Gifting nearly 1.5% of Big Hit Entertainment’s pre-IPO shares to the seven members of BTS is looking like a win-win for all concerned as the company and the band remain invested in each other’s success. But it does little to mitigate the notion that the Seoul-based firm is a one-act show.

The company is poised to be valued as one of the largest entertainment concerns in Korea when its listing on the Kospi exchange is completed in a few days. It is seeking to raise some $815 million of fresh cash through a sale of 21% of Big Hit, and launch with an implied valuation of $3.9 billion. That is bigger than all three of Korea’s leading music-talent agencies (SM Entertainment, YG Entertainment and JYP Entertainment) combined.

There’s an irony to that, as Big Hit founder Bang Si-hyuk established the company in 2005 with a promise to topple the establishment, having worked for eight years at JYP.

“The music industry was not fair, and I was angry with it. I will fight to make sure workers in the industry are treated and paid fairly,” Bang said last year, speaking to students at his alma mater, Seoul National University. “You may face unfair and unreasonable moments in your journey. I hope you get angry and fight against them, changing society.”

Now, Bang and Big Hit are staring down very establishment-like IPO targets.

“The price range looks expensive relative to its earnings and compared with its rivals,” says Lee Jin-man, an analyst at SK Securities. At launch, the company is valued at some 76 times projected 2020 earnings. That’s a price/earnings multiple roughly double that of Samsung Electronics, Korea’s manufacturing champion and the world’s leading phone and memory chip maker. And it far outpaces the 10- to 12-times multiple of a fruitful music asset these days, like the publishing catalog of a successful songwriter.

Big Hit struggled in its early years, reportedly flirted with collapse in 2007, and went in for a top-to-bottom strategic rethink in 2011. The result of that new approach was Bang’s 2013 launch of BTS. It proved a turning point for company, and for Korean pop music.

Under Bang, the company has tried to position itself less as a Korean-style talent agency, which runs the gamut from training and education to music distribution, and more as a music label or content company. Its staff has swelled to 800. Some have likened Big Hit to an IT company. The similarities may seem slim, as the firm earns most of its revenues from representing, promoting and selling BTS. But the Silicon Valley reference reflects the huge number of staff whose job is to manage BTS’ media profile and social media presence, rather than the old-fashioned view of a record label’s role to drive radio play and physical sales.

The band is present on major Western platforms Twitter, Instagram and YouTube; Korean social media networks Daum and Naver — it was the first artist to exceed 10 million followers on Naver’s V Live; and China’s Weibo and Youku. But Big Hit also has its own Weverse platform, an app described as a “fan community” that was developed by in-house tech subsidiary beNX and that launched in 2019. The site, with some 1.4 million daily active users and operational in Korean, English and Japanese, is a communications tool and e-commerce vector now used by BTS and Big Hit’s other talent: Seventeen, TXT, GFriend and NU’EST. Weverse is also increasingly being used for video content, such as the Big Hit co-produced K-pop survival show “I-Land,” the BTS “Bring the Soul” PVOD docu-series and even “Learn Korean With BTS.”

Big Hit could scarcely have picked a worse macroeconomic moment to float its shares. The coronavirus pandemic has interrupted BTS’ Map of the Soul global tour. And BTS band members may soon have to step aside to do their compulsory military service, the IPO prospectus reveals.

But, like some other tech and content companies, Big Hit has weathered the COVID storm in reasonably good shape. Revenues for the first half of 2020 at KRW294 billion ($253 million) were almost as high as the company’s full-year take in 2018 (KRW301 billion). First-half operating profits were up from KRW39.1 billion in 2019 to KRW49.7 billion in January to June 2020, and net profits dipped only by 4%.
Album sales, PVOD concert “Bang Bang Con: The Live,” latest documentary feature “Break the Silence: The Movie” and, of course, the single “Dynamite” — all BTS-related — should continue to help make up for the live performances lost to lockdown.

Since last year, Big Hit’s efforts to diversify have become more pronounced. It bought record label Source Music in July 2019, and followed that a month later with the acquisition of game firm Superb. In May, the company acquired a majority stake in record label Pledis Entertainment, which represents boy bands NU’EST and Seventeen.

The large cash injection and the highly valued shares should now propel Big Hit to diversify further through mergers and acquisitions. That could mean additional acts — and BHE ever more resembling the corporations that Bang previously railed against.