JOHN BRANCA and RANDY JACKSON. Two advisors, two outcomes for Michael Jackson’s finances
The eve of Michael Jackson’s birthday is not the best moment for an article like this, but I still decided to post it before the birthday as after it would be even worse – let the time and our attention afterwards be spent on something better than this subject.
The information I am presenting here will start with a comment I made in reply to a screenshot taken by Shelly from the 2007 Prescient lawsuit against MJ
http://i.imgur.com/JAU1Y.png
:
Forget about the lawsuit itself for a moment – all we need from it now is the text which is retyped here:
- “Since inception of Sony/ATV, which was originally valued at $930,000,000, the partners have agreed to acquire about $400,000,000 of additional music catalogs. The MJ Trust has borrowed a total of $272,500,000 to support the purchase of additional catalogs at Sony/ATV, and to support other various working capital needs. Sony has provided the lenders to MJ Trust a credit enhancement (for which Sony receives additional payment of $9,000,000 annually).”
1. ASSUMPTION
This quote made me come to an assumption which is now in the comments section and will be repeated here because this is where this post started from:
The above confirms what I thought all along. So when the Sony/ATV joint venture was formed Sony and Michael agreed they would supplement their catalog with additional songs and buy more and more. From what we read about it the idea was that the money for those purchases would be generated by the joint catalog itself – they would acquire more songs from the profits the catalog made, not needing any more money input. So when Michael later bought Eminem’s songs it was within their initial plans.
The idea was not bad as it meant to turn Michael into a major musical publishing rights tycoon (with Sony being the other half) and it would have worked perfectly well in case Michael’s success had continued and no financial disasters had taken place. But they did take place – in the form of the 2003 case, the trial and many other projects which failed due to the extremely negative media which nipped each of his projects in the bud.
While Michael was fighting the unjustice Sony evidently went on adding new songs to the catalog and paying their share. I’ve read that they were even paying Michael’s share of the expenses, most probably out of the profit Michael was to receive from his 50% in the joint venture. This must have created constant tension between the partners, because surely Michael would have preferred to have cash instead of having to invest it into more songs. What looked like a good idea in 1995 turned into a big financial burden for him later.
The joint venture was evidently John Branca’s idea. He suggested it instead of selling Michael’s Beatles catalog which was advised by other Michael’s advisors in 1993 when Michael had to pay damages to Marcel Avram for canceling the Dangerous tour and huge costs on litigation with the Chandlers. It was then that the crisis started and Michael first faced the need to sell his Beatles catalog.
Now he could have got out of this joint venture again and by the same method too – by selling his share and at a higher price this time, however he still preferred to fight the circumstances.
I don’t remember the details now but at a certain point things became so bad that Michael was in a danger of losing to some creditors half of his share in the joint venture (or 25%), but his partner Sony helped him to avoid it. They evidently supplied him with some financing in return for the right to be the first to buy those 25% in case Michael had to sell it.
As a result Michael kept his 50% but was still involved in tremendous loans he had to take most of which were spent to fulfill his commitments under the joint venture project (and not on his “lavish style” as the media likes to portray it).
All of the above explains very well Michael’s feelings in respect of Sony – it was like sharing a home with someone you no longer love and even fight, but cannot part with due to the common property you share.
However life proved that Sony as a partner was not that bad after all – they had the right to acquire the 25% share of Michael’s catalog but never used it as Michael still keeps his half in the project.
If my understanding of the situation is correct, than the current merger of Sony/ATV with EMI and creation of a new giant holding music publishing rights this way is very much in line with the original idea Michael liked and went for. He could have sold the catalog long ago, but he still preferred to keep and expand it further – even at a tremendous financial cost and even sacrifice for himself.
If the new project is successful it will turn Michael’s children into tycoons of music publishing rights, but for it to be successful it will again require some money to service Michael’s commitments arising from it. That merger must have required a lot of money already, and this is where some of those millions from Michael’s Estate must have gone.
In short it isn’t ‘embezzlement’ – it is investment of the money, and probably wise investment too because it is meant to generate more money than the sums already spent on it. From the point of view of Michael’s siblings it is unwise of course because 1) it doesn’t bring immediate profit 2) leaves some of MJ’s debts still unpaid 3) will prove its worth in a somewhat distant future.
But from the point of view of Michael’s legacy and the future of Michael’s children the idea is good. I personally would very much like to see Michael’s children to benefit from other people’s songs. Somehow it feels like just the right outcome after all that their father had to endure.
This is my understanding of the situation, though of course the matter should be studied and studied thoroughly.
A few days passed since the time I wrote it and by now I have studied the matter further, so let me present to you the absolute minimum from the mountain of information collected.
2. A BIT OF HISTORY
Since everything revolves around the Sony/ATV famous catalog we need to refresh some basic facts about the way it was started. With a few slight exceptions Wiki paints a pretty accurate picture of how it began:
Sony/ATV Music Publishing is a music publishing company co-owned by the Estate of Michael Jackson and Sony Corporation.[1]In December 1995, ATV Music Publishing merged with Sony Music Publishing, a division of Sony Corporation, to become Sony/ATV Music Publishing.
Sony/ATV Music Publishing Type Limited liability company Industry Music Entertainment Founder(s) Lew Grade Headquarters New York, United States Key people Michael Jackson Services publishing Revenue 1.9 billion (2011) Owner(s) The Estate of Michael Jackson(50%)
Sony (50%)Website http://www.sonyatv.com Jackson was first informed that the ATV catalog was up for sale in Sept. 1984 by his attorney John Branca, who had put together Jackson’s earlier catalog acquisitions. Warned of the competition he would face in buying such popular songs, Jackson remained resolute in his decision to purchase them.[2][4]
Branca approached McCartney’s attorney to query whether the Beatle was planning to bid. The attorney stated he wasn’t; it was “too pricey”.[2][3] According to Bert Reuter, who negotiated the sale of ATV Music for Holmes à Court, “We had given Paul McCartney first right of refusal but Paul didn’t want it at that time.”[16] Lennon’s widow, Yoko Ono had been contacted as well but also did not enter bidding.[3]
McCartney had previously attempted to purchase the catalog alongside Ono in 1981.[2] He was offered the catalog for £20 million ($40 million USD) and proposed the pair would each pay £10 million.[3][5] Ono refused as she thought it was too high a price. McCartney spoke about the offer at a press conference in April, 1990, explaining that Ono “actually said ‘I think we can get it for 5.’ So I said, ‘Well ok, you know, let’s see what we can do.’ And we couldn’t.”[5] Not wanting buy the songs himself and potentially be seen as being “grabby” for “owning John Lennon’s bit of the songs”, McCartney let the offer fall through.[3][5]
The competitors in the 1984 sale of ATV Music included Charles Koppelman and Marty Bandier’s New York-based The Entertainment Co., Virgin Records, New York real estate tycoon Samuel J. LeFrak, and financier Charles Knapp.
