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Kakao and SM Entertainment merger has fans worried about possible chart manipulations

Fans wonder if Kakao Entertainment’s acquisition of SM Entertainment will lead to chart manipulations for the artists under the label in the future
SM Entertainment is now the second biggest entertainment company all thanks to Kakao Entertainment's acquisition of 18.72% of its shares (SM Entertainment, Kakao Entertainment)
SM Entertainment is now the second biggest entertainment company all thanks to Kakao Entertainment's acquisition of 18.72% of its shares (SM Entertainment, Kakao Entertainment)

Becoming one of the biggest K-pop companies is a challenge that most labels are willing to take on and as history proves it, mergers and acquisitions are the only way forward for big labels to grow even further. With HYBE labels acquiring up to 33% stakes/shares in the domestic entertainment agency market, SM Entertainment is now not far behind. On March 11, it was announced that SM Entertainment was officially acquired by South Korea’s leading entertainment company, Kakao.

This has in turn increased SM Entertainment’s position in the domestic entertainment agency market where it is said to have 20% of the total stakes/shares, coming in second after HYBE labels. Reports suggest that Kakao acquired the stakes owned by SM Entertainment CEO, Lee Soo-man. Lee Soo-man is the largest shareholder of the entertainment label which debuted boy groups like EXO, SuperJunior, SHINee, NCT, and more as well as girl groups like Girls’ Generation, aespa, and Red Velvet, among others.


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Some artists under SM Entertainment (@SMTOWNGLOBAL/Twitter)

Kakao acquires SM Entertainment for 1 trillion won

Kakao Entertainment is now the proud owner of 18.72% stakes of SM Entertainment that were originally owned by Lee Soo-man. Reportedly, Kakao paid thrice the market price for the acquisition which is estimated to reach a maximum of 1 trillion won ($809 million). While original reports suggest that Kakao Entertainment plans to actively utilize SM Entertainment’s intellectual property to develop new businesses, advance into key overseas markets such as the United States, and recruit talent, fans are not entirely on the same page.

Fans of groups from other labels believe that this merger will most likely lead to chart manipulations in favor of SM Entertainment groups. It is public knowledge that Kakao Entertainment also owns Melon, one of the biggest charting platforms for South Korea, domestically. This has led fans of other groups to call the merger a ‘monopoly’ tactic, alleging that all thanks to this acquisition, groups from SM Entertainment will start getting ‘PAKs’ aka Perfect All Kills on Korean charts.

A PAK is a music chart achievement in South Korea where a song simultaneously reaches number one on the real-time, daily, and weekly components of iChart, a music chart ranking aggregator operated by Instiz.

Some of SM Entertainment's popular groups as of 2022 (SM Entertainment)

'Its obvious monopoly this time'

Fans of other groups started commenting about how this merger was going to turn SM Entertainment into a monopoly and lead to chart manipulations in the future. One user said, "HOLY SH*T. CJ ENM LOST TO KAKAO??? This is genuinely frightening. As close to a monopoly as it can be. Kakao + SM. Wow." Another said, "U will see sm group having pak all of a sudden." They continued, "Because kakao own melon the biggest music platform in sk and since kakao own part of sm they will definitely benefit from the profit sm Artist gets so if they get pak kakao will be benefited a lot."

One user said, "Another fandom commenting about sm x kakao saying its obvious monopoly this time because kakao owns melon and now SM and they won’t be surprise if they see the chart start to change." Another wondered, "When will kpoppies call out the obvious monopoly this time. Is it only reserved for anything related to BTS ?? Cause kakao owns melon and now SM. Won’t be surprise if we see the chart start to change." Another said, "Kakao owns melon too so i guess the chart manipulation about to skyrocket."







'Stop creating trouble out of nothing'

On the other hand, fans of SM Entertainment groups pointed out how Kakao already owns stakes of major K-pop labels but that has never caused such a stir. Fans defended SM Entertainment artists saying that they had always been charting well in comparison to other artists. One fan said, "18.72% is not a majority share... even if Kakao bought out LSM it won't own SM. no one cared about melon manipulation for their artists before  but now they suddenly do because it's SM." Another fan said, "Lol this certain fandom quivering in fear, fyi Melon was already owned by kakao in the first place and if chart manipulation will happen then it should've happen even before.. this toxic fandom just had another excuse to trash sm its always been 'that fandom' who cant moved on."

One fan said, "You guys do know just because Melon is owned by Kakao doesn't mean they will allow manipulation right? IU is literally the biggest artist in Korea and her company is literally KakaoM (previously Loen, which has always been with Kakao). Stop creating trouble out of nothing" Another fan said, "Kakao has owned shares in sooooooooo many entertainment companies for YEARS but that never affected the chart performance of those artists so why exactly is the case different for SM."