Extraordinary General Meeting Approves Merger Between JYP Entertainment And JYP

[lysblack.livejournal.com]

JYP Entertainment has published the results of their Extraordinary General Meeting regarding the merger between the publicly listed JYP Entertainment and the non listed JYP on the Korean Financial Supervisory Service’s DART Electronic Reporting System. The report states that the merger has been approved with the merger effective starting from October 17.

There were a lot of big words in that first paragraph so lets break it down a bit because this report has some juicy information, including how much each of their artists make for the company.

First a summary

• JYP Entertainment and JYP-Parent used to be separate companies responsible for separate artists


• They have decided to merge the two companies together under the "JYP Entertainment" banner


• They held an investor’s meeting to discuss the merger


• They have revealed that they plan to expand their business to include drama, movie production, tour packages, musicals and actors.


• They will also expand their business in Japan with the debut of a new boy band along with creating a new branch in Thailand


• They will also debut four new idol teams to increase their sales


• They have revealed that they expect gross sales of $51.3 million USD (Exchange rate at 1000 KRW to $0.92 USD) along with operating profits of approximately $10.1 million USD for the first year after the merger (2014).


• This is a significant increase compared to their current financial performance


• The vote on the merger was held on September 13 and passed


• The merger will become effective on October 17


• 2PM made up a total of 79.1% of JYP's Total Music Related Sales for the first half of 2013


• 2PM alone posted higher total sales in the first half of 2013 compared to JYP Entertainment (Pre Merger) as a whole


• miss A makes up a total of 70% of sales for JYP Entertainment (Pre merger) for the first half of 2013

Now some more in depth explanations. JYP Entertainment as we usually know it is the agency responsible for artists such as miss A, Wonder Girls, 2PM, 2AM, Joo, 15& and JYP himself. However there is actually two separate companies.


Only one part of the overall brand we associate as “JYP”

One is the publicly listed JYP Entertainment, which is responsible for miss A (Actually they are only half-responsible for missA since they are contracted under AQ Entertainment but lets skim over that for now), Park Jin Young, 15&, Baek Ah Yeon and a whole bunch of actors.

Meanwhile JYP (Which we’ll call JYP-Parent) is the non-listed company that is responsible for artists such as Wonder Girls, 2PM, 2AM (Once again like miss A, they are contracted under Big Hit but we’ll skim over it as well), Joo, actress Kim So Young and Kim Ji Hyun.

On September 13, JYP Entertainment held a “ONE JYP Investors Meeting” where JYP Entertainment President Jung Oak discussed the implications of a merger between the two companies, setting some lofty goals in the process.


JYP Entertainment president Jung Oak during the “ONE JYP” investors meeting

During the meeting, JYPE President Jung Oak revealed that “While JYP Entertainment so far has been a company that has focused on the production of singers and music, starting from this year we will be increase the scope of our business to include other ventures such as movie, drama production, musicals, actors and tour packages.”

He has also stated the JYP Entertainment plans to increase its focus on the overseas market. Their push into the Japanese market was delayed due to their push in the U.S. market but they now plan to strengthen their business in Japan along with creating a branch in Thailand by Fall of this year.


Concerts such as this will now be produced by JYP Entertainment alone

They also revealed that they will now be producing their concerts internally, ending their concert production relationship with CJ E&M.

However they will be reducing some of their U.S. business ventures with President Jung Oak stating that “We will be scaling down and minimizing the amount of effort and expenses in regards to the U.S. However, we will be looking into steps that will allow us to increase our profits in that market.”


One of JYP Entertainment’s US related business ventures

President Jung Oak explained that at least for the U.S. market the company has secured royalties for their “Diamond Tears” headphone products, produced in conjunction with Monster. They also plan to create a global audition program with famous producers such as Mark Burnett.

In regards to their core music business, he states that JYP Entertainment will continue to invest in their music business and will debut four new idol teams to increase sales. They also plan to showcase a new boy band in the Japanese market.

Lastly President Jung Oak has revealed that he expects to see the larger merged JYP Entertainment post gross sales of approximately $51.3 million USD (Exchange rate at 1000 KRW to US$0.92) along with operating profits of approximately US$10.1 million for the first year after the merger (2014).


Groups like 2PM will now be reflected on the JYP Entertainment Financial Reports.

As a comparison, in our previous financial report article, JYP Entertainment’s pre merger combined gross sales for the first half of 2013 was US$5.08 million with a combined operating loss of US$2.1 Million. JYP Entertainment’s expected total gross sales (According to their latest DART Merger report) for 2013 is approximately US$11.6 Million with operating losses of US$3.6 Million.

So long story short, JYP Entertainment expects to see their business increase almost 5 fold from 2012 to 2014 through the merger of JYP Entertainment and JYP and the subsequent expansion of their business.

But wait, we actually don’t know what the financial state of JYP-Parent is? Well good news because, for what I believe is the first time, JYP-Parent’s financial state has been publicly stated in the JYP Entertainment’s DART report in regards to their merger. According to the report, JYP-Parent’s expected gross sales for 2013 is approximately $25 Million USD along with expected operating profits US$6.5 Million.

