Kakao Entertainment on sale - but who will pay its huge price?

Kakao Entertainment is on sale for 11 trillion won, or about $7.5 billion in today's exchange rate.

However, the cold truth is few people are willing to pay its huge price tag.

To do an IPO of Kakao Entertainment, it bought a bunch of agencies here and there, and also acquired a controlling share of SM Entertainment.

However, a lot of them are actors' agencies and the actors can leave when their contract run out.

It also owns a company which manages youtube personalities, but that is like actors' agencies.

Other than Melon and Kakao Page, the only agencies turning profits are Edam Entertainment and Starship Entertainment. SM was acquired in a bizarre situation so it is hard to measure how beneficial it is to Kakao.

Edam Entertainment was acquired from Lee Jieun in 2022, and most likely if Kakao is sold she will buy her shares back. She already branched off some of her staff, like her famous bodyguard who now guards Han Sohee, in anticipation for a change of venue. She will only retain some of her musical crew as her dancers and other staff are getting older.

Starship is too dependent upon two people, Jang Wonyoung and Ahn Yujin, and the contracts for both began when IZOne debuted in 2018 and is up to renewal. Wonyoung is unlikely to sacrifice her future for the 4 members of IVE (Ahn Yujin can hold on herself )

So even the more profitable labels of Kakao Entertainment are dependent upon three people who have no reason to stay with whoever buying Kakao.

With the world market tumbling because of Trump, few people are willing to pay $7.5 billion for a company which is basically a shell. Crafton, and NC Soft, both game companies in Korea, refused to buy Kakao Entertainment, and Hybe also expressed that it is not interested on Kakao.

So Kakao is trying to entice private equity funds and also the national wealth funds of Singapore and Saudi Arabia to buy but nobody is willing to do so now.

Why Kakao chose to sell Kakao Entertainment at the worst possible time is hard to fathom, but most likely it will be sold for far less than what Kakao is looking for.

Quote from Epyon-556

Why would Wonyoung or Yujin be sacrificing their future? Just because Kakao which owns Starship itself has a new owner doesn't unmake IVE as a Top 3 GG or erases Starship's ability to give them comebacks.

Their contracts are expected to expire this year or at most next , unlike the contracts of the rest

Basically if they extend their contracts that is just sacrificing themselves for the other four since they can make more money playing celebs and singing an occasional single or two instead of having to share the profits with 4 people who are not exactly pulling their weights

Quote from BIGnorBANG

Kakao has denied the intent to sell Kakao Entertainment. However, it's a bit of an albatross around its neck, so I think they'll sell the majority of its shares, while retaining a small share. They've been planning to list it since 2019.

Kakao denied intent to sell Kakao Entertainment | Korea JoongAng Daily

There is now no possibility of doing an IPO so it will be sold to any taker

Quote from trollacc

I don't think this is true at all. 7 year contracts most likely signed at IVE debut. If I end up being wrong then remember to quote this post when the renewal comes up in the near future but I doubt that will happen.

No one outside of Starshit knows for sure, but the contract between them and Starshit is considered to have started when IZOne debuted in 2018 so this is the 7th year.

It is possible they extended their contracts when IVE debuted in addition for more favorable income distribution, but no one knows for sure and by the later half of this year we will probably know more about it.

If Starshit's future is fine, it would have reassured Dives that their contracts are good at least until the contracts for the others end in 2028, but with Starshit's own future uncertain, that might go to an unexpected direction.