The two sides began drafting contracts in Jan. 1985 and follow-through meetings began on Mar. 16. Jackson’s team described the negotiations as frustrating, with frequent shifts of position by the other side. One Holmes à Court’s rep described the negotiations as a “game of poker.” Jackson’s team thought they had reached a deal several times but new bidders would enter the picture or they would encounter new areas of debate. The prospective deal went through eight drafts. In May 1985, Jackson’s team walked away from negotiations after having spent hundreds of hours and over $1 million.
In June 1985, they learned Koppelman/Bandier had made a tentative agreement with Holmes à Court to buy the catalog for $50 million.[4] But in early Aug., Holmes à Court contacted Jackson and talks resumed. Jackson only raised his bid to $47.5 million but he had the advantage of being able to close the deal faster, having completed due diligence of ATV Music prior to any formal agreement.[4] He also agreed visit Australia as a guest of Holmes à Court and appear on the Channel Seven Perth Telethon.[4][16] Holmes à Court included some more assets and agreed to established a scholarship in Jackson’s name at a U.S. university.[4] Branca closed the deal and purchased ATV Music on Jackson’s behalf for $47.5 million on Aug. 10. 1985.[2][4]
Ono was pleased that Jackson had acquired Northern Songs and called it a “blessing”.[2] Speaking in November, 1990, Ono stated, “Businessmen who aren’t artists themselves wouldn’t have the consideration Michael has. He loves the songs. He’s very caring.”[2] She added that if she and McCartney were to own the songs, there would certainly be arguments. Ono explained that neither she or McCartney needed that. “If Paul got the songs, people would have said, ‘Paul finally got John’. And if I got them, they’d say, ‘Oh, the dragon lady strikes again’”.[2]contract provision to visit Perth, Western Australia and appear on the telethon, where he spoke briefly and met with two children.[4][16]
In 1995 the Japanese corporation offered Jackson $90 million for 50% of ATV Music Publishing.[19][20] [other sources name $100mln. and more]
Jackson gladly accepted; [I am not sure of it] he had essentially acquired half ownership of the Beatles’ songs for a large profit.[19] Jackson’s own songs were not included in the deal.[18] Having been merged, the company was renamed Sony/ATV Music Publishing and became the second largest music publisher in the world.[19] [according to other sources it was third or forth world publisher].
Michael P. Schulhof, President and CEO of Sony, welcomed the merger and praised Jackson for his efforts in the venture. “Michael Jackson is not only the most successful entertainer in history; he is also an astute businessman. Michael understands the importance of copyrights and the role they play in the introduction to new technologies.”[18] He added that Jackson recognises Sony’s “leadership in developing and realizing new technologies that serve to expand the creative horizon of artists such as himself”.[18] Administrative expertise was provided by Sony, who installed Paul Russell as chairman. Jackson was a company director and attended board meetings regularly.[19] As each party in the arrangement held the power of veto, both sides would have to agree on a decision before it could be made. If neither party agreed on a decisions, they would not be implemented.[19]
Michael Jackson was the first in everything he did, so it doesn’t surprise us that according to his own words he wanted to establish the largest music publishing company in the world:
- Merging of ATV with Sony establishes our commitment to create one of the largest music publishing ventures in the world. We have been working on this for over a year and, now, with the two of us together, the sky is our only limit. (Michael Jackson, 1995)[18]
Immediately after the merger Sony/ATV’s mentioned its two main competitors:
- “Sony said its new catalog will be the 3d biggest in music publishing. The largest is Time Warner Inc’s Warner – Chappell, followed by EMI Music Publishing” – The Jet, November 1995.
So let us make a mental note that in 1995 the Sony/ATV catalog was the third biggest in music publishing business. Its main competitors were Warner Chappell and EMI Music Publishing.
Today we can very well state that both of them have given up their rights – partially or fully – to Sony/ATV.
3. THE DEAL WITH EMI MAKES SONY/ATV A NEW GIANT
Recently Warner Chappell lost its rights to administer Michael Jackson’s own songs which were passed over to Sony/ATV. In a second move a Sony-led group of investors bought the full music catalog from the British EMI Music Publishing, and this now makes Sony/ATV the biggest music publishing business the world over.
Interesting how it falls in line with the words of Michael Jackson who said that the sky was the only limit to their plans?
It is also interesting that the EMI acquisition was made by the Sony-led investors despite competition from the same Warner Music Group who was and is Sony’s main competitor. Warner fought for the right to obtain another arm of the EMI business – the recorded music (not publishing rights) but lost in a competition with Universal who got the deal.
In the circumstances of so fierce a competition and the stakes being so high (billions of dollars) one cannot help thinking that it isn’t only Michael Jackson’s haters who work against Michael’s fans, but most probably the Sony/ATV competitors in the first place too. Same as Michael’s detractors, they don’t want Michael’s joint venture with Sony to succeed and hold the key role in the music publishing business.
Knowing that Michael has half of Sony/ATV I think that it would be extremely unwise on the part of Michael’s fans to fight the only real company which is operating in the interests of Michael and his children (and is doing it in a superb way).
I am not saying that those who are in a constant battle with Sony/ATV are necessarily working for its competitors, but when Michael’s fans unwittingly or deliberately undermine Sony/ATV they should at least realize that they are playing into the hands of Michael’s competitors – no more, no less.
And Sony/ATV’s competitors did fight the deal with EMI tooth and nail. The price of the deal was determined at an auction and ranged from $2,1 from a competitor to $2,2 from Sony. The matter was more or less decided in November last year:
Citi to sell EMI for $4.1B to Universal, Sony
By CLAIRE ATKINSON
November 11, 2011
Citigroup has reached a deal to split up and sell iconic UK record company EMI to Vivendi’s Universal Music Group and a consortium of investors lead by Sony Corp.
Citi will sell EMI’s recorded music arm to Universal for $1.9 billion, and the publishing business to Sony group for around $2.2 billion.
The Sony consortium now includes Hollywood heavyweight David Geffen, who is still negotiating his investment in the bid, along with private-equity firm Blackstone and Abu Dhabi-owned investment fund Mubadala, sources said.
Both bids ended up higher than analysts and rival suitors had expected heading into the auction for EMI, home to acts such as ColdPlay, Katy Perry and The Beatles.
Len Blavatnik’s Warner Music Group bid was believed to have bid in the region of $1.5 billion for the recorded music unit, while KKR-backed BMG Rights were offering $2.1 billion for publishing.
The deal will cement Universal’s position as the largest music company in the world, though it will likely have to divest assets outside of the US.
EMI’s share of the recorded market in France and Germany is in the region of 75 percent, while in the UK it is between 40 and 45 percent. In the U.S, EMI’s market share is less than 10 percent.
For the new acquisition not to go counter the anti-trust legislation (which fights monopolies and ensures competition) Sony had to approach the European Union in March 2012 as well as the US regulators. To the European Union they had to make a concession by selling its rights to some of its other labels.