The expected gross sales for the merged company in 2013 is approximately $27 Million USD along with operating profits of $1.6 Million. So looking at it like this, JYP Entertainment expects to see their sales double while also increasing their operating profits by a factor of almost 10. Not entirely impossible but certainly very ambitious.

Now in the previous photo above, I specifically mentioned that 2PM will now be included in the JYP Entertainment financial report. I’ve included this note for a very specific reason, a fact that will soon become apparent when we delve into the merger report (Page 132 on their PDF report). First here is a table of sales and the percentage each artist under the JYP-Parent label is responsible for.



And a pie chart just to highlight the above data



So in simple terms, 2PM makes up almost 80% of all sales in JYP-Parent. Especially important because they will now come under JYP Entertainment and thus their financial performance will be recorded in the publicly listed JYP Entertainment. The low numbers for miss A and 2AM thou should be explained. Up until the end of 2010, miss A was fully under the umbrella of JYP-Parent. However after that they were pulled out into the separate companies we call “AQ Entertainment” and “JYP Entertainment” Thus their performance will be listed under that company and not JYP Entertainment. A similar tale for 2AM, who is managed by Big Hit Entertainment. But their numbers are higher here compared to missA because 75% of 2AM sales still get registered with JYP-Parent.


miss A is responsible for 70% of sales for JYP Entertainment (Pre Merger)

Want to know something even more amazing? JYP Entertainment’s total sales from artists (Which include miss A, Rain, JYP, 15&, Baek Ah Yeon and a few others) was approximately US$4.62 Million in the first half of 2013. During that same period, total sales for 2PM alone were US$7.9 Million. Now there is some caveats such as the fact that Rain is no longer under JYP Entertainment (Thou he still has some residual sales being reported under JYP Entertainment for long term contracted work) but miss A appears to have taken up most of that slack, posting sales of US$3.2 Million in just the first half of 2013 compared to their 2012 total of US$4 million. In terms of percentages, miss A is responsible for 70% of sales under JYP Entertainment. But you can see why the merger of the two companies is going to make JYP as a whole look a lot healthier than it does now.

In either case, the extraordinary general meeting was held on September 13 to vote on the merger and the vote has passed. This means that from October 17, there will be no JYP Entertainment and JYP-Parent split. Instead we will now have a singular listed company called “JYP Entertainment” with Park Jin Young remaining the largest shareholder at 17.66%


» soompi
it may be a bit TLDR for some, but it does a great way to explain the shenanigans of the company that many people weren't aware of.

Comments

[pikapika217.livejournal.com]

I'll be honest, I only read about half of that but I just wanted to express my displeasure at the lack of a Miss A comeback. They are money makers and we WANT THEM

[tsuyoi-hikari.livejournal.com]

IDK, the figure said other wise since Miss A only recorded 6.75%, 5.75%, 0.4% & 0.95% of the total sales from other JYP artists. 2AM technically sell better than them every year but the fact that they are not one of the top male groups while miss A is one of the top female groups in Korea boggles my mind.

[anathema-switch.livejournal.com]

Because of their agreement with AQE not all of Miss A's sales are posted to JYP. The important bolds:

JYP Entertainment’s total sales from artists (Which include miss A, Rain, JYP, 15&, Baek Ah Yeon and a few others) was approximately US$4.62 Million in the first half of 2013.

During that same period, total sales for 2PM alone were US$7.9 Million.

miss A appears to have taken up most of that slack, posting sales of US$3.2 Million in just the first half of 2013

[tsuyoi-hikari.livejournal.com]

Ah is it? Thank you for telling me.

I did read the article that miss A recorded the highest profit from JYP Entertainment but the % of total sales disagree that's why I'm a bit confused.

[22-taken.livejournal.com]

at least we know they're preparing for a comeback /sigh

[candycrush808.livejournal.com]

Thanks OP! I skimmed a lot but it was pretty interesting :).

[hpn88.livejournal.com]

so from this i understand that the fail that is AQE still exists for some stupid reason and that concerts now might be a lot mess b/c they will be produced in house
whatever just give me the new boy groups

[gigabytexx.livejournal.com]

So basically they combine these companies into 1 single big company, only to make their total number sales/profits comparable to other big companies? Isn't it like, just a number in accounting matters meanwhile the money they will get (whether it's separated companies or not) will be just the same as before?

[hpn88.livejournal.com]

its probably also decreasing overhead by streamlining production and consolidating positions. profit increases will hopefully be because of the new groups. its def a numbers thing though cause their stock was plummeting so they need to reassure investors by showing bigger numbers

[gigabytexx.livejournal.com]

Profit increases because of the new groups, that's for sure. I mean, even if they're not merging the companies they still can debut new groups & gaining profit?
Or do investors think if all of these new groups came from 1 single big company then usually it'll most likely have more potential to profit more?

lmao excuse my comment I'm using the stupidest explanation ever bec idrk business terms

[hpn88.livejournal.com]

the part that was listed on the stock market was not posting large profits mostly because 2pm earnings weren't included and their stock was falling. most of this imo is probably to sure up their stock value so they do these investments into tours etc. i'm no business major either, but thats what it looks like to me

[anathema-switch.livejournal.com]

Investors only benefit from the profits of the publicly listed JYP. The public JYP has no access to the profits of the private JYP and investors cannot look into the private JYP's numbers to analyze them.

