SM Secretly Manipulated Public Opinions During Feud with HYBE? 

According to a recent report, SM Entertainment (hereinafter referred to as SM) was discovered to have manipulated public opinion on online community boards and internet cafes during their management dispute with HYBE early last year.

This is the first time it has been discovered that an entertainment company has directed and paid for public opinion manipulation to create a negative perception of their opponent during a dispute. This comes in the wake of Kakao founder Kim Beom-soo being arrested on the 23rd for stock price manipulation to block HYBE’s acquisition of SM. It appears there was also artificial intervention in public opinion, not just stock prices.

External firm contracted for 1.38 billion KRW (around 1 million USD)

According to exclusive Telegram chat logs obtained by TenAsia on the 23rd, the PR agency “Astrafe” created a chat room called “St” on February 27, 2022, which included employees of the viral firm they hired and SM executives. 

This was a task-force style organization aimed at creating favorable public opinion for SM in the SM-HYBE management dispute that started earlier that month. They aimed to spread information favorable to SM (viral) and spread negative news about their rival (reverse viral). The team consisted of six people: 2 SM employees, Astrafe’s director, and 3 employees from the viral firm.

The apparent contract between SM and Astrafe was for an advertising campaign to promote “SM 3.0” on portal sites like Naver. The contract amount was a total of 1,388,140,000 KRW. SM 3.0 was a plan to enhance shareholder value that SM put forward to counter HYBE. Given the criticism that SM had previously neglected shareholder value, the plan was intended to boost stock prices and, as a result, thwart HYBE’s tender offer.

However, SM did not spend such a large sum of money solely for the promotion of SM 3.0. Astrafe proposed to SM to also engage in a “media mix” operation, which includes not only general advertising but also viral marketing—a comprehensive service concept.

The chat logs confirm that while the surface goal was to promote SM 3.0, the actual intent was closer to public opinion manipulation, i.e: spreading content favorable to SM and unfavorable to HYBE.

Intervention and manipulation of public opinion in communities and cafes

Even before the contract, Astrafe was aware that their contract with SM would focus on viral marketing. Detailed discussions with SM began after the contract date, starting March 1. An SM employee responsible for online promotion asked, “We have an issue right now. Can we quickly do viral marketing in communities?“, to which the other party responded, “Tell me the issue. I’ll talk to the viral team.” The SM employee shared an article titled “[Exclusive] HYBE’s demand behind Lee Soo-man’s injunction” and suggested modifying the title and content to fit the community. They also asked if they could view the posted content through a shared spreadsheet, indicating the need to report progress.

When the issue of spreading past issues was mentioned, the online promotion manager (at the center level) of SM actively agreed, saying, “It would be good to spread it once more.” Another SM employee requested a list of communities where the content could be posted, suggesting they were preparing a report for higher-ups. This shows that SM was not just subcontracting the work but directly instructing the viral firms, which complied.

“HYBE will force artists to disband”

If SM had only shared articles favorable to them, criticism might have been limited. However, SM also took active steps to spread negative opinions about HYBE.

SM detailed how the viral firms should frame (angle) their posts. They divided the angles into three categories. The first was how to explain the SM-HYBE situation, emphasizing concerns that HYBE’s acquisition of SM could lead to the disbandment of artists. 

In particular, SM’s side would provide specific content written in a “community tone,” such as “The groups that disappeared after HYBE’s acquisition include GFRIEND, NU’EST, and PRISTIN. HYBE is making a tender offer because they can afford it, but ultimately the stock market thinks the current SM management is better, so they are not selling to HYBE.” 

Meanwhile, the claim that PRISTIN disbanded after HYBE’s acquisition is false; PRISTIN disbanded in May 2019, and Pledis was acquired by Big Hit (HYBE) in May 2020.

SM also addressed the multi-label system issue, countering HYBE’s claims about their systematic multi-label system. SM claimed it was impossible for HYBE to support SM artists, stating, “If SM becomes a HYBE sub-label, SM artists might be unable to speak up and face contract termination or disbandment according to HYBE’s wishes.” 

They also aimed to raise concerns about contract renewals, suggesting that if artists moved to another agency, they would be disbanded. This narrative was meant to imply that both current SM staff and even HYBE fans were against the acquisition. The viral firm employee responded to SM’s request, saying they would break down the provided content into parts and spread it across various communities and cafes.

When truck protest photos against HYBE appeared in some communities, an SM employee asked if similar content could be posted on Theqoo, Instiz, and other cafes, showing SM’s awareness of specific communities.

The chat logs reveal that viral firm employees took significant measures to avoid detection. One employee criticized another firm’s post for being too obvious, prompting Astrafe’s director Park to order the post to be taken down and adjusted. 

Source: Naver