In April Sony got the approval from the European Union to purchase EMI’s music publishing unit, but only after it agreed to sell its rights to the chart hits by Robbie Williams and Ozzy Osbourne, as well as its rights to the Sony/ATV portfolio which was agreed to be kept separate in the deal.
This looks like a very interesting point to me (if I understood it right) because it shows that the Sony/ATV joint venture is not the same entity as Sony proper and is separate from it.
However if Sony sold its right to Sony/ATV doesn’t it mean that Sony/ATV had to buy it? And at an additional cost to the money paid to be part of the EMI deal? If this supposition is correct than the amounts paid should have been quite substantial to say the least. And this at the time when the debt of $300 mln. to the Barclays’ bank still remains unpaid?
If my understanding of the situation is correct the above means that the Michael Jackson Estate is making further investments even though it is still indebted to the Barclays’ bank. Whether the risk is wise or not is a matter for dispute of course, but something tells me that had Michael been alive he would have readily gone for it. He was a very far-sighted businessman and was always looking into the day after tomorrow instead of a mere today.
The very least this situation tells us is that all those millions generated by the Estate are probably going in the direction of this deal. And of course also into financing the great Cirque du Soleil worldwide shows which is the biggest project undertaken by the Estate now.
The deal with EMI faced opposition not only from some Michael Jackson’s fans who oppose every Sony’s step since the time Tommy Mottola was fired ten years ago, but from Warner Music Group as well, and also Impala, an independent group of record labels.
Sony-Led Group Wins EU Approval To Buy EMI Unit
Apr 19, 2012
…. Sony Corp.-led group won European Union approval for its $2.2 billion purchase of EMI Group’s music publishing unit after it agreed to sell rights to chart hits by Robbie Williams and Ozzy Osbourne.
The European Commission approved the deal after the Sony group offered to sell the global rights to EMI’s Virgin catalogs and Sony/ATV Music Publishing’s Famous U.K. portfolio, the regulator said in an e-mailed statement.
The deal will give the Sony group control of EMI’s publishing rights to classics such as “New York, New York” and “Stand By Your Man,” adding to a portfolio of songs by Elvis Presley, the Beatles and Bob Dylan. Sony/ATV, the joint venture formed in 1995 that is co-owned by Sony Corp. (6758) and Michael Jackson’s estate, will oversee the new business.
The Sony group’s offer to sell the song catalogs eliminated antitrust concerns about the company’s control over online rights for chart hits by British and American artists, the EU said.
Dylan Jones, a spokesman for EMI, and Warner Music Group, an unsuccessful bidder for EMI, both declined to comment. Impala, a Brussels-based group of independent record labels that opposed the deal, is convinced that “the impact of this merger on the livelihood of authors has been underestimated, while the ability of the remedies to secure future competition has been overestimated,” Helen Smith, the group’s executive chair, said in an e-mail.
You can practically feel the fear of the author of the next article who says that the deal will give Sony/ATV too much control and even dominance as it will become the biggest music publishing business the world over – the news which I personally welcome very much.
It also mentions that in order to make the deal Sony had to sell the famous UK catalog to the Sony/ATV venture.
So if I understood it correctly while some bloggers are constantly telling us that Sony/ATV will sell Michael’s share to Sony, exactly the opposite scenario is taking place now – Sony sold its rights to the Sony/ATV joint venture and it seems to be a much more independent entity now than it used to be before:
Thursday April 19th, 2012 12:48
The European Commission will today green light the bid led by Sony to buy the EMI music publishing business, a takeover which will give Sony/ATV control of the EMI song catalogues, making for the biggest music publishing business in the world.
As previously reported, the Sony-led consortium offered EC competition regulators a number of concessions during the initial stage of the European investigation into the proposed deal, which some say will give Sony/ATV/EMI way too muchdominance in the publishing sector, digital licensing and the collecting society system. And seemingly those concessions were enough to overcome opposition and concerns across Europe.
According to the Financial Times, the biggest concern for EC regulators was the dominance Sony/ATV/EMI would have over the Anglo-American catalogue in the UK market. The proposed sale of the Virgin-branded songs catalogue, plus the Famous UK catalogue and some key songs by prominent Anglo-American artists, was designed to specifically deal with those concerns. Seemingly some extra US-owned rights were also thrown in to further placate officials.
Although the Sony/ATV deal still needs approval in the US, and is also being investigated in Australia and Brazil, having secured approval in Europe with just a one-stage investigation is a considerable achievement, not least because it’s European regulators who are often hardest to please.
The entertainment conglom does not own Sony/ATV outright – the Michael Jackson estate owns the other half – meaning the Sony recording and publishing businesses have never been as closely aligned as at the other major music firms.
Meanwhile Sony and the Jackson estate will each be only minority shareholders in EMI Publishing, meaning the new acquisition will remain an autonomous entity, albeit controlled and managed by Sony/ATV day to day. This slightly complicated structure seemingly enabled Sony to persuade EC regulators to be less tough than they were with Universal in 2006 when it bought the original BMG publishing company.
Needless to say, pan-European indie label trade body IMPALA expressed disappointment at last night’s reports that an EC all clear for the Sony transaction was incoming.
http://www.thecmuwebsite.com/article/ec-to-green-light-sonys-emi-deal-as-marty-moves-to-allay-staff-fears/
In June 2012 the deal was finalized. Now the joint venture between the Michael Jackson estate and Sony will control over 2 million songs. If any MJ’s fans tell me that this is unwelcome news I will call these people hypocrites.
Sony purchases EMI publishing rights
June 30, 2012
Sony Corp. and the Michael Jackson estate said Friday they had purchased Britain’s EMI Music Publishing for $2.2 billion from Citigroup, creating the world’s largest music copyrights company with a catalog that includes hits from Motown, The Beatles, Jay-Z and Norah Jones.
Publishing has remained a steady business over the years, despite the onslaught of the Internet and the ongoing decline of compact disc sales, because of its diverse revenue sources. And by acquiring EMI, Sony/ATV, a 50-50 joint venture between Sony and the Michael Jackson estate, will control just over 2 million copyrighted songs. The new entity is estimated to capture nearly a third of publishing revenue in the world.
The Associated Press
http://www.thenewstribune.com/2012/06/30/2200109/sony-purchases-emi-publishing.html
The Associated press even calls the EMI catalog managed by Sony/ATV the world leader now.
Associated Press – Fri, Jun 29, 2012
WORLD LEADER: Sony’s partnership with the Michael Jackson estate, Sony/ATV, will manage the EMI catalog, which has songs from Kanye West, Rihanna and Norah Jones. The entity’s No. 1 market share is about 31 percent, compared to 22 percent for Universal Music Publishing Group.
http://finance.yahoo.com/news/news-summary-sony-buys-emi-publishing-2-2b-214052409–finance.html
Others call the new consortium a giant force. This article explains in detail the way it will be run:
June 29, 2012, 9:08 AM
Sony Closes Its Acquisition of EMI Music Publishing
By BEN SISARIOAn investor group led by Sony closed its $2.2 billion acquisition of EMI Music Publishing on Friday, creating a giant force in music publishing, the unglamorous but lucrative side of the music business that deals with songwriting rights.
