By Lee Minji
SEOUL, April 6 (Yonhap) -- Hybe, the K-pop powerhouse behind BTS, is set to cement its footing here and accelerate its overseas push with a billion-dollar deal to buy Scooter Braun's Ithaca Holdings.
In a surprise move, Hybe on Friday announced a plan to acquire a 100 percent stake in the U.S. media group in a US$1.05 billion deal that would bring together some of the world's biggest pop musicians -- BTS, Justin Bieber and Ariana Grande to name a few.
The two companies voiced anticipation over the deal, with Hybe founder and Chairman Bang Si-hyuk calling it "the start of a new adventure no one could have possibly imagined" and Braun commenting that "global opportunities for artists (will) become exponential."
Artists managed by the two companies -- BTS, J Balvin, Demi Lovato, Seventeen and Justin Bieber -- also supported the move in a congratulatory video released through Hybe's official YouTube channel on Tuesday.
"We're so happy to see so many artists that we cherish and love become a part of this family. It feels like the world is getting more connected and even smaller," RM of BTS said.
Bandmate Suga called the deal "incredible news" that shows how "things we could never imagine turn into reality."
"It makes us think there are no boundaries or limits to the work that we're doing. We can't wait to see the endless possibilities that await us."
Across from the Pacific, Bieber joined in.
"I'm thrilled at the potential this alliance holds ... We're getting so much support from every angle, there's so much we can do with the team. Let's make history again."
Apart from the creative synergy the merger will bring, industry watchers appeared excited over the formation of a lucrative entertainment titan that has been making colossal leaps over the past few months.
The small agency established 16 years ago succeeded in going public on the main Korean bourse, KOSPI, in October. It then went on to sign deal after deal with some of the biggest industry players, like South Korean portal operator Naver and label giant Universal Music Group.
The company also formed a strategic bond with competitor YG Entertainment, which manages K-pop sensation BLACKPINK that alone boasts 59.7 million subscribers on YouTube.
In March, the company signaled bigger ambitions to grow into what it called an "entertainment lifestyle platform." Changing its name from Big Hit Entertainment to Hybe, it restructured its business into other music-derived sectors and announced its move into a new headquarters in Seoul's central Yongsan ward.
Analysts based in Seoul said the latest acquisition will give a major boost to Hybe's seemingly endless expansion, with its legion of artists giving the company substantial bargaining power in the competitive entertainment industry.
"The acquisition will yield extreme power," Hana Financial Investment Co. analyst Lee Ki-hoon said. "In terms of YouTube subscribers, it will bring together No. 1 Justin Bieber, No. 3 BTS and No. 4 Ariana Grande. BLACKPINK is expected to join (Hybe's fan community platform) Weverse, and on top of that, there are partnerships with other labels ... this alone is a fan base of 220 million."
Some noted how a more diverse and bigger portfolio of musicians will be a boon for a music label aiming to go global.
"With big name pop musicians joining, Hybe not only bulked up its portfolio but lowered its reliance on BTS," said Park Ha-kyung, an analyst at Korea Investment & Securities, mentioning how the company has been moving toward this direction by acquiring smaller labels.
In 2019, sales generated by BTS accounted for 97 percent of the company's revenue, but the figure dropped to 85 percent in 2020 following mergers with local labels, like Pledis and Source Music.
"Having a more diversified artist portfolio of various genres, like hip hop, Latin and country, compared with its past portfolio that was 100 percent K-pop, will also help the company secure a new growth engine," Park said.
More significantly, the bigger fandom and portfolio of artists will lead to a tangible increase in sales, if the incoming artists join Hybe's fan community platform Weverse, the analysts said.
Weverse, which also sells merchandise, tickets and videos, represents 19 musicians as of Tuesday. They include Hybe-managed and non-Hybe K-pop acts, like BTS, Seventeen, CL and TREASURE, as well as artists based abroad, like Gracie Abrams and Alexander 23.
"The global merchandise market is mostly all about T-shirts. Think, for instance, ARMY bombs in a Justin Bieber concert ... If Big Hit's merchandise production capacity meets with global artists, that will lead to a whole new market for global fans who are looking for more merchandise," Lee Sun-hwa, an analyst at KB Securities Co., said.
Lee projected sales coming from Weverse to account for 66 percent of revenue this year, up from 41 percent in 2020, noting how K-pop fans usually spend US$8 on fan merchandise compared to an average of $5.50 by other music fans.
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