K-Pop and Latin Converge: Hybe Acquires Exile Music

November 22, 2023 by  Chris Erwin

RockWater Roundup

RockWater analysis to make you a better investor and operator. Today we discuss Hybe’s acquisition of Exile Music, the $1.3B Latin music market, and why the worlds of K-Pop and Latin music are converging.


 

K-Pop and Latin Converge: Hybe Acquires Exile Music

South Korea’s Hybe just acquired Exile Music.

Why the convergence of K-Pop and Latin media markets?

Let’s break down the deal rationale…

 

WHAT IS HYBE LABEL?

  • South Korea-based multinational entertainment co
  • Behind K-Pop supergroup BTS
  • Acquired Scooter Braun biz and clients in 2021 for $1B
  • Rumored to be raising $1B for global expansion

 

WHAT IS EXILE MUSIC?

  • Music label of spanish language media co Exile Content Studio
  • Exile Content is spanish language content studio
  • Exile parent co acquired by Candle Media in May 2022

 

HYBE DEAL RATIONALE

  • 1st foray into Latin music, setting up Latam biz unit 
  • Help other Hybe artists access one of world’s fast-growing music market
  • Graft K-Pop’s proven methodology for artist development to Latin genre
    • localized training & development, A&R system, competitions
    • recruit top-level producers, composers, managers, and artists in Latin music

 

HYBE LATAM UNIT LOGISTICS

  • Mexico-based and run by former YG ENTERTAINMENT exec
  • Exile founder Isaac Lee will be Latam unit chairman of board, and continue as Exile CEO

 

LATIN MUSIC MARKET

LATIN MUSIC MARKET Infographic
  • $1.3B market size
  • 26% YoY growth in 2022 vs 9% for global music market
  • $1B in US recorded music revenue in 2022
  • 8% share of US music streaming revenues
  • $627M  in gross revenues in US for 1H 2023
  • $150M YoY growth est for FY 2023

 

WHAT ELSE IS INTERESTING?

BTS group members on break while serving mandatory military service. While Hybe’s South Korean revenue up due to growth across talent portfolio, likely reinforces need for further market and talent diversification..

Hybe chairman also focused on fast-growing afrobeats genre. That’s a space our RockWater team is watching closely, with some pending advisory assignments.

With recent news that Candle portfolio of recent acquisitions not hitting revenue and EBITDA targets (e.g. Hello Sunshine, Moonbug Entertainment), and challenged economic performance of content buyers (studios and streamers), Candle strategy must adapt. Needs to get all portfolio companies to profitability and preserve cash. Sale of premium audio asset gets cash in bank, and allows focus on core video business.

Hybe also says forming partnership with Exile to create content for Latam market, and form network of global and local media co’s. Seems like a commercial deal also being put in place separate from sale transaction.

Based on deal rationale above, likely that Exile will help global Hybe artists localize and market content for Latam consumers, and Hybe could do same for Exile content that seeks to travel to new global territories and consumers, particularly Asia. 

Of note, deal financial terms were not disclosed.

 

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I’m the founder of RockWater Industries. We do financial and strategy advisory for media, tech, commerce. From M&A and fundraising to consumer research and go-to-market planning. 

DM me on LinkedIn or email me chris @ wearerockwater dot com

 

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