The deal will give Sony control over a catalog of more than two million songs, and a global market share of about 31 percent, nine points above that of Universal, its closest competitor, according to an estimate by the trade publication Music and Copyright.
Sony’s new catalog will include the 750,000 tracks — including 251 by the Beatles — that are controlled by Sony/ATV, the company’s joint venture with the estate of Michael Jackson. It will also include 1.3 million from EMI, with Motown hits, chestnuts like “Have Yourself a Merry Little Christmas” and songs by contemporary stars like Norah Jones, Kanye West and Amy Winehouse.
The deal just completed between Sony and EMI Publishing reunites Mr. Bandier, the chairman of Sony’s current publishing arm, Sony/ATV, with the EMI catalog, which he ran until 2007.
The financial structure of the deal is complex, and while Sony will administer the EMI catalog through Sony/ATV, its deal with Jackson requires that EMI Publishing remain a separate company. Sony and the Jackson estate will have a 38 percent stake. The other investors are the sovereign wealth fund Mubadala of Abu Dhabi, Jynwel Capital of Hong Kong, Blackstone’s GSO Capital Partners and the Hollywood mogul David Geffen.
The royalties and licensing fees from publishing rights are often seen as the most stable side of the music business, offsetting the more tumultuous fortunes of record companies.
“Music publishing, along with the rest of our entertainment companies, has been a bright spot in our business portfolio, and we expect that trend to continue with this important acquisition,” Kazuo Hirai, Sony’s president and chief executive, said in a statement.
Sony’s deal was one of two reached by Citigroup in November, which took possession of EMI in early 2011 after the private equity firm Terra Firma defaulted on its debt.
In the parallel sale of EMI’s recorded-music division — which includes albums by the Beatles, the Beach Boys and hundreds of other acts — the Universal Music Group bid $1.9 billion. That deal is still under review in Europe and the United States.
Sony’s deal will also reunite Martin N. Bandier, the chairman of Sony/ATV, with the EMI publishing catalog, which he built over 17 years until he left the company for Sony in 2007. While Sony/ATV and EMI will be separate entities, Mr. Bandier made it clear in an interview that he intended to run them as one collection of songs.
Let us make some conclusions now. The share of 38% makes up more than one third of the consortium and belongs to Sony/ATV. In this stake Michael Jackson’s Estate has a half. This means that the personal stake of Michael Jackson’s children and his mother is 19% or almost one fifth of the new music publishing giant which is now number 1 in the world.
And this share belongs to Michael Jackson? The man who only three years ago was condescendingly looked upon as a ruined bankrupt, faded star and as someone who was completely done away with from the point of view of people like Tom Sneddon and Diane Dimond? Do you remember the snide remarks from DD and Peretti in that ugly film about Jackson where they practically labeled Michael a finished man?
And now this man has become a giant of music publishing business worth billions? And his estate will now receive profit each time Tom Sneddon and Diane Dimond listen to anyone’s music? Because Michael’s joint venture has control over 2 million songs and Michael’s detractors surely can’t avoid listening to them when they go shopping, watch TV or listen to the radio?
Imagine the feelings of those who made their living by mocking at Michael but are now humbled into listening from every corner to his and everybody else’s music, knowing that each minute of it brings profit to the man they ridiculed so much and wanted to see in the gutter?
And this giant worthy of billions is also the same man who was only recently humiliated beyond measure by the slavery terms imposed on him by AEG? And who was dictated their terms in the so-called riot act which threatened to pull the (financial) plug if he did not abide by their rules?
And all this miraculous change happened within the last 3 years only? With the help of the Estate lawyers by the way?
Oh Lord, your ways are full of wonder indeed! The Heavens definitely put their hand to it – none of us could ever count on a powerful revenge like that. The mills of God grind slowly, but they grind exceedingly small…
4. THE MIJAC CATALOG
As we know Sony/ATY will also administer the Mijac catalog which contains all Michael Jackson’s songs. The article below says that already half a year ago Sony/ATV had plans to take over the administration rights over Michael Jackson’s own songs from Warner Chappell.
What is exceptionally interesting in this information (dated February 2011) is that “according to sources, this arrangement was written into the MiJac contract with Warner Chappell years ago” which makes us think that Michael was well aware of the plans and probably even wanted it this way.
Another statement says that the process “would be triggered by the release of Michael’s next album–in this case, the recent ‘MICHAEL,’ and the repayment of loans”. Both of these terms have almost been fulfilled as the posthumous album was released and only $4 mln. of the initial loan pledged by the MjJac catalog is left to be paid.
Will MiJac Move To Sony/ATV?
Wednesday, February 16th 2011
Showbiz411.com have exclusively revealed that plans are developing to move MiJac Publishing away from it’s current administering company, Warner Chappell, and will become part of Sony/ATVMusic Publishing.
MiJac Publishing, owned entirely by Michael’s Estate not only owns all Michael’s iconic hits, but also those of Ray Charles, Curtis Mayfield and Sly and the Family Stone, to name but a few. Previously administered by Warner Chappell, in the face of the decline in the record industry, it could be that MiJac will leave them and become part of Sony/ATV Music Publishing, the company that the Michael Jackson Estate co-owns with Sony, and contains the Beatles Catalogue.
According to sources, this arrangement was written into the MiJac contract with Warner Chappell years ago. It would be triggered by the release of Michael’s next album–in this case, the recent ‘MICHAEL,’ and the repayment of loans.
The move by MiJac to Sony/ATV is important for many reasons. With both WMG and EMI Music for sale, Sony/ATV could be checking out each company’s publishing divisions for purchase. But Warner Chappell might be less interesting to Sony ATV considering they’re already getting MiJac and without MiJac, Warner Chappell–which just had a down quarter–might not look so good to other potential buyers.
http://www.mjworld.net/news/2011/02/16/will-mijac-move-to-sonyatv/
The same Michael Jackson fans’ source posted the message from John Branca which enables us to finally place it correctly in time. When Branca’s letter recently resurfaced we thought that it was written in connection with the latest maneuvers of Michael’s siblings over the will – however now it turns out that this was said a year and half ago, probably because the threat to challenge the will haunted the Estate lawyers then and is haunting them now (and haunts them on a permanent basis despite the fact that Branca was named Michael Jackson’s executor in four Michael’s wills).
Branca’s letter confirms that as long as he and John McClaim are in charge of the Estate they will never relinquish the ownership of Michael’s catalog to anyone. Even if it were passed to Sony/ATV it would be for a limited time only and on unprecedented favorable terms too. The main thing he says is that the catalog will by all means be passed over to Michael’s children (which is all that matters, at least to me).
Mijac & Sony/ATV
Thursday, February 24th 2011
There have been numerous questions asked regarding the Mijac catalog and reports in the press of it moving to Sony/ATV. Below is an email from Co-Executor John Branca to Jeff Jampol, GM of the MJ Online team, clarifying some of what has been publicized through various media outlets.
