Two producers combined forces together. Contents business holding company iHQ and global K-POP strong leader, Cube Entertainment have recently announced their strategic partnership. The two company revealed their aspiration to make Cube-iHQ part of the Big 3 in the music industry and to establish as the number 1 multi-entertainment company. The meeting of these two powerful men, will they change the said entertainment’s power in the market? Or, will this be nothing more but a physical combination of these two companies? We shall look at ‘Cube-iHQ’ background and future prospects.
▶ Strategic partnership? Matter of fact, Cube is now a listed entertainment agency.
iHQ brought over 50.01% of Cube Entertainment’s shares (worth approximately 16.5 Billion Won) on the 17th September, as per strategic partnership agreement. Cube Entertainment’s Hong Representative retained his existing 28% of shares and will be investing 2 Billion Won in iHQ’s convertible bond (CB). Cube Entertainment previous largest shareholder Universal Music, which is in charge of Cube’s global content distribution networking now has 11% of the total shares.
In reality, this strategic partnership signifies that Cube Entertainment is now listed on the stock market.
Representative Hong started out in the largest music company in the 90s, Dae Young AV. He was a prominent figure in the industry, working with singers Lee YeRin, Park JinYoung, Jun RamHee, Kim DongRyul, Park GiYoung and Lyn. In 2001, Representative Hong established JYP Entertainment together with singer Park JinYoung. He was the representative director of JYP then. He subsequently left JYP in 2008 and established Cube Entertainment that has produced singers BEAST, 4minute, G.NA, and BTOB. The returns were amazing. The followed year after establishment, Cube showed a positive figure in profit, and the figure continued to rise in 2010 and 2011 with 1.56 Billion Won and 3.33 Billion Won respectively. Last year (2012), Cube recorded profit of 970 Million Won and the figure is expected to rise to 2.5 Billion Won this year due to Japan activities.
Moreover, BEAST’s growth was a dazzling one. The group achieved revenue comparable to 2PM. According to Cube-iHQ evaluation report, BEAST earned 16.073 Billion Won in 2012, close enough to 2PM’s revenue of 18.364 Billion Won. Revenue earned from promotions increased by 144.2% just within a year, and their will be expecting an annual inflow of 2.6 to 2.7 Billion Won of revenue from Japan’s largest advertisement group, which further gained anticipation for their upcoming activities.
With such amazing performance, Cube Entertainment has become the Big 4 of K-POP global brand and being listed on the market further gives an advantage. While Representative Hong may have been in the midst of reviewing possible ways on being listed, this strategic partnership with Chairman Jung HoonTak seems to have provided a faster alternative for the former.
▶Internal affairs between Hong SeungSong and Jung HoonTak?
iHQ’s Chairman Jung HoonTak started out as a manager of singer Cho YoungPil. He further established himself in the entertainment industry with Kim HyeSoo, Jeon DoYeon, Jun JiHyun and Jung WooSung. Not wanting to stay in the mere (?) management industry, he broke away from his previous company and ventured into many other new profitable businesses, creating new history for the Korean entertainment industry.
However, as Hallyu wave hits overseas with the current Big 3 listed companies of the music industry, iHQ was unable to have a strong influence in the foreign market. Currently, iHQ houses Jang Hyuk, Hwang JungEum, Park EunJi, Kim Shinyoung and many more artists. but it was unable to sought much power as compared to the past. In order to fuel a fresh new growth, iHQ needed a definitive turning point.
Subsequently, to Chairman Jung, Cube Entertainment is seen as the driving force to reconstruct a reputable entertainment agency.
The result of this strategic partnership, iHQ has its very own music production and artists management team, together with music distributor Monkey3 acquired in June, which leads to a vertical integration of the music industry.
Moreover, drama production further allows a variety of synergy for the company. We can definitely anticipate a new combination of iHQ’s know-how in movie and drama production and Cube Entertainment’s global networking expertise.
In addition, iHQ’s upcoming boy group which is scheduled to make their debut this fall may seemed to benefit directly from Cube Entertainment’s knowledge in the music industry.
▶The birth of a powerhouse that will overtake JYP? How destructive will it be?
Many wonder on how the combination of iHQ and Cube Entertainment will affect the overall entertainment industry.
Industry insiders expect that if iHQ and Cube Entertainment are able to work to their advantage, it is possible that there will be a new win-win model of an entertainment company. This is feasible since Cube Entertainment has the support from global content distributor and previous largest shareholder, Universal Music.
Furthermore, Cube Entertainment houses potential global stars such as 4minute Hyuna who made herself known through world craze ‘Gangnam Style’, as well as the first Korean world star Rain.
If we were to look more into the future, this partnership may extend their influence further into both industries.
Towards this strategic partnership decision, Cube Entertainment solved its ‘importance of size’ problem that hinders its listing on the public stock market. Instead of listing ‘solo’, Cube Entertainment that has consistently produced desired performance had chosen the iHQ card, signifying the difficult process in obtaining a pass to the stock market. Thus, it is expected that more small-medium entertainment agencies may follow Cube Entertainment’s footstep so as to get listed on the stock market and this may create a new power topography in the industry.
In addition, Cube-iHQ may prepare themselves to compete with JYP Entertainment, which has reported to be in a sluggish situation for some time. Industry insiders expressed, “In July this year, after the announcement of the merger of 2PM’s JYP and subsidiary JYP Ent that houses Miss A, JYP has been busy formulating a new business plan to move investors hearts but this may take some time” and, “In fact, although SM and YG have a sound structure, the Cube-iHQ partnership may see a new phase brought to fit the existing system.”
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Source: Sports Chosun