2024-09-12: HYBE's Statement Regarding "Ignore Her" Incident

Korean Original: https://n.news.naver.com/article/015/0005033371

English translation by Grok AI

[Analysis] 2024-09-12: HYBE's Statement Regarding "Ignore Her" Incident

NewJeans Joins the Fray with a 'Bold Move'... Exclusive Contract Termination Dispute on the Brink of a Storm

Input: September 12, 2024, 7:07 PM | Updated: September 12, 2024, 7:31 PM

Reporter: Ha Ji-eun

This article was published on Market Insight on September 12 at 6:52 PM.

Five months after the conflict between HYBE and former ADOR CEO Min Hee-jin erupted, NewJeans has now entered the fray, plunging the dispute into a greater whirlwind. The NewJeans members issued an ultimatum, demanding Min’s reinstatement within two weeks. Given the circumstances, speculation is rife that NewJeans may be considering steps toward terminating their exclusive contracts. Market attention is already focused on whether penalties will be imposed and their potential scale.

Ongoing "Ignoring Greetings" Truth Battle

The decisive incident that shattered NewJeans’ trust in HYBE was the “greeting controversy” involving the manager of HYBE’s girl group ILLIT. The incident dates back to around June, three months ago, shortly after Min Hee-jin won a legal battle against HYBE. During a YouTube live broadcast on the evening of September 11, NewJeans member Hanni detailed the situation, stating that a manager of a HYBE artist told members to “ignore” her, likely referring to the ILLIT manager.

Concerned about internal ostracism, NewJeans’ parents raised the issue with ADOR and HYBE management, requesting a smooth resolution. However, conflicting interpretations of the “greeting controversy” prevented the conflict from being resolved. HYBE reviewed 7–8 minutes of CCTV footage from the incident, which captured Hanni and ILLIT members exchanging greetings, and stated that no problematic remarks by the manager were found.

The issue raised by NewJeans’ parents was not publicly addressed within the company at the time due to insufficient evidence. However, considering the history between HYBE and Min Hee-jin, the music industry believes there was a strong possibility of a subtle “emotional battle” escalating.

Three months later, when Min Hee-jin was sacked from her CEO position, NewJeans took action. Previously, NewJeans’ parents had revealed that HYBE Chairman Bang Si-hyuk repeatedly failed to acknowledge the members’ greetings. HYBE responded by suggesting that Bang might have “face blindness.”

Min Hee-jin and NewJeans: Now in the Same Boat

Ultimately, NewJeans issued a bold demand for Min’s reinstatement within two weeks. Setting a specific deadline has fueled suspicions that they are considering legal action against HYBE.

The music industry views it as highly likely that NewJeans may pursue a lawsuit to terminate their exclusive contracts. Typically, contract termination lawsuits begin with an artist presenting demands to the agency. If those demands are not met within a set period, the artist files for an injunction to suspend the contract’s validity. The prevailing interpretation is that NewJeans’ demand is a declaration of intent to file a lawsuit if their requests, including Min’s reinstatement, are not met within two weeks.

The possibility of a contract termination lawsuit was already discussed late last month when Min was removed as CEO. Min’s side stated that her dismissal violated the shareholder agreement and disregarded a court ruling, signaling they were reviewing follow-up measures.

One insider commented, “Experiences like the ‘greeting controversy’ have deepened NewJeans’ distrust in HYBE, leading them to align with Min Hee-jin. Through this live broadcast, they strongly signaled their intent to stand with Min, effectively crossing an irreversible line with HYBE.”

Reconciliation Virtually Impossible... The Key Issue Is Penalties

NewJeans’ demand for Min’s reinstatement is unlikely to be accepted. HYBE has already filed charges against Min for breach of trust. With the conflict reaching its worst point, the chances of a dramatic reconciliation are slim.

If a lawsuit proceeds, the key issue will likely be penalties. According to the Fair Trade Commission’s standard exclusive contract, penalties are calculated by multiplying the average monthly revenue from the past two years by the number of months remaining in the contract. Estimates suggest NewJeans’ penalties could reach approximately 300 billion KRW. It is highly unlikely that NewJeans would choose to pay such penalties to become free agents.

One insider predicted, “NewJeans will focus on building a case to leave the company without penalties, while HYBE will concentrate on gathering evidence to support their claim that Min Hee-jin initiated the conflict with ‘tampering allegations.’” HYBE has alleged that Min planned to secure external investors to make ADOR independent and take NewJeans with her.

Amid the fallout from NewJeans’ involvement in the dispute, HYBE’s stock price fell by up to 6% during trading on the previous day, closing at 169,000 KRW, down 2.82%.

Reporter Ha Ji-eun, hazzys@hankyung.com