Forwarded Message From: John Branca Date: Mon, 21 Feb 2011 15:18:31 – 0600 To: Jeff Jampol
Subject: Michael Jackson/Mijac
Jeff, I understand that you are being asked a lot of questions about Mijac. Yes, there is a matching right that Michael granted to Sony/ATV but they only get to administer the catalog for a limited term AND only if they agree to unprecedented favorable terms. We will not relinquish ultimate control and ownership to anyone. We have favorably refinanced the loans on Mijac which will be paid off and the catalog WILL absolutely be passed to Michael’s children as long as we have anything to say about it. Sony/ATV is a great company and the Estate owns half of it but no one, not even Sony/ATV, will ever own Mijac while John McClain and I remain in charge. The current Sony team is the one Michael chose to work with on the ‘Thriller 25,’ release and they are good partners. As stated in the recent court filings, they worked with us to refinance the burdensome debt that had been placed on Michael’s interest in Sony/ATV to very favorable terms, an important achievement which insures that Mijac and Michael’s masters remain secure for the benefit of Michael’s children for years to come.
I would appreciate your sharing this with the fans that are asking questions. Thanks – John
John Branca Co-Executor, The Estate Of Michael Jackson, Los Angeles, CA
Source: MJOnline (The Official Online Team Of The Michael Jackson Estate) & MJWN
http://www.mjworld.net/news/2011/02/24/mijac-sonyatv/
However let us pay attention to the phrase which is actually crucial for Michael’s ownership of the catalog – “We have favorably refinanced the loans on Mijac which will be paid off”. This phrase is indeed key to understanding the situation around the Mijac catalog of Michael Jackson’s songs.
5. ENTERS FORTRESS INVESTMENT GROUP
If the loan for Mijac catalog had not been refinanced by Branca and McClain to a 4% interest rate it would have remained at the 16,5% it finally reached and would have required millions of dollars as monthly payments of the interest rate only.
And if the loan had had to be repaid at that outrageous interest rate Michael could have defaulted in payment and could have lost it altogether. In this case it would have gone not into Sony’s hands as everyone says, but into the hands of Fortress Investment group which acquired those loans from the Bank of America.
Here are some details about it from an article dated June 21, 2010. The article makes an important emphasis on the fact that the MJ Estate Executors are not actually “traditional executors” (who first pay the debts and then try to preserve whatever remains of the money). No, John Branca and John McClain are the people who are “aggressively managing Mr. Jackson’s affairs as a going concern”. The Estate Executives are not obliged to turn the Estate into a lucrative business, but they are nevertheless doing it and doing with much enthusiasm and fine professionalism.
From the article below we learn that the appalling interest rates which were to be paid for the loan backed by Mjjac catalog were handled in the most professional way and lowered to less than 4%:
Jackson Estate Steers to Next Challenge: Loan Refinancing
Since Mr. Jackson’s death last June 25, his businesses have been run by the singer’s longtime lawyer, John Branca, and a music-industry veteran and personal friend of Mr. Jackson’s named John McClain. Unlike traditional executors, Messrs. Branca and McClain are aggressively managing Mr. Jackson’s affairs as a going concern.
Mr. Jackson’s debts were spiraling out of control…. A loan backed by Mijac carried a crushing 16.5% interest rate, to be paid out of royalties generated by the company.
When the royalty payments fell short of the towering cost of servicing the debt, any unpaid interest was piled on to the principal. As a result, by the time of his death, the Mijac loan had reached $75 million, with $11 million due in annual interest, which was several million dollars more than the catalog was generating annually.
The loan has now been refinanced with an interest rate of less than 4%. And thanks to increased album sales since Mr. Jackson’s death and a new deal for public-performance royalties, the catalog is generating enough cash to pay off the refinanced loan a little more than a year from now.
http://online.wsj.com/article/SB10001424052748703438604575315364195884770.html
The outrageous interest rates must have been the doing of Fortress Investments – the company which acquired all Michael’s loans from the Bank of America where they were initially taken by MJ.
Roger Friedman tells us the story of how Michael’s loans turned out to be in Fortress’s possession. Friedman claims that passing them over to Fortress shocked Jackson and was an unexpected move on the part of the Bank of America. What is top important is that as a result of the deal Fortress became the first in line to the ownership of Michael’s 50% share in Sony/ATV publishing venture in case he defaulted on the $200 loan.
The Fortress also acquired Michael’s loan for $72,5mln, which was backed by the Mijac catalog of Michael Jackson’s own songs. Friedman says that the new 9,5% interest rate on the loan was not negotiated with Michael and he simply had to accept it (eventually it turned into 16,5%.)
The above makes me ask Sony’s critics a question – who in their opinion presented a bigger danger to Michael Jackson in terms of losing not only one, but two catalogs, at least in the year 2005 – Sony or Fortress Investment Group?
When you read the article you’ll see that Roger Friedman thunders over Jackson’s rejection of the deal with Goldman Sachs and former advisors Charles Koppleman and Al Malnik who offered to buy half of his share (25%) to help him out of his liquidity crisis. Michael refusal shows that though this step would have solved his problems he was still intent on keeping his share intact (evidently to pass it over to his children).
In refusing Goldman Sachs Michael followed the advice of no other but John Branca. The press recently reported John Branca saying that it was him who advised Michael against selling half of Michael’s share, so Friedman is wrong in thinking that Branca sided with the others in the proposed deal.
Let us also disregard Friedman’s hostile tone (which is nothing new to us) and look at the factual side of the matter only:
FYI: Friedman – (Jackson) Shocked by Sale of Loans
From Roger Friedman’s column on May 5, 2005:
Michael Jackson was reportedly shocked Wednesday when he received word that Bank of America sold him out.
I can tell you exclusively that Bank of America has sold Jackson’s $270 million in loans to a private hedge fund. The group is called Fortress Investments, located in Manhattan. Their principals are Peter L. Briger Jr., formerly with Goldman Sachs, plus Wesley R. Edens, Robert I. Kauffman, Randal A. Nardone and Michael E. Novogratz — all with substantial backgrounds in finance.
Their specialty, according to their Web site, is rescuing “undervalued, orphaned and distressed investments throughout the United States, Western Europe and Japan.”
With this sale, Fortress now stands to become a 50 percent owner in Sony/ATV Music Publishing if Jackson should default on the loan.
Technically, he is currently in default. Furthermore, Jackson’s deal with Sony comes to an end this December, at which time the company can buy him out for $200 million if he can’t come up with a new buyer or enough money to pay back the loan.
The Fortress deal is also rumored to include a $70 million loan Jackson has on his own publishing catalog, called MiJac.
Jackson was apparently shocked, according to sources, when he got word about the sale on Wednesday morning from Bank of America. He had previously rejected a deal that would have netted him money, cleared debt and left him in good shape with people who were longtime friends. But now he’s in business with strangers.
