South Korean pop group BTS visited the White House earlier in June.
In many ways, the group had never been riding higher heading into its annual "Festa." In the span of just two months, they performed for more than 200,000 people in Las Vegas, visited the White House dressed in their black-tie best and released an album, "Proof," memorializing the megahits that have racked up tens of billions of views and made their backers a fortune.
For more than half an hour, the pop stars ate, drank, bantered and reminisced around a table framed by dozens of purple balloons. After being teased about looking sleepy, J-Hope, the group's versatile rapper, dancer and singer who just days earlier made history by being named a headliner at Chicago's Lollapalooza festival, brought up the bombshell: All seven are going solo.
The BTS Army, the group's huge fan base, saw the hiatus as the end of an era. And with it, so went the fortunes of Bang Si-hyuk, the South Korean billionaire behind the boy band that took the world by storm.
Bang Si-hyuk, founder of Hybe Co., formerly Big Hit Entertainment Co., poses during the company's listing ceremony at the Korea Exchange. Photographer: SeongJoon Cho/Bloomberg
Shares of Hybe Co., founded by Bang, slumped 25% in a single day last week after BTS's announcement, prolonging the company's months-long slide and cutting Bang's fortune by $2.6 billion since its November peak to $1.2 billion, according to the Bloomberg Billionaires Index. The stock hit a record low on Wednesday, even though BTS has promised to reunite one day.
"Hybe is the house that BTS built," said Jeff Benjamin, a widely-followed journalist who covers K-Pop. "When there's a change to the flagship artist or product people are going to worry even though it might not be that different."
Bang, who controls 31.8% of Hybe, founded the company in 2005 after a career as a music producer. In its early years, the business almost went bankrupt before it got its first hit with local group 8Eight's "Without a Heart" in 2009. BTS released its debut album in 2013.
He became an unlikely billionaire after the company's initial public offering in 2020, by which time BTS had already teamed up with Halsey, Nicki Minaj and Steve Aoki, appeared on "The Tonight Show Starring Jimmy Fallon" and "Saturday Night Live," and had fans camping out for days before a free concert in New York's Central Park for "Good Morning America."
The IPO also gave the band members, all in their 20s, stakes worth millions of dollars.
BTS and the broader industry thrived during the Covid-19 shutdowns thanks to online videos, streaming services and album sales. Once the pandemic eased, the mania grew even greater. Recent shows in Las Vegas attracted fans from around the world for four live concerts. ARMY members who pay a fee to get exclusive access to pre-sales, special merchandise, content and more snapped up all the tickets before they went on sale to the broader public. Desperate fans forked over as much as $15,145 for top-notch tickets on the resale market, while those attending loaded up on themed hats, t-shirts and light sticks, known as the Army bomb.
Hybe's revenue surged 58% to nearly 1.3 trillion won ($1 billion) last year, with almost 70% of its operating profit coming from the label that manages BTS, according to Meritz Securities Co. The shares more than tripled from their 2020 listing through a peak in November.
Hybe's dependence on BTS was always a concern. The company has tried to diversify, adding new artists and entering different business areas. It teamed up with the operator of South Korea's largest crypto exchange to sell non-fungible tokens and bought Ithaca Holdings, a US media firm behind stars such as Justin Bieber and Ariana Grande. The tie-up last year gave both artists Hybe shares worth millions.
While it's still too soon to see how successful these new venture are, BTS's hiatus remains a blow. SK Securities Co. cut its estimates for Hybe's operating profit by 9% to 234.9 billion won for 2022 and by 24% to 273.2 billion won for 2023. Analyst Hyo-ji Nam said the projections could increase when the individual projects of BTS's members start.
A Hybe representative didn't respond to requests for comment.
Even if the band does get back together, concerns linger over Hybe's future as the artists remain subject to about two years of military service. Shares of the company are down 60% this year, far more than those of agencies JYP Entertainment Corp., SM Entertainment Co. and YG Entertainment Inc.
"It's not about how they will reduce their dependence on BTS," Hyunyong Kim, an analyst at Hyundai Motor Securities Co., said of Hybe, adding that the two are too entwined to be separated. "It's a matter of how well they will cope with the potential risks stemming from the issue of military service."