According to Koreaboo, HYBE Group has once again become the center of controversy regarding its subsidiary ADOR (the management company of the group NewJeans).
Some recent media reports speculate that the group may be taking revenue from ADOR to inflate sales for HYBE IM, a subsidiary specializing in video games.
The report gained quite a bit of attention from Korean netizens through a viral post on Theqoo, which cited an article mentioning suspicious insider transactions from ADOR to HYBE IM.
According to the article, on October 17, two subsidiaries of HYBE announced an internal transaction worth 4.2 billion won in the third quarter of 2024. While HYBE IM received 4.1 billion won from ADOR in revenue, ADOR only received 90 million won from HYBE IM for the same transaction.
To put the numbers into context, the amount HYBE IM received is equivalent to 3.7% of ADOR's revenue last year and 13.3% of HYBE IM's revenue.
However, the explanation behind such a large transaction is quite brief. Both companies claim that it is for game royalties.
But there seems to be some suspicion in the industry that HYBE is trying to inflate HYBE IM's revenue by using ADOR's revenue - the bulk of whose income is due to the success of NewJeans.
The reason behind the suspicions is because of the apparent role reversal in this transaction. Normally, if a HYBE artist appears in a game, their record label will be paid a fee by the game company to use their IP (intellectual property) through royalties and copyrights.
But in this case, it seems that ADOR is paying HYBE IM back for its gaming services.
Last August, HYBE IM updated its Rhythm Hive game to include NewJeans. ADOR is supposed to be paid by HYBE IM for the artist's IP. Interestingly, HYBE IM is said to have yet to break even and even recorded an operating loss of 19.7 billion won last year.
A market insider pointed out a lack of transparency in HYBE's internal transactions, which could lead to a decrease in the amount of money artists receive.
When a media outlet reached out to a HYBE official for comment, they said “it is difficult to confirm specific details regarding the insider trading disclosure.”
This report led many netizens to believe that HYBE was “stealing” revenue from ADOR to inflate the paper profits of this video game subsidiary.
In 2023, ADOR achieved 110.2 billion won in revenue and 26.5 billion won in net profit, with only NewJeans as its only artist. The 5-member girl group earned this amount mainly from music products and advertisements, without concerts or tours.
ADOR is the 4th most profitable company in HYBE Group in 2023, after Big Hit Music (managing BTS, TXT), Pledis Entertainment (managing Seventeen, Fromis 9, TWS) and HYBE Japan.