Merging the companies will make JYP more profitable and encourage investment. They may even issue more stock and make money that way.

[ankhan.livejournal.com]

GREAT ARTICLE (and yes i read it all 'cause my feels are invested in jype) ;)


and most important
"They will also debut four new idol teams to increase their sales"

GIVE ME JACKSON AND THE DANCING BOYS WE SAW ON THE YG vs. JYP battle NOW!.. my eyes will surely appreciate it dearly

[hearttaek.livejournal.com]

Dropping by to say.....

GIVE ME JACKSON! MARK! BRIAN! BAMBAM! JAEHYUNG! Nooooooooow!

I could not care less about the business aspect of jyp/jype whatever. I need my new boyband. Forget the fact that bambam is a braces wearing 97er.

[ankhan.livejournal.com]

wait what.. 97er! that makes him what? 16!!! dear lord.. i have fail in my life..
how was i wasting my life when i was that age? (-- _ -- ;)

ps. leo lovers *high five*

[hearttaek.livejournal.com]

Mark and jackson are 1994ers. Idk about brian though. But yeah bambam is young. Not by idol standards, but by my 1991-born old ass self standards. Need to rethink my life choices tbh. Oh and he'a thai.

High five-ing you forever until leo is well again.

[anconeous.livejournal.com]

Brian is 20, I think.

[anconeous.livejournal.com]

LOL I want the exact same 5 people to debut NOW. Jaehyung is forever my bb but Jackson is just so UNF-worthy.

[cuizy.livejournal.com]

Wow this is very interesting.... It's like a behind the scenes peak at a major idol company cool

[fallingstarryuu.livejournal.com]

all i got is that their figures are shit compared to sm and yg rn and this merger will make them look less shitty.

funny how they are primarily talking about music sales. i doubt miss a's bringing in that little if we are talking inclusive of other things.

[stoppedclock321.livejournal.com]

idk if that's the only reason (although having a good public record of figures is good for them/their investors), but miss a makes up 70% of jyp-ent's profits. plus they haven't actually promoted as miss a in 10 months. the big point that this article makes afaik is that 2pm and miss a were under different 'versions' of jyp (such as miss a still being under aq), but basically they're still bringing in 70-80% of their signed company's income. for 2pm that was jyp-parent, for miss a (read: suzy) that was jyp-ent.

basically 2pm/suzy are the main breadwinners of the jyp-family-mess, but 2pm brings it in music sales (tours/japan) and suzy brings it in with cfs/dramas/endorsements/etc.

[colorito.livejournal.com]

BTS (or Bangtan) is also under Big Hit right? So they will be included in the merge as well?

[hina.livejournal.com]

No, this merge has nothing to do with Big Hit.

[22-taken.livejournal.com]

BTS are under Big Hit, and the only BH artist that has something to do with JYPE is 2AM (because they are managed my Big Hit even though their company is JYPE).

[ashiva.livejournal.com]

I think their profit and sales expectations are ridiculous 'cause debuting four new groups will cost a lot and it's unlikely all of them will be successful from the start.

[asnindie.livejournal.com]

it's been a year, where the fuck is a Miss A comeback?

[stoppedclock321.livejournal.com]

There were rumors that they were coming back in August or September (Soribada IIRC had an upcoming single listed for them on 8/19 or something), but I think it got delayed because of Jia's drama. Rumors now point to an October-November-ish comeback, which would put them against IU and possibly SNSD (rumored).

[daisyazul.livejournal.com]

ikr wth

[erbalurbal.livejournal.com]

I don't understand why they had their artists split like that in the first place.

[stoppedclock321.livejournal.com]

OP, thank you for posting this, I thought it was really interesting. It does explain how the big companies deal, and it puts the whole Suzy vs. 2PM 'who's the breadwinner?' argument to rest.

[daisyazul.livejournal.com]

This is all very confusing. All I got from this is mergers and new groups. Bring on the new groups, JYPE!

and a Miss A comeback, c'mon now.

[22-taken.livejournal.com]

We heard about miss A's comeback 'soon', 2AM's comeback in November, new girlgroup in October, and JJ Project in Dec/Jan but still no dates..

[scionofawhisper.livejournal.com]

This was super interesting! Thanks.

[nounou24.livejournal.com]

so how bout a summary of the "summary". that was way too long to be called a summary

[aniloratka.livejournal.com]

tour packages - like visiting 2pms dorms?? Hihi
Interesting article, thanks for that. I'm waiting for that new groups and miss a comeback cuz I didn't like I don't need a man and I want something new :(
Also my 2pm babies ♥♥♥♥