Still in the equation, however, is grocery king Ron Burkle. He sent a letter to Bank of America several days ago saying that he needed 90 days to help Jackson refinance. Burkle could still be Jackson’s white knight and bail him out from Fortress, but so far he’s done nothing. Jackson remains cash poor in the meantime as he continues to stand trial for child molestation here in Santa Maria.
Michael Jackson has no one to blame but himself for what’s happened to him now. He can’t say record producer Tommy Mottola is a racist or that producer Charles Koppleman is out to get him. He’s cooked his own goose, with all the trimmings.
Jackson was severely taken aback to discover yesterday morning that Bank of America had sold his $270 million debt to a group of private investors. But why was he surprised at all? In the last few weeks, Jackson has done nothing but spit in the faces of the people who have kept him solvent for the last 20 years.
First there was his private banker at Bank of America, Jane Heller. Heller came with Jackson’s loan from NationsBank when it was merged into Bank of America. But the fact is, Heller has kept Jackson in carnival makeup and llama food for the two last decades.
Then there’s Al Malnik and Charles Koppleman. They’re not the Red Cross; they’re savvy businessmen. But they worked hard for Jackson over the last three years to help get his house in order and off the auction block. Jackson was frequent guest at Malnik’s Miami manse, bringing with him kids, nannies, etc.
In 2003, Malnik told Jackson that he should downsize his life, take stock and stop inviting children into his bed, before the current scandal broke in the fall of 2003. Jackson froze him out and the two have not talked since then.
Jackson also long ago stopped speaking to Koppleman and to his longtime attorney John Branca — two more advisers who kept him afloat. Instead, Jackson turned to a succession of con artists and hustlers who promised him the moon but simply mooned him.
There was also the brief infatuation with the Nation of Islam and the ill-fated association with Shmuley Boteach. To this day no one knows where the money went from the Feb. 14, 2001, Carnegie Hall event hosted by Boteach and Jackson “for children.”
But the one thing Jackson had with Heller, Malnik, Koppleman and Branca — besides a history — was affection. They cared about him even when he didn’t care about them. They protected him, too.
But last month Jackson refused a deal they offered that would have bailed him out of debt. He didn’t like it because he thought they would get something out of it. In his characteristic sneaky manner, he turned to grocery king Rob Burkle of Yucaipa Companies to save the day.
Malnik, properly insulted, quit. The bank, which considered Malnik their only link to reality, obviously had enough.
Who knows what the moneymen that bought out Jackson’s debt have in mind for the loan. One thing is for sure: The hedge fund’s major principle, Peter L. Briger, doesn’t know the former King of Pop and probably doesn’t want to.
Briger will function very well as a stranger to Jackson, dispassionate and businesslike as the clock counts down to December 20: the day when Jackson will have to either put up or shut for good. One thing’s for sure: He will get exactly what he deserves.
Source: MJFC / Fox News
Despite Roger Friedman’s highly emotional attitude and resentment towards Michael the news that Michael was in a serious risk of losing his Beatles catalog was correct. It was repeated by CNN who said that the loan for $200 mln. sold to Fortress by the Bank of American was due in December 2005 or only six months from the moment when this article was written:
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In almost every article of the period Roger Friedman’s exclaims that Michael was crazy to reject the deal from Goldman Sachs and his former advisors Charles Koppelman and Al Malnik who offered to purchase from him 25% of the Beatles catalog (or half of Michael’s share). For us Michael’s refusal is a sure sign of how terribly unwilling Michael was to part even with a fraction of his catalog though the dramatic situation and common sense were urging him to sell.
We also remember that Charles Koppelman always wanted to have the Beatles catalog and was one of the initial bidders for it, but lost to Michael in 1985, so I somewhat doubt the sincerity of his friendly gesture towards Michael Jackson.
6. EVEN A PLEDGED CATALOG NEEDS EXPANDING
From another Roger Friedman’s article we find out that under the initial agreement with Michael Jackson Sony was to go on adding new songs to the catalog and do it even on behalf of Michael Jackson. However the burden of it was not supposed to affect Jackson as the cost of new acquisitions was to be covered by the money generated by the catalog itself.
The idea was very good, as I’ve said before, but at the time there was no way to know that Michael would need a tremendous amount of cash to solve his legal problems both in the 90s when he had to settle numerous suits from Marcel Avram for disrupting the Dangerous tour and other commitments arising from it and during the 2003-2005 non-stop litigation process (all in all Michael Jackson faced more than 1000 lawsuits in his life).
What looked like an effortless acquisition of more and more songs became an extra burden for Michael when he started fighting the circumstances and those acquisitions could have well accumulated new debts for him – though “on paper only”, according to Roger Friedman.
Jackson Finances: CPA Got It Wrong (excerpt)
May 4, 2005
Readers of this column know we started generating stories here about Michael Jackson’s finances as long ago as 2001. This was after an excellent piece in Penthouse (of all places) by investigative journalist John Connolly. Later this material was picked up and repurposed without credit in Vanity Fair.
Yesterday, a CPA hired by the prosecution to analyze Jackson’s financial picture testified in the trial. This, of course, was District Attorney Tom Sneddon’s great revenge, to embarrass the King of Pop and show him as a pauper who lives beyond his means.
Unfortunately, the accountant assigned this task, while very nice, had no real experience evaluating song catalogs or entertainment portfolios other than, he said, some work on David Bowie’s finances. For example, a verbal fight ensued between John Durros Bryan, the accountant, and defense attorney Tom Mesereau over how much Jackson’s stake in Sony/ATV Music Publishing is worth. Even though Jackson has a 50 percent stake in the company, Bryan insisted he would get far less than that if the company were sold or if Jackson were bought out of his half.
If the company is worth $1 billion, Bryan claimed, Jackson would get only $200 million. Sony would get the rest.
Well, Mr. Bryan, you are — to quote Janet Arvizo — incorrect.
My sources, who have been right on the money about Jackson and Sony for a long time now, explain it this way: Jackson and Sony are in fact 50/50 owners of Sony/ATV Music Publishing. Sony often makes acquisitions for the company. They recently bought Acuff Rose Music Publishing, for example. But Sony’s deal with Jackson is that they must finance his half of such acquisitions. “That creates a debt on paper,” says my source.
But that debt, which is amortized over a 10-year period, is not counted against Jackson. That’s because the purchase of the acquisition turns a huge profit over the years to come, making money for everyone.
Jackson, in fact, has a $500 million stake in Sony/ATV. He has a Bank of America loan against it for $200 million. If the company is sold for a billion, or Sony buys him out, Jackson will be left with $300 million. Of course he has other substantial debts that would winnow that amount down considerably. But Bryan was wrong, my source says, when he testified that if Jackson sold his stake, he’d not only be broke but $40 million in debt because of his tax liability.
Frankly, the only thing Bryan said yesterday that was completely accurate was in response to Mesereau’s assertion that Jackson had offers to sell his stake for $400 million — thus bailing himself out of hock.
Said Bryan: “If that’s the case, then why doesn’t he do it?”
