nevertheless, we patiently listened to their voices, and as a result, we accepted CBX’s request to conduct their own activities.

In other words, the exclusive contract between the company and CBX is still in effect today, but while allowing individual activities to be carried out through a private entity, CBX signed the agreement itself, which paid 10% of the sales of the individual corporation.

Despite that we are not obligated to amend a valid contract, we agreed because we believe that if the legal dispute with CBX continues to interfere with the activities of EXO, it will not be fair for the other EXO members who are doing their best in their group activities and to the fans who support EXO.

However, as it became clear today, INB100 was not independently operated by CBX. INB100 has been incorporated as a subsidiary of MC Mong and Cha Ga Won. Though we had already suspected this idea, the claims at the conference made it clear that CBX was tampering.

When we signed the agreement last year with CBX, we tried to protect EXO by sending a message that did not take issue with the tampering between MC Mong and Cha Ga Won with regards to CBX.

However, we are saddened to hear today’s press conference and we hope that this will not further distort our sincerity towards EXO.

CBX enjoys rights and benefits as members of EXO but ignores promises and obligations

As CBX signed an agreement with the company under mutual consent, they have independently signed contracts for music and distribution through a private entity and have been free to engage in various personal activities such as appearing in concerts and broadcasts.

Regarding this, the 10% payment of the turnover of individual corporations is a standard that has been implemented in accordance with the court’s arbitration, in the case of an exclusive contract dispute between the company and EXO members in China, and is already applied as a reasonable standard with precedents.

Therefore, we would like to inform you that the standards that were derived from the court’s arbitration were applied to CBX’s case and that these rates were mutually discussed and concluded during the actual settlement process.

However, since INB100 was incorporated as an affiliate of MC Mong and Cha Ga Won, and has sent proof of contents indicating that the agreement was not upheld.

This means that they only want to enjoy the rights and benefits of being EXO members, but not fulfill their obligations. As such, CBX continues to repeatedly ignore the legally validated contract.

After receiving INB100’s letter of proof, we have not taken issue with the fact that EXO members, D.O., Chen, and Suho, are currently active in their solo music, concerts, and endeavors, so we did not raise concerns to avoid interfering with their activities.

Nevertheless, we emphasize that CBX is distorting our consideration.

Their claims of providing financial settlements are simply them finding any fault

Since EXO’s debut, we have been making payments twice a year until the revision of the Popular Culture and Arts Industry Development Act, and we conduct paychecks each month.

We have allowed our artists to view the income distribution and payment details, and the expenses related to artists’ entertainment activities can be printed out and taken home at the time of settlement.

If requested, artists would also be able to check the separate accounting data recorded in the company’s accounting system. After checking the income distribution and payment details, our artists signed the settlement details, and CBX never raised any issue about providing the settlement data.

But in April 2023, they were trying to deny the validity of their contract renewal and suddenly began to ask for copies of their settlement basis.

CBX did not take issue with the exclusive contract because the company did not provide the settlement data, but to make the settlement data’s provision an issue to somehow invalidate the exclusive contract.

We initially refused to accept CBX’s request for the settlement data’s copy, and although it was possible to view, these were based on fraudulent intentions. We could not be concerned about it falling into the hands of a third party behind CBX.

The specific activity details and settlement rates for each artist, which are the basis of the settlement data, are also information and trade secrets that must be protected by SM.

Settlement rates are negotiated individually, and the repercussions are very large if made public. As you can see from this press conference, the essence of the CBX situation was tempering.

We are not obligated to comply with demands with unreasonable purposes, and we will take necessary measures, such as imposing confidentiality agreements for CBX and responding to settlement issues within the legal process.

Distortion of the company’s efforts to protect EXO despite financial losses

INB100’s allegations about the unfair distribution commission rate are not true. We mentioned that we would assist CBX in negotiating better terms. We do not have the authority to determine the distribution commission rates of other distributors.

In fact, during the signing of the agreement, CBX requested the distribution commission rate be included in one of the agreement’s conditions.

However, the clause was removed, meaning it could not be included because the company did not have the authority to choose, and consequently, the clause was not included in the signed agreement.

Despite our efforts, it became difficult to adjust the distribution commission rate that CBX wanted. We gave CBX a different kind of consideration.

(This includes allowing Baekhyun’s solo album, which we had been preparing since the beginning of 2023, to be released by a private entity, and pay the concert penalty in Japan that Baekhyun had canceled).

Apart from this, CBX and INB100 have signed contracts with other distributors, in which we are a major shareholder, and as a result, the distribution of music and recordings was carried out smoothly, thus, CBX didn’t suffer any losses.

At today’s press conference, their lawyer said that CBX members are “adults who can think for themselves and take responsibility for their decisions, as well as think and judge independently.”

We can no longer tolerate the claims of invalidating the contract renewal they signed and agreements through over one year and six months of negotiations, alongside the major law firm they hired.

We will not tolerate CBX’s actions of repeatedly claiming that the exclusive contract and agreement are invalid in pursuit of their own interests.

CBX is trying to justify their wrong actions through public opinion warfare, but we will respond calmly by the law and principles, and hold them accountable through the courts.

Thank you.”

ADDITIONAL HEADLINE: EXO-CBX Set to Host Press Conference and Accuse SM of ‘Unfair Treatment’ + INB100 Releases Official Statement

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