ADOR, appears to be preparing for a split from its parent company, HYBE.
This speculation arises as the contract term for NewJeans still has a considerable duration left, yet there seems to be a push for independence. The situation surrounding Min and the ADOR management's attempt to take over control has been controversial since June of last year, drawing parallels to the case of the girl group FiftyFifty.
Min Hee-jin, being a major shareholder at HYBE, is preparing grounds for a lawsuit to avoid contract termination liabilities, as ending the contract with NewJeans could entail substantial penalties.Despite the possibility of raising funds from foreign investors to cover these penalties in setting up a new corporation, the penalties are expected to be significant.
Given that NewJeans debuted in 2022 and the typical contract duration for K-pop groups is 7 years, about 5 years remain in their contract. According to the standard contract by the Korean Fair Trade Commission, penalties are calculated by multiplying the monthly average revenue of the last two years by the remaining months in the contract.
With NewJeans recouping their investment within two months post-debut and still having 60 months left, the penalty could exceed several hundred billion won.
An industry insider noted that the investment in girl groups varies by agency, but it generally ranges between 7 billion and 10 billion won (approx. 5-7 million USD). In fact, achieving revenues of at least 7 billion won within just two months suggests that as activities increase in 2023, the monthly average revenue is likely to rise further. Even if the initial monthly revenue was at least 3.5 billion won (approx. 3 million USD), a simple calculation based on the standard exclusive contract would amount to 210 billion won (approx.155 million USD).
The ADOR situation draws comparisons to the FiftyFifty exclusive contract dispute that shook the entertainment industry a year ago, indicating similar controversies may arise. Despite these parallels, if NewJeans were to terminate their contract, HYBE’s ability to intervene might be more limited than in the FiftyFifty case, particularly since NewJeans currently has little significance in domestic activities.
correct me if im wrong but nobody is talking about contract termination here so this post is unnecessary?