Responded my source, who knows Jackson well: “Because he’s crazy.”
Jackson, in fact, just rejected a deal from Goldman Sachs and his former financial angels Charles Koppleman and Al Malnik. The deal would have left Jackson with no debt at Neverland or on his own songwriting catalog, a 25% stake in Sony/ATV, $10 million cash and a $7 million-a-year income. Why? He just didn’t like it.
$38,000 to Pay $10 Million in Bills?
One true thing did come out of the long examination of Jackson’s finances yesterday. Schaffel, who was earlier identified as cashing checks for $1.5 million from a joint account with Jackson, clearly was reimbursing himself for money owed.
You may recall this column breaking the story of Schaffel’s civil suit against Jackson for $4 million. After John Bryan’s testimony yesterday, we know that around the time Schaffel was cashing those checks, Jackson had only $38,000 in cash for spending money. He had bills of $10 million.
It was hard to imagine when the story of the suit broke that Marc Schaffel was actually lending millions to Michael Jackson. But apparently Jackson’s lack of liquidity was so pronounced at the time — February and March 2003 — that Schaffel was loaning him money and advancing money for the production of Jackson’s rebuttal video and home movies, which were shown on Fox.
Source: MJFC / Fox News / Roger Friedman used with special permission.
Wiki confirms that Michael Jackson never wanted to part with his share in the Sony/ATV catalog and that new acquisitions to it were part of the plan from the very beginning of the joint venture. Michael Jackson said that his catalog would never be for sale:
In May 2001, Jackson denied rumours that he was planning to sell the Beatles’ song catalogue. Rumours had circulated that the singer was to sell them in order to finance the upkeep of Neverland Ranch and to cover legal bill expenses.[21] The singer announced in a statement, “I want to clarify a silly rumour – The Beatles catalogue is not for sale, has not been for sale and will never be for sale.[21]
Sony/ATV Music Publishing continued to acquire song catalogues in the 21st century. In November 2001, the company signed country singer Tony Martin to an exclusive songwriting and co-publishing deal. Through the deal, they acquired Martin’s Baby Mae Music catalog of 600 songs, which includes Joe Diffie’s “Third Rock from the Sun” and Jeff Carson’s “Not on Your Love”.[22]
In July 2002, Sony/ATV Music Publishing bought veteran country music publisher Acuff-Rose for $157 million. The venture included music publishing rights to 55,000 country music songs, including the music of Hank Williams, The Everly Brothers and Roy Orbison[23][24] as well as the master recordings of the defunct label Hickory Records. Sony/ATV revived Hickory Records as the in-house record label imprint in 2007, with distribution handled by Sony Music’s RED Distribution.[25] Sony/ATV also owns the masters of Dial Records, Four Star Records and Challenge Records.[26]
In 2006, Sony obtained an option to buy half of Jackson’s stake in the company at any time for a fixed price of $250 million.[27][28][29][30] Sony has not exercised the option.
Timeline of Sony/ATV Music Publishing 1955 Associated Television (ATV) is established by Lew Grade. 1957 ATV acquires Pye Records as a wholly owned subsidiary. 1957 ATV Music Publishing is created to exploit the songs owned by ATV. 1968 ATV Music and Lew Grade acquire the rights to the Lennon–McCartney song catalogue, Northern Songs. 1982 ATV Music Publishing and Pye Records are put up for sale. They are bought Robert Holmes à Court. 1985 ATV Music Publishing and its assets, Pye Records and Northern Songs, are again put up for sale. Singer Michael Jackson acquires them for $47.5 million. 1995 Jackson merges ATV Music Publishing with Sony. He earns $90 million in the venture. May 2001 Jackson declares that The Beatles’ songs “will never be for sale”. November 2001 Sony/ATV Music Publishing acquires Tony Martin’s Baby Mae Music catalogue of 600 songs. July 2002 Sony/ATV Music Publishing buys country music publisher Acuff-Rose for $157 million. The venture includes publishing rights to 55,000 songs. 2007 Sony/ATV Music Publishing acquires theLeiber and Stoller catalogue, which includes the Elvis Presley hits “Hound Dog” and “Jailhouse Rock,” and Famous Music, a music publishing business with song catalogue of more than 125,000 songs.
7. THE “DAY OF RECKONING” WAS PUT OFF DUE TO SONY’S HELP
The day when the $200 mln. loan was to be repaid to Fortress Investment Group was December 21, 2005 or only several months after the end of the 2005 trial, so we can very well imagine Michael Jackson’s emotional state at the time. If Michael did not pay it off he was to lose his share in the Sony/ATV joint venture which served as collateral for those millions.
From the article below we get a confirmation that Fortress also owned the second Michael Jackson’s loan, backed by his Mijac catalog, but as per December 2005 the loan for at least that catalog was not yet due.
Michael sought an extension of the deal with Fortress, however they agreed to only 6 months and with interim payments at the rate of 9,5% which amounted to $1,5mln. a month.
The LA Times has no respect for the man who seems to be doomed to a default in payment:
Michael Jackson Advisors Try to Stave Off Default
The singer, whose loans for $200 million came due Tuesday, is seeking a six-month extension.
December 21, 2005|Charles Duhigg | Times Staff Writer
Advisors to Michael Jackson spent Tuesday negotiating to keep the once self-proclaimed “king of pop” from defaulting on $200 million in loans guaranteed by the singer’s stake in the Beatles’ song catalog.
People familiar with the negotiations expected Jackson’s representatives to secure a six-month extension to repay Fortress Investment Group, which owns loans that came due Tuesday. Fortress purchased the debt from Bank of America Corp. in April [2005].
The loans are collateralized by Jackson’s 50% partnership in Sony/ATV Music Publishing, a joint venture between the singer and the electronics company that owns a 4,000-song catalog containing such songs as Bob Dylan’s “Blowin’ in the Wind” and 251 Beatles hits.
Jackson’s share in Sony/ATV, which also owns his valuable catalog and Neverland ranch in the Santa Ynez Valley, is worth more than $500 million, according to court testimony.
According to sources, Fortress will demand interim payments during the extension, and may insist on an interest rate that could reach as high as 9.5%, or more than $1.5 million a month.
Fortress also owns another Jackson loan, for $70 million, that has not come due. The sources requested anonymity because negotiations were still going on.
A spokeswoman for Fortress declined to comment on the negotiations. A spokeswoman for Sony/ATV declined to discuss specifics, except to say that the firm was “trying to be a good partner, and keep the partnership with Jackson going.” Jackson’s lawyers and spokeswoman did not return phone calls.
If Jackson does default on his loans, he may be forced to sell a portion of his half-ownership in Sony/ATV. Such a transaction, however, could take months to complete and might result in a tax bill of $40 million, according to court testimony from earlier this year.
Jackson was acquitted of charges of child molestation in June in Santa Maria, Calif. During that trial, court testimony revealed that the singer was strapped for cash, spending as much as $30 million more a year than he earned. During the last year Jackson was sued at least four times, accused of failing to pay $3.3 million in overdue bills.
