Entertainment Industry Financial Analysis: Troubles and Triumphs

Kim Ho-jung's drunk driving incident caused financial strain on Think Entertainment, while Lim Young Woong earned over 200 billion last year.

### Kim Ho-jung's Drunk Driving Incident and Think Entertainment's Financial Crisis
* 🚗  Kim Ho-jung is under investigation for causing a drunk driving accident and **attempting to flee the scene**, leading to **severe criticism and public backlash**.
* 📊  Think Entertainment, the agency Kim Ho-jung belongs to, has been managing well and increasing its corporate value, but faces a financial crisis due to **excessive advance payment debts**.
* 💸  Despite the financial stability shown in the profit and loss statement, the large proportion of **advance payments to total debt** is a significant risk factor.
* 📉  The company has also invested around **6.98 billion won in acquiring a 20% stake** in a trot fandom management platform, but is now realistically facing the risk of **bankruptcy**.
* 🏢  The company has announced that all employees will resign, and is considering whether to **continue business or shut down**.
* 🎤  On the other hand, Im Young-woong, who performed in front of about 100,000 fans at Sangam World Cup Stadium, is the **major shareholder of his own company** and earned approximately **20.2 billion won in 2023**.
* 🎵  Im Young-woong's company, Fish Music, has been steadily increasing its sales, with a **high profit margin**, and has seen a **sharp increase in media content revenue**.
* 💰  Despite some ambiguity in the service fees paid by Im Young-woong to the company, it is estimated that he earned an average of **60 million won per day**.

Hello, this is the time for Issue Check, where we explain the weekly issues in an easy, fun, and sharp way. I'm reporter Kim Joo-young. Today, we will analyze the economy smoothly with Director Kim Su-won from MTN Corporate Economic Center. Hello. Yes, hello. Singer Kim Ho-jung is currently under investigation for drunk driving. As the entertainment industry generates all profits through artists, there is a lot of focus on how the company is doing. Let's take a look at the financial statements. Also, these days, singer Yeongwoong's annual income last year exceeded 20 billion Korean won. We will also examine how he earned that income. Trot singer Kim Ho-jung is facing severe criticism. He is being seen as a public enemy of the nation for his actions. One of the reasons for the criticism is that the incident itself is so severe.

The agency tried to cover up the incident systematically, and the main person involved, Mr. Kim Ho-jung, actively participated in it. It's a historic incident. Secondly, despite the ongoing systematic cover-up, they proceeded with the performance. So, when people see it, they might think, Why did they do that? Did they go crazy for money? In a vulgar way, it seems like they went crazy for money. Therefore, they faced even harsher criticism. Why did they insist on the performance so forcefully even when the systematic cover-up was revealed? I will analyze the financial statements of the company through a systematic analysis, which has also been partially covered in the news.

I will do that. Like you see on the screen, this is an article that came out today, the 29th, while we are recording today. Kim Ho-jung caused an accident by crashing into a taxi while driving under the influence of alcohol, then attempted to flee. At that time, he called his manager and requested to surrender on his behalf. The police have secured a recorded conversation. Such articles keep coming out. Let's see if it's automatically recorded. When you look at this, typically, for example, sometimes managers may say, I'll take the blame for the singer to protect them, but it's rare for the person who caused the accident to demand the manager to take the blame. It's truly disappointing, very disappointing. This incident is recorded on the manager's smartphone. It seems like there was an automatic recording feature on the smartphone, so they kept trying to lie.

There is a situation where attempts to conceal organization continue to be reported every day. Let's take a look at the company Kim Ho-jung belongs to, called Think Entertainment. I will check the current ownership percentage of Think Entertainment. As of the end of 2023, the ownership percentage is divided as follows: Lee Kwang-deuk, Choi Jae-ho, and Jung Chan-woo each hold 33.3%. Oh, Jung Chan-woo is a famous comedian on Cultwo Show, right? Yes, that's correct. So, these three individuals each had a 33.3% stake. The company was established in early 2018 with a capital of 100 million won. Since they split 20,000 shares, dividing 100 million won by 20,000 shares equals 5,000 won per share, and each of the three individuals had 50,000 shares. But as of the end of last year...

