Since the announcement that HYBE (formerly known as Big Hit Entertainment) will merge with Scooter Braun’s investment company Ithaca Holdings, the news has swept through K-Pop fandoms—but what does it really mean? The following is a non-technical overview of how everything will work for HYBE and its artists.
To begin, HYBE is the new name for the parent company that was previously known as Big Hit Entertainment. HYBE is best known for owning Big Hit Music (the company that manages BTS and TXT), but it also owns the following subsidiaries:
- Music Source (which manages GFRIEND),
- Pledis Entertainment (which is responsible for the management of SEVENTEEN and NU’EST)
- BELIFT Laboratories (which manages ENHYPEN in conjunction with CJ E&M)
- KOZ Ent (founded by Zico).
Along with HYBE Labels, the company operates the following subsidiaries: HYBE Platforms (Weverse), HYBE Solutions (for intellectual property, education, and more), and HYBE America, formerly known as Big Hit America.
Through the new merger, HYBE America will acquire a 100 percent stake in Ithaca Holdings. Technically, an acquisition occurs when one company acquires the majority or entire stock of another to gain control, whereas a merger occurs when both companies merge to form a new entity. However, the terms are frequently used interchangeably because each new partnership is unique.
Ithaca Holdings is currently expected to become a subsidiary of HYBE America rather than merge with it directly. Ithaca Holdings will be acquired by HYBE America through its merger subsidiary, Big Hit Odyssey. After that, Big Hit Odyssey will be dissolved, leaving Ithaca Holdings as the sole subsidiary of HYBE America.
SB Projects, in turn, is a subsidiary of Ithaca Holdings. SB Projects is a talent management company that represents Justin Bieber, Ariana Grande, and Demi Lovato. Unlike in K-Pop, artists in the United States are managed by independent management companies and signed to independent record labels. For instance, Ariana Grande is signed to Republic Records in addition to being managed by SB Projects.
HYBE America will pay Ithaca Holdings’ existing shareholders and creditors 1.19 trillion KRW (approximately $1.05 billion USD) for the acquisition. HYBE also stated in another filing that approximately 860,000 shares worth 182 billion KRW (approximately $161 million USD) will be issued to Scooter Braun, Ariana Grande, Justin Bieber, and over 30 additional individuals.
Scooter Braun will own 462,380 shares, while Ariana Grande and Justin Bieber will each own 53,557. When Big Hit Entertainment’s initial public offering (IPO) began, each BTS member received 68,385 shares. However, it is unknown how many additional shares members may have purchased since then.
Scott Borchetta, CEO of Big Machine Label Group, will also receive 166,537 shares, with the remainder distributed to artists such as Carly Rae Jepsen and Demi Lovato.
Taylor Swift was previously signed to Big Machine Records. Scooter Braun and Scott Borchetta both garnered media attention in 2019 following Ithaca Holdings’ acquisition of Big Machine Records, which included the masters for Taylor Swift’s six studio albums—something Swift had been attempting to do for years. This effectively transferred the profits from Taylor Swift’s older songs to Scooter Braun and his company.
Scooter Braun sold Taylor Swift’s masters to another company, Shamrock Holdings, in October 2020. Following the publication of this news, Taylor Swift announced that Scooter Braun would continue to profit from her musical catalog for several years under the new deal.
While Taylor did not specify whether she meant Braun personally or Ithaca Holdings, it is assumed that she meant the latter. As such, it is possible that HYBE will benefit from Taylor Swift’s older songs following its acquisition of Ithaca Holdings.
Regarding HYBE’s artists, it’s critical to remember that Big Hit Music, Source Music, Pledis Entertainment, BELIFT Lab, and KOZ Entertainment are all independent of HYBE America. As such, Ithaca Holdings will have no automatic influence over BTS, TXT, and other K-Pop artists’ creative freedom.
Scooter Braun, on the other hand, will join the board of directors of HYBE as part of the merger. The board of directors of a company is responsible for appointing (and dismissing) senior executives, approving major corporate decisions (such as mergers), assisting in setting broad goals, and ensuring adequate resources, among other responsibilities.