SM Entertainment and Kakao Launch Joint Division in North America

South Korean companies SM Entertainment and Kakao Entertainment have launched what they are calling a “local integrated corporation” in North American as part of previously hinted-at efforts to accelerate their joint stateside operations and build upon the successes of their K-pop artists in the world’s largest music market.

The companies said on Tuesday (Aug. 1) that the full-fledged firm’s topline goals are to develop and invest in new IP and build a “global 360-degree management system” to provide wide-ranging support for album releases, performances and promotional activities for their artist roster. SM/Kakao will also seek to bolster that roster with local artists and focus on strengthening collaborations with labels and distribution platforms.

The integrated corporation will be lead by Kakao Entertainment America chief executive Jang Yoon-joong, who pledges to “accelerate the global advancement and growth of Kakao Entertainment and SM Entertainment’s artists” and “expand the growth potential of Kakao Entertainment’s music business.”

The merging of Kakao Entertainment America and SM Entertainment USA into one North American integrated corporation will be “completed quickly within this year,” the joint announcement indicated. The companies said they hoped the new synergies will help “accelerate its advance into global markets such as Europe.”

SM Entertainment, home to such K-pop acts as NCT 127 and Red Velvet, and internet giant Kakao endured a bit of Succession-worthy drama earlier this year when the latter said it would buy a 9.05% stake in SM against the wishes of Lee Soo-man, SM’s founder. Lee then approached HYBE founder and chairman Bang Si-hyuk with an offer to sell about 80% of his SM shares to the rival K-pop company. In the end, Kakao was able to increase its share of SME to nearly 40%, while HYBE reduced its stake to less than 9%.

Both companies have taken steps to build out their stateside operations this year, with SM stating in March that it wanted to acquire a U.S.-based company to expand into hip-hop or R&B, and Kakao Entertainment’s Starship Entertainment (Monster X’s label) partnering with Columbia Records to co-manage marketing and promotion of girl group IVE in North America.

SM’s chief rival HYBE is the furthest along in the U.S., of course, having acquired Scooter Braun’s Ithaca Holdings in 2021 and putting the mogul in charge of HYBE America, a genre-spanning collection of artist management and record labels that includes SB Projects, Nashville-based Big Machine Label Group and Atlanta hip-hop company Quality Control.