SM Entertainment, one of the leading agency groups in Korean entertainment, said Friday that it will terminate a contract with Lee Soo-man, a year early, at the end of 2022.
“SM Entertainment [..] will sever ties with its chief producer Lee Soo-man at the end of this year,” Yonhap news agency reported on Friday.
Lee was one of the key figures in the early discovery of Korean pop talent in the mid-1990s, developing the agency system that has hatched numerous idol groups, and has remained one of the biggest executive names in the K-pop business. The four leading agencies are brand names in their own right, organize concerts for their stables of performers, and maintain a far more visible presence than music management firms in most other countries.
Lee has been behind the success of acts including BoA, TVXQ, Girls Generation, Shinee, EXO, Super Junior, NCT and aespa.
SM Entertainment’s board of directors said Friday that it would bring to an early end a deal with Like Planning, a music production company that is wholly owned by Lee. SM Entertainment outsourced production and has paid millions of dollars of royalties per year to Like Planning.
The arrangement was criticized by institutional shareholders including Align Partners Capital Management as undermining SM Entertainment profitability and shareholder value.
Lee is also publicly-traded SM Entertainment’s biggest single shareholder with an 18% stake.
The rift emerged a month ago and when it emerged that Lee might himself seek the exit, SM Entertainment shares leaped by some 20%.
“With the 25-year-old production system Lee established running well, he is confident that good junior producers will manage without much difficulty. He added it is also reasonable to humbly accept minority shareholders’ opinions to step down (as chief producer),” SM Entertainment said last month.
Separately from the Like Planning row, Lee has been in discussions for over a year to sell his holding in SM Entertainment. Earlier this year, it was reported in Korean business circles that CJ ENM had become the last remaining contender to buy Lee’s SM Entertainment stake. But a deal has not been announced or completed.
It is not clear whether formalization of the Like Planning-SM Entertainment rift makes it more or less likely that Lee will dispose of his SM Entertainment shares.