There has been some changes in the ownership percentage. Here, if you look, Kakao Enter has emerged as a new shareholder with 10%. Next, SBS Media Net has about 3.6%. On the other hand, the ownership percentages of the three people in the front have decreased. Lee Kwang-deok, who is now the company's representative, decreased by 5%, Choi Jae-ho decreased by 3.6%, and Jung Chan-woo decreased by 5%. However, if you look closely, when you add up the 5% decrease in ownership of Lee Kwang-deok and Jung Chan-woo, it totals 10%. This was acquired by Kakao. They bought 10% from the two individuals, 5% from each. Then, Chairman Choi sold 3.6% to SBS Media Net. Upon my calculation, Lee Kwang-deok and Jung Chan-woo sold at 3.75 million won per share. It seems the value has expanded to 37.5 million won from the initial 5,000 won per share they received when establishing the company and later selling it at 375 million won per share.

I sold two dogs and then sold them for 3.75 billion won after stopping. Then, Director Choi Jae-ho calculated the value of the entertainment company at 100 million won, and received 3.6% of that, which is 36 billion won, and sold it to SBS Media Net. So now, people have already made tens of billions of won in profit through partial sales of shares in the middle. If you refer to this, how can you know? If you look at Kakao Entertainment's 2022 audit report, you can see that below, there is Think Entertainment. Think Entertainment owns 10% of the shares, and if you look here, it says 75. So, Think Entertainment bought 10% at 75, and Lee Kwang-jung and two others each sold 5% of their shares, so they sold each at 375,000 won per share.

We can now see that the company, established in 2018 and sold for 3.75 million won per share in 2022, was managing the company well and was in the process of increasing its corporate value. What we can see is that on May 14th of this year, an almost catastrophic incident occurred. In fact, this was a man-made disaster. Kim Ho-jung caused a drunk driving accident on May 14th, then immediately fled to a motel in Guri. He then contacted President Lee Kwang-deok, caused the accident, demanded settlement from the manager, and the head of the agency also hid the black box memory card of Kim Ho-jung's car. According to Dong-a Ilbo, the police confirmed that they swallowed the memory card.

It came out, whether it's true or not, I don't know, but if it's true, it's something miraculous that could happen in a movie. It's like something that could happen in a movie. For example, it's a miraculous event. I'm not sure about the details, but that's how it's reported. Also, a very famous and remarkable statement made by Kim Ho-jung. What is it? He said, I put the drink to my lips, but it didn't taste good. He said he put it to his lips but didn't drink it. Yes, he put it to his lips but didn't drink it. This is similar to the statement made by Kim Sang-hyuk in the past, who said he drank the alcohol but didn't drive under the influence. It's an unprecedented statement. So, he put the drink to his lips, but he said he didn't drink it. However, through the tracking reports of our numerous media outlets and the investigations of netizens, when I tracked it, he seemed very drunk, staggering at the bar.

When I came out, things like driving under the influence were objectively revealed. There were statements from bar employees, and it's regrettable that there were CCTV witnesses, but that part didn't come to light. However, despite this situation, they proceeded with the Changwon performance on May 18th and May 19th. Criticisms poured in. They even announced that they would go ahead with the Seoul performances on May 23rd and 24th. But while the May 23rd Seoul performance took place, they couldn't perform on the 24th because an arrest warrant was issued on that day. So, on the 24th, they went to the detention center, had the warrant reviewed, and ended up being detained, causing the cancellation of the performance scheduled for June. If they hadn't been arrested, they would have continued with the performances. They are pointing fingers.

Even if we keep receiving it, it seems like a really impressive mentality, right? So when we think about it, why did they come out and apologize and reflect on themselves at that level, saying, I won't participate in the performance? They should sincerely reflect on it. However, despite that, they keep saying, I will still perform. I was very curious about the reason behind the announcement of the forced performance. I think we can get some hints from the company's financial statements. Looking at the profit and loss statement of this entertainment company, in 23, they had sales of about 187 billion and an operating profit of about 33 billion. It seems like a company that consistently generates a considerable level of operating profit each year, and structurally, the company seems to have been managed at a very stable level. However, looking at the balance sheet, there is one thing that catches the eye, which is prepayments among the debts in 23.

