Agency Stocks Sputter

Despite the success of Korean music acts in overseas entertainment markets, the talent agencies that support them are having trouble making ends meet at home. The Korean stock market shows little confidence in these companies.

A case in point is the merger between J. Tune Entertainment and JYP Entertainment. J. Tune announced Dec. 27 it would raise capital by issuing new stock, which was later bought by JYP’s chief, producer-singer Park Jin-young, among others.

The Korea Times says that the move was made to help JYP go public on the KOSDAQ market through the back door, as JYP itself has “failed to meet the listing criteria” of the stock exchange.

JYP is considered one of Korea’s top three talent agencies, but its recent earnings have been disappointing, showing a net loss of 4.7 billion won ($41.6 million). The KOSDAQ requires a company to have a net income of at least 2 billion won.

Another company in the big three, YG Entertainment, has also failed to get listed, even though its net profits for 2009 was more than 35 billion won ($31 million). It’s assumed that KOSDAQ rejected YG because its business portfolio isn’t diverse enough. YG’s profits are mainly being generated by only two groups, Big Bang and 2NE1.

Even J. Tune is not completely in the clear. Most of its stock was once owned by its main act, Rain, who turned the former IT company into a talent agency after it was listed. However, Rain dumped most of his shares last July, at which point the company’s share price plunged.

Korea’s largest talent agency, S.M. Entertainment, was in the red until 2008 and then turned a profit in 2009. It is thought to have a roster that is diverse enough to guarantee stable income. More importantly, its stars have successfully penetrated Japan and their share in that lucrative market continues to expand. The company, in fact, predicts that almost 50 percent of sales will come from abroad in the coming year.