Is YG’s handling of BLACKPINK’s recontracting issue with “Nothing is confirmed” against ESG principles?
Whenever the issue of BLACKPINK’s contract renewal arises, YG consistently responds with the same stance for months. They claim that nothing is confirmed, but specific details of the contract negotiations, from the contract’s failure to the news of Jennie and Jisoo establishing their own agencies, have been exposed to the public.
Despite the fluctuating stock prices, YG continues to repeat the stance that “nothing is confirmed.” For a typical public company, it would be difficult to maintain such a stance regarding a specific contract issue for several months.
YG’s stock price closed at 65,500 KRW on September 25th, marking a continuous decline for four trading days, with a total drop of 18.43% during this period. Although the uncertainty surrounding BLACKPINK’s contract renewal and reports of Jennie and Jisoo establishing their own agencies contributed to this decline, YG has not taken any responsible stance. Among individual investors, dissatisfaction with YG is growing.
YG’s stock price is facing a crisis of trust. In September, foreign investors actively sold their shares, causing the foreign ownership percentage to drop from the 18% range to the 15% range. Even pension funds, including the National Pension Fund, sold 21.5 billion KRW worth of shares. Institutional investors have become acutely aware of the uncertainty surrounding YG. In contrast, individual investors bought 20 billion KRW worth of shares during this period. Existing investors saw it as a “dip-buying” opportunity, while new investors perceived the uncertainty as a buying opportunity.
From the company’s perspective, BLACKPINK is a core intangible asset and intellectual property (IP). Of course, when important negotiations are ongoing, there’s no need to disclose details. However, when information leaks externally during this process and causes stock price fluctuations, it raises other concerns. It implies that internal security measures are not adequately in place. If information has leaked, there is a need for specific explanations that can alleviate some of the uncertainty, as a nearly 20% drop in stock price due to a consistently irresponsible attitude of “nothing is confirmed” can significantly damage shareholder value.
One cannot rule out the possibility of a repeat of the case of HYBE’s employees who were prosecuted for insider trading after prematurely selling shares upon learning of BTS temporarily suspending their group activities.
In addition, the highly anticipated debut of YG’s rookie girl group BABYMONSTER, set to be in September this year, has been postponed. With no specific explanation provided, shareholders watching the situation can only feel frustrated.
“Promising stable activities for affiliated artists and fulfilling corporate responsibilities.” This was the statement YG made upon the return of Yang Min-suk as co-CEO just a year ago. It was YG’s emphasized principle of ESG management.
There’s a reason for this. Yang Min-suk, who resigned due to the ‘Burning Sun’ scandal, returned last year, pledging ‘ESG (Environmental, Social Responsibility, Governance) management.’ It was before the court’s ruling on Yang Hyun-suk’s ‘B.I drug cover-up allegations,’ Yang Hyun-suk being both his brother and YG’s overall producer.
His sudden return was accompanied by a commitment to transparent corporate governance to reassure shareholders. However, a year later, with Yang Hyun-suk back and Yang Min-suk still in office, YG’s response to this situation suggests that one of the core values of ESG management, ‘shareholder value,’ is not being properly safeguarded.
A securities industry insider remarked, “The perception that entertainment is returning to its old ways has led to a reevaluation of stock prices. Looking at YG’s handling of BLACKPINK’s contract renewal, it still seems like a ‘black-box’ system.” They also pointed out that ultimately, this recontracting issue could become a negative factor for the entire K-entertainment sector.