The total debt is 17.3 billion, and the advance payment is 12.5 billion. When I look at this, I can immediately see that the size of the advance payment debt is quite large compared to the total debt. Advance payments are received by companies like Geum before they do construction or sell products. Yes, that's right. What we call debt in accounting is an obligation. So, when we promise to supply a product or service and receive money in advance, that money becomes an advance payment. Then, when we promise to provide a service and receive money in advance, or when we promise to deliver a product and receive money in advance, I incur an obligation to deliver the product. Therefore, that money becomes a debt. It is recorded as a debt immediately, but later it should be converted into revenue.

I promised to provide a service and received money in advance, so that money is also considered as an obligation to provide the service. Therefore, it now becomes a debt. Here, the advance payment becomes a debt. When the obligation is fulfilled, the debt must be eliminated. For example, if I promised to deliver something, like if MTN goes to our Money Today broadcast and orders kimbap, giving 1 million won for the kimbap, then on Saturday, please bring the kimbap to a certain mountain location. So, the kimbap seller recognizes the 1 million won as an advance payment debt because they have to fulfill the obligation to deliver the kimbap. On Saturday, when we talk about the kimbap at the mountain location, our mouths start watering. It's time to eat, so they will bring the kimbap now.

When we fulfill our obligations, our debts disappear. Then, we need to recognize the transition to revenue of 1 million won as revenue. Therefore, advance payments are generally considered good debts because revenue recognition is planned. If I fulfill my obligations, revenue recognition is planned, so if we have a lot of advance payments as debts, we view it positively. Ah, there are debts with planned revenue recognition, so our revenue will increase in the future. But the problem is when something goes wrong, when variables arise, and we can't fulfill our obligations, it becomes very awkward. Then we have to disclose things like advance payments because we couldn't fulfill our obligations. However, in the case of entertainment companies like this, if we can't fulfill our obligations, other companies will be the same, but simply that.

It may not be just at the level of spitting out money, but it may require a significant penalty, yes, a significant risk. For example, in 2022, the proportion of advances to total debt in Think Entertainment is 50%. Then, in 2023, the proportion of advances to total debt is 72%. So, it seems like a lot for us. Then, how about other entertainments? If you look at Antenna, they are specialized in music entertainment planning agencies. Here, Think Entertainment and Antenna may have somewhat similar sizes. In 2022, the proportion of advances to total debt is 19.7%, and in 2023, it's only 2%. Think Entertainment overwhelmingly has a large proportion of advances. As I mentioned earlier, here it's 70%. Next, if we look at the labels under our Hive group, Pledis Entertainment has a debt of 72.4 billion won.

The advance payment is about 109 billion won. In the case of Source Music, out of the total debt of 237 billion won, the advance payment is only about 18 billion won. Next, in the case of Mini Jin, out of the total debt of 218 billion won, the advance payment is only about 48 billion won. So, the advance payment ratio is abnormally high. Usually, in industries like entertainment, what can advance payments be used for? Typically, in a common sense perspective, it could be for things like concerts, performances, or receiving money in advance for albums. For example, now the album distribution company would supply the albums in advance, and there would be money received in advance for advertisements. Then, from the advertisements, they would receive a down payment, and because the artist has the obligation to do the advertisement, the down payment becomes part of the advance payment debt.

Well, you see, the thing is, the company officials here are all missing, and we can't reach them, so we couldn't investigate the specific details of the advance payment. Therefore, it's difficult to say exactly. For example, when a concert is scheduled, tickets are sold in advance. Then, if the entertainment agency receives the ticket sales revenue in advance, the artist is obligated to fulfill the performance. This also becomes part of the advance payment debt. So, after the performance is done, it converts into revenue. So, now, with those advance payment debts imposed, if the performance is not carried out, a significant penalty for breach of contract for the advance payment received must be paid, several times the advance payment, in a situation where they have to fulfill it.

Despite receiving criticism and insults, we had no choice but to perform. Now, we can think about it. But here, looking at the cash flow statement, there is something noticeable. It says marketable securities acquisition. What does marketable securities acquisition mean? In simple terms, marketable securities are like buying stocks of other companies or investing in certain bonds. It seems that we have acquired around 6 billion 980 million won worth of marketable securities, buying shares of other companies or something similar. So, from what I found in the data, we spent 6 billion won to acquire a 20% stake in the company Studio MNC. However, what kind of company is Studio MNC? Upon investigation, it turns out that Studio MNC operates a platform called Star Planet. Star Planet is a platform that hosts pop

It is a global platform for trot fandom. So, when you see the artists of Enterg, you see a lot of trot singers. Many trot singers have won awards at Mistrot. Kim Ho-joong is now the most promising star. There are many other trot singers as well. This trot-specialized fandom management platform spent about 600 million won on acquiring shares. So, until the Kim Ho-joong incident broke out, they were making profits quite stably. They were investing in trot platforms aggressively and expanding their market share. However, one slightly incomprehensible part is that the advance payments were excessive. I wonder if there was a lot of money to be paid. Nevertheless, the company is not financially bad in that sense.

