One of Korea's biggest entertainment businesses, SM Entertainment Co., saw its stock fall the most in the previous two months as members of one of its most well-known bands sought to terminate their exclusive contracts.
According to a statement from the company, EXO members Byun Baekhyun, Kim Jongdae, and Kim Minseok gave the company notice of termination of their exclusive contracts.
Yonhap News reported earlier on Thursday, the members claim that SM Entertainment is abusing its authority by requiring its artists to work for the company for longer periods of time in addition to the long-term contracts already in place.
The agency denied the accusations, according to the report, and stated that the singers renewed their contracts legally at the end of the previous year and that it had always allowed access to settlement documents at any time.
The nine-member K-pop group is one of SM Entertainment’s most popular acts.
Lee Jae-hak of the law firm Lin, the legal representative for the boy band members, told the news agency that SM not only required its artists to sign long-term contracts lasting 12 to 13 years but also made them renew their contracts upon expiration, which prolongs their contractual obligations for a period of 17 to 18 years.
The Seoul-based company fell as much as 8.3 percent, the most since the end of March, according to Bloomberg data. Trading volume rose to nearly five times the average as investors fretted about what the news meant for future profit.
In their statement, SM Entertainment said they’ve “identified external forces” that are giving false information to their artists, including “suggestions that it is okay to ignore our exclusive contracts and sign contracts with them.” The company said it would pursue all possible legal action.
(With inputs from Bloomberg)
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