HYBE Sells SM Entertainment Stake for $177 Million — Tencent Becomes Major K-Pop Player

In a significant move shaking up the K-pop business landscape, South Korea’s HYBE Corporation has officially sold its remaining 9.38% stake in rival agency SM Entertainment to Tencent Music Entertainment for a reported $177 million, according to a regulatory filing made public this week. The deal involves 2.21 million shares traded at 110,000 Korean won each, with the transaction expected to close on May 30. With this move, Tencent Music, a subsidiary of Chinese tech giant Tencent, becomes SM’s second-largest shareholder, trailing only Kakao Entertainment, which holds just over 40% of SM Entertainment.

K-Pop’s Corporate Realignment: HYBE Steps Aside

HYBE, the powerhouse behind BTS, NewJeans, and SEVENTEEN, had initially acquired a 14.8% stake in SM Entertainment from its founder, Lee Soo-man, in 2023. It later increased that stake to 15.78% in a failed attempt to take control of SM. That takeover was ultimately thwarted by Kakao, which secured majority backing and now maintains a controlling interest in SM.

Now, HYBE is calling its sale a strategic retreat. In a statement quoted by Yonhap News Agency, HYBE said the divestment was part of a “choice and concentration” strategy to shed non-core assets and “secure future growth engines.” The cash injection from the sale is expected to fund HYBE’s next wave of investments in music, tech, and global expansion.

Tencent’s K-Pop Power Play

Tencent’s increased stake in SM Entertainment arrives at a critical geopolitical moment. Reports indicate that China is preparing to lift its 2017 ban on South Korean cultural imports—a freeze triggered by political tensions over the U.S. THAAD missile defence system deployment in South Korea.

As the world’s most populous country, China represents a massive untapped market for K-pop, and Tencent’s positioning now gives it a front-row seat to capitalise on that opportunity. In fact, SM Entertainment has already hinted at plans to “work more closely with Tencent Music” following the sale.

Tencent is no stranger to K-pop investments. It also owns a 4.61% stake in Kakao, as well as shares in YG Entertainment, the agency behind the popular girl group BLACKPINK. With these stakes, Tencent now holds influence in three of the top K-pop agencies, strengthening its grip on the global music ecosystem.

What This Means for the Future of K-Pop

This strategic sale signals more than just a financial transaction — it’s a realignment of power in the K-pop world. With HYBE stepping back from SM, the industry may see less inter-agency rivalry and more cross-border collaboration, particularly as China re-emerges as a viable entertainment market.

For fans and investors alike, the Tencent-SM Entertainment partnership marks the beginning of a new era: one where China holds K-pop’s next frontier isn’t just global — it’s also digital and deeply integrated with Chinese media giants.