It could be considered a solid company. However, now it is said to be facing the risk of bankruptcy. In the current situation, realistically, it seems very difficult for the company to continue its business. The CEO has been arrested, the head of the headquarters is also under arrest, and the main artist has been arrested as well. When I tried to access the website, it was not available. The company has released a statement saying that all employees will resign, and they have decided to change the CEO. They are currently reviewing whether to continue the management business or close it down. It seems like they are discussing these matters. Now, it is said that the affiliated entertainers are planning to terminate all exclusive contracts. This official statement has been announced. Among the affiliated entertainers, Son Ho-jun is also mentioned.

There is, and yes, Kim Kwang-kyo is there, and so, when I saw it, it was ridiculous. What happened is, even the insider lure has become ridiculous. If they shut down the business now and go all the way to liquidation, it means they won't care anymore. They will collect all the company's funds that can be collected, pay off the debts, and even if there is money left, it will be divided among the shareholders. How much will be left and how the shareholders will divide it, that's something to see at that time. Yes, whether they can recover a 10% stake will have to be seen at that time. Right? Kakao Entertainment may not be able to touch anything or may be able to touch some. It seems like that. Next, secondly, Im Young-woong, who is rising as a trendsetter in the music industry, how much did he earn in 2023? The part where his image is good, Truck Nae, has also been partially reported, but it's still 25 days.

On the 26th, for two days, Lim Young Woong performed in front of about 100,000 fans at Sangam World Cup Stadium. Lim Young Woong has a really good image. He is very exemplary, clean, kind, and good-hearted. I'm not sure about the reality because I haven't experienced it firsthand, but his outward image is that of a very good singer. Even people who know Lim Young Woong well give him very good reviews. They say he is a singer with a clean life. Lim Young Woong is the only artist under his agency, Fish Music. Looking at the shareholders here, Shin Jung-hoon and two others own 50%, Lim Young Woong owns the other 50%.

So, Im Young Woong is practically the major shareholder of his own company. Currently, the company is structured that way. When you look at the company, it continues to increase its sales to around 306 billion won. The sales are quite diverse. Looking at the composition of sales, it includes revenue from performances, original albums, followed by media content, YouTube, Im Young Woong's YouTube channel, then advertisements, rent, and other sources of income. When it comes to other sources of income, from what I can see, it seems to be income from Im Young Woong's online store and goods. Now, looking at the operating expenses, this is important. Within the operating expenses, there are outsourcing costs. What could be included in outsourcing costs? For example, in 2023, in the case of 246 billion won in operating expenses, 192 billion won went to outsourcing costs. However, when you look further, the breakdown of these outsourcing costs is revealed. The operating profit is around 113 billion won, which is a high profit margin considering the sales of 360 billion won.

I can see it as a company. However, the decrease in concert frequency and a slight decrease in music album imports have led to a sharp increase in media content revenue. If you look here, the media content revenue, which was around 800 million in 2020, has now risen to 5 billion. Oh, media content like YouTube. Yes, Im Young Woong has 1.62 million subscribers on YouTube. Ah, we should invite him to our show once. Yes, our company needs to invite Im Young Woong who has 1.62 million subscribers. Im Young Woong's official channel currently has 310,000 subscribers. Then, there is this. If you go into the fan cafe, there is a shopping mall. Im Young Woong's shopping mall. It seems that the sales are reaching tens of billions even in the shopping mall. We can sell cheering sticks and medical supplies. There are various accessories as well. If you look at the financial statements, you can see in the footnotes.

