SM Says, “CBX Only Enjoys EXO’s Rights And Neglects Its Obligations,” To Pursue Legal Action 

Published Categorized as Kpop
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SM has issued a response to the emergency press conference held by EXO-CBX!

On the 10th of June, a press conference for INB100, the agency representing EXO-CBX (Chen, Baekhyun, Xiumin), was held at the Shilla Hotel in Jung-gu, Seoul. During the press conference, various allegations have been made, you can take a look at them here.

In response to the press conference, SM has issued a lengthy statement expressing regret over the press conference and adding they will be taking legal action against EXO-CBX as a result. However, they do not specify exactly what type of legal action they’d be pursuing.

The statement introduction

Hello, this is SM Entertainment.

Regarding the emergency press conference held today by INB100 about Chen, Baekhyun, and Xiumin (hereinafter referred to as CBX), we express our deep regret over the method and content of the press conference and convey our position as follows:

MC Mong, Cha Ga-won Denying Tampering, Claiming “More Than Family” Relationship

First and foremost, we want to make it clear that the essence of this entire incident is the improper inducement (tampering) by MC Mong and Cha Ga-won towards our artists. For a long time, MC Mong and Cha Ga-won have been approaching several artists who have valid contracts with us. Subsequently, CBX started to find fault in order to invalidate the valid re-signing they had with us. Despite this, we listened patiently to their voices and, as a result, accommodated CBX’s request to carry out individual activities independently. This means that while our exclusive contract with CBX remains valid, we agreed that they could engage in personal activities through their private company, on the condition that they would pay 10% of the revenue from their private company to us, a term which CBX agreed to by signing the agreement. Although we were not obligated to amend a valid contract, we made such an agreement because continuing legal disputes with CBX would negatively impact EXO’s group activities, and we felt it was not fair to the other EXO members and their fans who are doing their best for EXO.

However, as clearly confirmed today, CBX’s INB100 is not being independently operated by CBX. INB100 has now become a subsidiary of MC Mong and Cha Ga-won’s company. We had suspected this, but today’s press conference confirmed that the tampering with CBX was indeed a fact. At the time of signing the agreement with CBX last year, we even released a public statement to preserve EXO by not addressing the tampering with MC Mong and Cha Ga-won. After today’s press conference, we cannot help but feel devastated. We hope our genuine intentions for EXO are no longer distorted.

CBX Want to Enjoy the Rights/Benefits as EXO Members but Ignore Promises/Obligations

In reality, after signing the agreement with us, CBX freely carried out various individual activities such as signing independent contracts for music and album distribution, and appearing in concerts and broadcasts through their private company.

Regarding the 10% of private company revenue we are to receive, this was a standard applied by the court during the exclusive contract dispute with EXO’s Chinese members, and we applied this reasonable standard, which had already been set as a precedent, to the CBX case as well. The rate was discussed and agreed upon during the actual negotiation process.

However, INB100 has now become a subsidiary of MC Mong and Cha Ga-won’s company, and they sent us a notice implying they no longer need to adhere to the agreement. This is an attempt to enjoy the rights and benefits as EXO members while neglecting their obligations. CBX continues to ignore the legally valid contract repeatedly.

After receiving the notice from INB100, we initially chose not to pursue the matter considering the activities of other EXO members like D.O., Chen, and Suho with their solo albums, concerts, and works, to avoid disrupting their activities. Despite this, CBX is distorting even our consideration.

Claims About Providing Accounting Records Are Mere Pretexts

Since EXO’s debut, we have conducted settlements twice a year before the amendment of the Promotion of the Development of Culture and Arts Act, and monthly thereafter. We allowed the artists to view the details of revenue distribution and payments and provided detailed expense reports related to their entertainment activities. If requested, we also made separate accounting records available for verification.

Our artists signed handwritten confirmations on the settlement details, and CBX never raised any issues regarding the provision of settlement materials until they started trying to invalidate the re-signing in April 2023, when they suddenly began demanding copies of all settlement records. CBX’s claim that they questioned the exclusive contract because we didn’t provide the settlement materials is false; they are using the request for settlement records as a pretext to invalidate the contract by any means.

We initially did not accept CBX’s demand to provide copies of settlement records due to concerns that these records might fall into the hands of a third party behind CBX and their representative. The specific activity details and settlement rates per artist are SM’s know-how and trade secrets that must be protected. The impact would be significant if such information were to be disclosed, as seen in today’s press conference. The essence of the CBX issue is tampering. We have no obligation to comply with demands driven by improper motives and will firmly address the settlement-related issues within legal procedures while imposing necessary confidentiality obligations on CBX.

Efforts to Protect EXO Despite Financial Losses Are Distorted

The claims about unfair distribution rates by INB100 are false. Our comments about supporting CBX in negotiating favorable terms with distributors were to assist them, and we had no authority to determine distribution rates of other distributors. During the agreement process, CBX requested that distribution rates be included as a condition in the agreement, but we explained that we could not include this as we did not have the authority, and thus the provision was deleted from the final agreement.

Despite our efforts, when it became difficult to meet the desired distribution rates, we showed other forms of consideration to CBX (allowing Baekhyun’s solo album, which we had been preparing since early 2023, to be released through his private company, and covering the penalty for the unilateral cancellation of Baekhyun’s Japan concert). Separately, CBX and INB100 signed favorable contracts with another distributor in which we are a major shareholder, ensuring smooth distribution of their music and albums, and therefore, CBX has not suffered any significant losses.

Attorney Lee, CBX’s legal representative, mentioned in today’s press conference that CBX are “adults capable of independent thinking and judgment, responsible for their decisions.” We can no longer tolerate their repeated attempts to invalidate the re-signing and agreement, which were reached through 18 months of negotiations with a large law firm hired by them and us.

We will not tolerate CBX’s repeated claims to invalidate both the exclusive contract and agreement for their personal gain. CBX is trying to justify their wrongful actions through public opinion, but we will respond calmly according to law and principles and hold them accountable through the courts.

Thank you.

Source: (A)

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