K-pop giant SM Entertainment will terminate their production contract with Lee Soo Man and his production company, Like Planning.
K-pop giant SM Entertainment is looking to part ways with founder and former chairman Lee Soo Man and his production company, Like Planning. The announcement comes a few years after SM Entertainment came under fire for paying large amounts to Like Planning – at the time, the company defended the payments citing their producer contract with Like Planning, under which they direct all production to the latter.
In a statement released earlier today, SM revealed that the impetus to terminate the contract came from Lee himself. Lee founded SM Entertainment in 1989 (then known as SM Studio) and is often referred to as the father of the modern-day K-pop system. He remained on the company’s board of directors until 2010.
“We have been conducting various reviews and discussions on the production contract of Like Planning with executive producer Lee Soo-man, and the executive producer told us that he wanted to terminate the production contract early at the end of this year.” SM said in their statement, before adding that they were discussing the impact of the decision internally.
“Our agency plans to discuss with major shareholders the impact of the early termination of this production contract with the executive producer on his business and announce the result later.” they said.
In 2018, SM Entertainment faced backlash after a news report revealed that they had paying large sums of money to Like Planning – founded by Lee in 1997 – since at least 2014. Their business report for 2017 stated that under the terms of their production contract, the company was to pay Like Planning up to six percent of royalties.
The report pointed out that not only had SM’s payments to Like Planning increased every year, but the company also claimed six percent of royalties on total sales rather than 15% on album sales only. The reveal led people to speculate that Lee had been claiming profits through these “internal transactions” since stepping down from his position in 2010.
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SM denied all allegations, stating: “We thoroughly examined precedents made with similar global businesses regarding obtaining consultation by a professional third-party organisation and signed a contract that was reasonable in comparison. There is no legal issue in regards to the contract and no unlawful internal dealings.”
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