SM Entertainment is considering an early termination of its production service contract with former CEO Lee Soo Man‘s company, Like Planning.
SM Entertainment has released a statement on the possible early termination of the contract.
We have been reviewing and discussing the production contract with executive producer Lee Soo-man from various angles. The executive producer has informed us that he wants to end the production contract early at the end of this year.
We plan to discuss with key stakeholders the impact of the early termination of the production contract with the general producer on our business and plan to make an announcement about the future direction.
— SM Entertainment
Like Planning is the largest shareholder of SM Entertainment. It is in charge of music consulting and producing SM artists’ albums. SM outsourced its production requirements to Like Planning and paid the company billions of dollars in royalties yearly.
According to Align Partners Asset Management, which owns a 1.1 % stake in SM, SM paid ₩143 KRW (about $0.10 USD) royalties to Like Planning from its listing until the third quarter of last year. The large amount of royalties paid was a source of controversy in 2018, when it was reported that what SM paid Like Planning was equivalent to 5% of their sales back then.
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Previously Lee Soo Man has stated that for Korea to become competitive internationally, it must become a “nation of producers,” emphasizing that, “There must be a line of succession, where hoobae (newer) producers emerge and are acknowledged by the masses, and I’ve always worked toward creating this.”
He has been highly regarded for his vision and youthful sense through the years, even now that he is already seventy. Like Planning was instrumental in SM’s milestones in producing successful K-Pop groups, the most recent of which are NCT, which focused on free member recruitment, and aespa, which introduced the metaverse concept.