This.

SM has always set standards in their groups, they need to be really trained well (singing, variety, dancing, , acting, mc etc) before debuting. With Loona, though there are some members that are already Idol-level in talent/performance, there are still a great proportion of the group that is lacking. The only way this would work is if LOONA (the current members), would be disbanded and a few of the members will be re-debuting in their new girl group alongside longtime trainees of SM Ent.

Don't get me wrong, this is actually great for LOONA on a marketing perspective. Them being connected to LSM/SM ent generated quite a bit of noise and it made SM stans give them some bit of attention.