'EXO-CBX was stolen from us': SM Entertainment fires back with its own claims

K-pop

Published: 11 Jun. 2024, 15:51 Updated: 11 Jun. 2024, 15:58

'EXO-CBX was stolen from us': SM Entertainment fires back with its own claims

Members of boy band EXO's subgroup EXO-CBX, from left: Chen, Baekhyun and Xiumin [SM ENTERTAINMENT]

Round two of SM Entertainment versus Chen, Baekhyun and Xiumin of boy band EXO — better known as EXO’s subgroup EXO-CBX — has begun, with the trio accusing SM Entertainment of breaking its promise regarding distribution fees.

SM Entertainment struck back, arguing that it all comes back to Cha Ga-won and MC Mong coaxing the members to get out of their original agency.

INB100, an agency founded by CBX’s Baekhyun last year, publicly accused EXO’s agency SM Entertainment of violating an agreement that it made with the three EXO members in June last year in a press conference held on Monday afternoon in central Seoul, convened hastily just hours prior to the event.

According to INB100, SM Entertainment allegedly promised that the trio would be able to distribute their music through Kakao at a 5.5 percent fee rate, lower than the customary 15 to 20 percent rate charged for non-Kakao affiliates. In exchange, SM Entertainment demanded a 10 percent royalty fee for its intellectual property (IP), including the EXO franchise and content.

Representatives from INB100, the agency of EXO-CBX members Chen, Baekhyun and Xiumin, speak to reporters in a press conference held on June 10 in central Seoul "declaring full-on war against SM Entertainment." From left are: Lawyer Lee Jae-hak, attorney of the three EXO members and INB100; Cha Ga-won, majority shareholder of One Hundred, the holding company of INB100; and CEO Kim Dong-joon of INB100 and One Hundred. [NEWS1]

The 5.5 percent distribution fee wasn’t written in the contract, but SM Entertainment’s then-CEO Lee Sung-su made a verbal arrangement, which is “legally binding according to the Korean legal system,” according to CBX’s attorney Lee Jae-hak.

While Lee criticized SM Entertainment for demanding the 10 percent fee when it couldn’t keep its end of the deal, SM Entertainment emphasized that a 5.5 percent distribution fee was never stated in the contract between the two parties and that the CBX members agreed to the deal nonetheless.

“What INB100 argues is an unfair act on our side is different from the truth,” SM Entertainment said in a lengthy press release that came two hours after INB100’s press conference.

“The item was discussed as a gesture that we would help CBX negotiate with the distributor. We never had the power to decide the distributor’s fee rate. CBX did in fact ask that a clause regarding the distribution fee be put in the agreement, but we explained that it couldn’t be included because we just don’t have the power and took it out, which means that no such clause is included in the agreement.”

CBX didn’t get the 5.5 percent it wanted but SM Entertainment instead helped relieve its burden by letting Baekhyun release his solo album at INB100, not at SM Entertainment as was initially planned, and paying the cancellation fee for Baekhyun when he called off a concert in Japan upon his wishes, SM Entertainment said.

“CBX and INB100 got a good deal with a different distributor that we hold major shares in and is smoothly distributing their music and album,” SM Entertainment said. “CBX never really suffered any damage.”

Members Baekhyun, Ximuin and Chen of boy band EXO's subunit EXO-CBX [SM ENTERTAINMENT]

Rapper and producer MC Mong [YONHAP]

SM Entertainment accused MC Mong and Cha, the co-founders of INB100’s holding company One Hundred, of poaching the EXO members from SM Entertainment in an act referred to as tampering in the sports and entertainment industry.

SM Entertainment had previously made the same accusation last year when the CBX members first accused their former agency of mistreating them on June 1, 2023, demanding their exclusive contracts be terminated. SM Entertainment said that the three members were being wooed by a third party that was making them nitpick everything SM Entertainment was doing in order to break free from the agency.

SM Entertainment withdrew its claim and the two parties were able to make up on June 18, 2023, which was when the agreement was signed.

Cha is currently the president of construction company p_Arc as well as the majority shareholder and CEO of entertainment company One Hundred. The company owns INB100 along with other K-pop companies, including Big Planet Made and Million Market.

Cha helped Baekhyun establish his own company, One Signature, by taking out a 13 billion won ($9.45 million) loan with a penthouse she owns in central Seoul as collateral in June last year. She was a board member of Big Planet Made when the company was accused by SM Entertainment of “trying to poach EXO members” from the agency.

Cha Ga-won, president of p_Arc construction company and co-CEO of One Hundred, the owner of EXO-CBX's agency INB100, on June 10 at a press conference held in central Seoul [NEWS1]

She was also the one who spoke to SM Entertainment’s Lee when the CBX members were discussing the terms of their agreement on June 14. During Monday’s press conference, Cha referred to her relationship with Baekhyun and MC Mong as “closer than family.”

“MC Mong and Cha Ga-won have been approaching many of our artists from long ago,” SM Entertainment said.

“CBX started finding fault with all sorts of things in order to nullify the exclusive contract. Nevertheless, we heeded their call with patience and agreed to CBX’s demand to start their solo careers on their own. So a deal was signed where our contract with CBX was still valid but we allowed them to pursue their solo careers through their own agencies.”

“But it was made clear that CBX’s INB100 was not being run by CBX,” the agency continued. “CBX’s INB100 has been absorbed by MC Mong and Cha Ga-won’s company. We had presumed what was going on, but today’s press conference just made evident the tampering of CBX through the things that were revealed by themselves.”

Both SM Entertainment and INB100 swore to take legal measures and demanded the other party’s apology. INB100 released a follow-up statement on Monday night, threatening to sue SM Entertainment “should it fail to withdraw the tampering accusation or provide proper evidence.”

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]