Dispatch Reports Details Regarding Kang Daniel's Conflict With LM Entertainment

Dispatch has released an exclusive report regarding the conflict between Kang Daniel and his agency LM Entertainment.

According to the report, LM Entertainment and Kang Daniel got along well last year. Kang Daniel requested housing at a luxurious villa in the neighborhood of Hannam, and LM fulfilled this request by paying for the housing deposit of 950 million won (approximately $836,300).

Problems reportedly arose when a woman referred to as “Seol” entered the picture. “Seol” is an agent in Hong Kong who works with contracting hallyu stars for business like advertisements, events, and performances. She was listed as the legal representative for the initial certification of contents sent for the termination of Kang Daniel’s contract.

Earlier this year, Kang Daniel introduced “Seol” to LM, and “Seol” presented a proposal for business overseas. Conflict then started when “Seol” went to LM as Kang Daniel’s legal representative on January 31 and asked to see his exclusive contract.

On February 1, “Seol” sent the certification of contents to LM along with a power of attorney signed by Kang Daniel. “[Kang Daniel] signed the contract that includes unfair contract terms, so a request is being made for this contract to be deemed invalid and for the contract terms to be renegotiated by February 28,” the letter reads.

Kang Daniel’s contract with LM Entertainment was signed on February 2, 2018, and it was set to go into effect on February 2, 2019. The certification of contents was sent one day before this date.

Represented by the law firm Yulchon, a second notice was sent to LM Entertainment on March 4. One of the points presented was, “LM did not pay Kang Daniel the 50 million won (approximately $44,000) promised for signing the contract.” In response, LM presented proof of 48.35 million won (approximately $42,600) paid to Kang Daniel on April 14, 2018. This is the contract payment minus the withholding tax of 3.3 percent.

Another point argued is that LM Entertainment registered as a popular culture planning business on February 7, 2019 and was not registered at the time of the contract signing, which breaches the first clause of Article 13 in the contract.

LM Entertainment commented, “LM completed registration on February 7, 2019, which is five days after the start date of the contract. The management rights and fulfillment of duties are being carried out smoothly for another artist who signed with the same terms.”

The largest point of conflict is the joint business contract between LM Entertainment and MMO Entertainment. Kang Daniel’s lawyer previously mentioned that the joint business contract states, “The core rights of the exclusive contract, including the rights to produce and distribute musical content, concert and international business rights, and negotiation rights regarding [Kang Daniel’s] activities in the entertainment industry, will be exclusively given to a third party [MMO Entertainment].”

LM Entertainment argues that Kang Daniel and his mother were aware of the business partnership between LM and MMO. In addition, MMO does not have power to carry out any business without the agreement of LM Entertainment, CEO Gil Jong Hwa, and Kang Daniel.

As written in Article 3 of the contract, “MMO must respect the opinions of the agency and artist when exercising rights and planning business. When planning and carrying out new albums, concerts, and entertainment activities, they must be agreed to in advance by the agency and Gil Jong Hwa.”

Article 4 of the contract also states, “MMO grants exclusive rights to the agency for various tasks including planning, production, promotion of the artist’s entertainment industry activities in regards to the third clause of Article 3.”

In summary, MMO Entertainment invests 1 billion won (approximately $880,700) in LM Entertainment each year, and LM gives negotiation rights to MMO. The management rights belong to LM Entertainment.

For example, MMO proposed a fan meeting with CJ ENM, but the conditions offered by CJ ENM did not satisfy LM. As a result, MMO had to follow LM and signed a fan meeting contract with another company “T.” MMO does not have the power to contract a fan meeting without the agreement of LM and Kang Daniel.

The profit sharing ratio is 10 percent for MMO Entertainment, 40 percent for LM Entertainment, and 50 percent for Kang Daniel.

Based on a conversation exchanged between “Seol” and a director of LM Entertainment, Dispatch suspects that “Seol” appears to have been aiming for the money of “Won,” an M&A expert that has played a large part in various businesses within the entertainment industry. He was involved in YG Entertainment going public as well as the M&A of YG PLUS, and he earned at least 10 billion won (approximately $8.8 million) through YG PLUS. Additionally, he led the back door listing of J.Tune Entertainment in 2010. In 2018, he was indicted for the suspicion of manipulating stock prices of a company called Homecast.

When questioned by Dispatch, “Won” commented, “I don’t know who Kang Daniel is. I do not have plans to invest in the entertainment industry anymore. I hope it will be resolved well.”

Questioning for Kang Daniel’s request for an injunction to suspend his exclusive contract will be held on April 5 at the Seoul Central District Court.

In response to the reports, Kang Daniel’s lawyer Yeom Yong Pyo commented, “We do not plan on releasing a separate statement or press release regarding the reports from this morning. We will not respond to every single claim made by the other party.”

The lawyer added, “The major issue in this conflict is whether LM Entertainment sold Kang Daniel’s exclusive contract rights to a third party. We hope that everything will be revealed at the questioning on [April] 5.”

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