There is something called a major transaction with related parties. So, who are these related parties? Well, they are artists and shareholders. Yeong-woong is a shareholder and an artist. If we look at what transactions Yeong-ha Company, owned by Yeong-woong, has made, you can see that in the short term, in 2023, the service fees paid by Yeong-ha were 19.2 billion. Then, next to it, you can see that there is about 3.1 billion in unpaid money. So, when you add the service fees paid by Yeong-woong, which is 19.2 billion, and the money that has not been paid yet, which is 3.1 billion, the total raises some questions about Yeong-woong's income for 2023. Because, from what I see, within the 19.2 billion service fees, it seems like all the money given and the money to be given should be included, totaling 19.2 billion. So, if we separate the money to be given, there is about 3.1 billion left. This indicates that there is some ambiguity.

Lim Young Woong performs and provides singing services to the company, receiving approximately 19.2 billion won in return. Additionally, in the financial statements' notes, it is stated that the company distributed 2 billion won in dividends in 2023. So, if we assume Lim Young Woong owns 50% of the shares, he would have received 10 billion won from the dividends. Therefore, considering 19.2 billion won from singing services and 10 billion won from dividends, Lim Young Woong received a total of 20.2 billion won last year. Based on a monthly calculation, it averages around 1.8 billion won per month. Dividing 1.8 billion won by 30 days, it amounts to 60 million won per day. It's quite a substantial amount; earning 60 million won a day. Some people put in a lot of effort to earn an annual salary of 60 million won, making Lim Young Woong a truly remarkable singer. Despite some articles suggesting that Lim Young Woong may not earn as much as expected, earning 60 million won a day is quite impressive.

Vedani, so I got a little angry after reading that article. It's an amazing singer, right? Yes, today was a special feature on trot singers. Um, Kim Ho-jung, who is under investigation for drunk driving, many people are disappointed in him. There was a lot of interest in what would happen to the company as well. Through the financial statements, it was possible to see why they proceeded with the performance so forcefully. Also, it was interesting to look at how Lee Myung-woong earned over 200 billion last year through the financial statements. Thank you for your comments today. Thank you.

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경제야놀자

Financial Scandal and Ownership Changes at Think Entertainment

Singer Kim Ho-jung is under investigation for drunk driving, leading to a financial scandal at Think Entertainment.

The company is facing criticism for a systematic cover-up of the incident, leading to harsh public backlash.

Ownership of the company has shifted, with new shareholders emerging and original owners reducing their stakes, leading to a significant increase in the company's share value.

Complex Business Dealings and Scandalous Events at an Entertainment Company

Multiple lucrative sales of shares have resulted in substantial profits for individuals involved.

The company faced a major crisis in May, when a key figure was involved in a drunk driving incident and subsequent attempts to cover it up.

Despite public criticism and legal issues, the company initially proceeded with performances but was ultimately forced to cancel due to an arrest warrant.

The company's financial statements show consistent and significant operating profits, but the balance sheet reveals noteworthy prepayments among its debts in 2023.

The Significance of Advance Payments as Debt in Accounting

The size of the advance payment debt is significantly large compared to the total debt, indicating a substantial obligation to deliver products or services.

Advance payments are considered a debt in accounting as they represent an obligation to fulfill a promise of providing a product or service in the future, with the intention of being converted into revenue.

Think Entertainment has a much higher proportion of advances to total debt compared to Antenna and Pledis Entertainment, indicating a potentially higher risk and impact on revenue recognition.

High Advance Payments and Investments in Studio MNC

The advance payment ratio for Source Music and Mini Jin is unusually high compared to their total debt.

Advance payments in the entertainment industry are typically used for concerts, performances, album production, and advertising.

The companies also made significant investments in marketable securities, acquiring a stake in Studio MNC, which operates the trot-focused platform Star Planet, known for managing trot singers and aggressively expanding its market share.

Crisis and Restructuring at Fish Music: A Deep Dive

Fish Music, a company led by artist Lim Young-woong, is facing a major crisis, with the CEO and other key figures being arrested and the company website going offline.

The company is now in the process of deciding whether to restructure or shut down, while its affiliated entertainers are planning to terminate their contracts.

Despite its high sales, Fish Music is experiencing a significant outsourcing cost, raising concerns about its financial management and leading to a high operating profit.

Media content revenue has drastically increased, reaching 5 billion, possibly due to the popularity of YouTuber Lim Young Woong.

Lim Young Woong's company, Yeong-ha, paid him 19.

2 billion for singing services in 2023, and he also received 2 billion in dividends, totaling his income at 20.

2 billion for the year, making him a remarkably successful singer.