Jackson is living in the Middle Eastern nation of Bahrain, and it is unclear whether he is personally involved in his finances. Once represented by established career builders such as Sandy Gallin and Jeff Kwatinetz, Jackson has in recent years had an ever-changing circle of advisors, many with little experience in finance or the music business. Often, the singer’s decision-making is based on “who has Michael’s ear at the moment,” as one longtime confidant put it in June.
Jackson’s financial troubles have worsened as his popularity has declined. Jackson’s 1982 album, “Thriller,” is No. 2 on the list of best-selling albums in U.S. history, shipping 26 million copies since its release, according to the Recording Industry Assn. of America.
But Jackson’s last album of new material, 2001′s “Invincible,” sold only 2.1 million copies, according to Nielsen SoundScan. Since 2003, domestic sales of Jackson’s albums have declined to about 1 million a year .
http://articles.latimes.com/2005/dec/21/business/fi-jackson21
Six months later, in April 2006, or when the extended period was over, Fortress was relentless and was all ready to grab the Beatles catalog into its hands. In a desperate situation like that Michael Jackson turned to… you won’t believe it … he turned to Sony (!) or a company which, if we are to listen to some bloggers, was supposed to be his enemy until the end of times.
Sony helped to refinance the debt by procuring a $300 mln. credit from the Barclays’ bank and lowered the interest rate from the 9,5% down. In return all they asked of Jackson was the right to be the first to buy half of Michael’s share in their mutual catalog (or that 25% asked by Koppelman and Malnik), which was an option which Sony never used, either when Michael was alive or after his death.
This fact should be remembered and never to be forgotten by Michael Jackson’s fans – Sony never used the option of buying half of Michael Jackson’ s share!
Where are these bloggers who constantly hum in our ears that Sony is the main villain? Why do they forget about Fortress Investment Group for example? Or are they working for Fortress, Koppleman or Sony’s competitors or all of them taken together? Otherwise how can they explain that they choose to totally disregard facts?
8. ENTERS PRESCIENT ACQUISITIONS GROUP
The article below repeats the usual mantra of a non-existent danger of Michael forfeiting his share to Sony and naturally does not say a word that as a result of Michael’s cooperation with Fortress he was in the imminent danger of losing all his belongings – including his whole 50% share in the Sony/ATV catalog plus the full of the Mjjac catalog (when that loan was due).
The article also introduces us to Prescient Acquisition Group which prides itself on finding investors who paid for Michael’s $272.5 million debt to the Bank of America. The article is very vague about who these investors are, but it must have been Fortress whom they found. In addition to Fortress another company mentioned is Transitional Investors LLC through whom they claimed that refinancing was done. For their services of middlemen Prescient Acquisition Group wanted $48 mln. in fees.
If all of the above is true it means that Roger Friedman’s initial story was incorrect - the transition of the loans from the Bank of America to Fortress Investment Group could not be a surprise for Michael Jackson as it resulted from the long process of finding new investors who would buy Michael’s debts from the Bank of America. On the other hand it could be correct as another option is that all these negotiations could take place behind Michael Jackson’s back.
Whatever it was, it is worth mentioning that none of these businessmen behaved in a way even remotely close to Sony who showed their goodwill towards Michael and readiness to help. Sony sent to Dubai two executives who met Michael and renegotiated the deal with Fortress Investment Group.
This article is clearly underestimating this fact. Moreover they are not even saying that it is Sony which helps Michael with the refinancing – instead they overemphasize the fact that Sony will receive a 25% stake as a result:
Michael Jackson Refinances to Stave Off Bankruptcy
By Alex Armitage and Dana Cimilluca - April 13, 2006
April 13 (Bloomberg) — Michael Jackson, struggling to stave off bankruptcy, agreed to a debt refinancing that may lead him to forfeit a share of a music catalog that includes more than 200 Beatles songs.
Jackson refinanced loans with hedge fund Fortress Investment Group LLC, the singer said in an e-mailed statement today. The statement didn’t disclose terms of the refinancing.
Under the agreement, Jackson gave Sony Corp. an option to buy half of his 50 percent stake in Sony/ATV Music Publishing LLC, allowing him to refinance about $300 million of loans, according to people familiar with the transaction. The catalog, which includes songs from Bob Dylan and John Mayer, is worth more than $1 billion. The sale may help Jackson pay debts that mounted as he fought child-molestation charges.
“He wasn’t going to give it up willingly,” said media analyst Hal Vogel, chief executive of New York-based Vogel Capital, who values the catalog at $1 billion. “He didn’t want to give it up unless he had to.”
Jackson, 47, bought the catalog 21 years ago, outbidding Beatle Paul McCartney and John Lennon’s widow, Yoko Ono.
Grahame Nelson, a lawyer representing Jackson at Qays H. Zubi, didn’t return calls seeking comment. Sony spokeswoman Lisa Gephardt declined to comment beyond saying Sony is committed to its partnership with Jackson.
He paid $47.5 million in 1985 to acquire the ATV catalog, which has about 4,000 songs, including Dylan’s “Blowin’ in the Wind” and “Sweet Caroline” by Neil Diamond.
In 1995, Jackson merged his ATV Music with Sony’s publishing business to battle financial problems. The singer is currently living in Bahrain. His team for the refinancing included Bahrain- based financial adviser Ahmed Al Khan and lawyers Qays H. Zubi Attorneys & Legal Consultants.
Fortress, based in New York, manages $21 billion, including buyout, hedge and real estate funds. It’s run by former Goldman Sachs partner Peter Briger and Wesley Edens, a former partner at BlackRock Financial Management Inc. Lilly Donohue, a Fortress managing director, declined to comment.
The refinancing will lower the interest rate on Jackson’s debt, which had risen to as high as 9.5 percent, said one person, who asked not to be named.
Lawsuits stemming from Jackson’s financial woes posed a hurdle to refinancing the debt. At least one lawsuit against Jackson, filed in federal court in New York, is still pending.
Prescient Acquisitions Group Inc., a New Jersey-based financial company that specializes in asset acquisitions, sued Jackson last July, saying the entertainer owed $48 million in fees for helping him secure a loan that rescued his stake in publishing rights to Beatles’ songs.
Prescient said in the suit it helped Jackson find investors to help him pay off a $272.5 million debt to Bank of America.
Fortress holds the debt previously held by Bank of America Corp., today’s statement said. Citigroup Inc. arranged the refinancing.
Prescient said it also helped Jackson buy complete control of “MJ Publishing Trust,” which is also known as “Sony/ATV Music Publishing LLC.”
Prescient said Bank of America found Jackson in default on part of the loans and creditors were setting their sights on MJ Publishing Trust and the Beatles catalog. The suit said the catalog was pledged as collateral for some of his loans.
Prescient said in the suit it fulfilled the contract and secured financing for Jackson through a group of investors that included Transitional Investors LLC and Fortress.
Evan Weintraub, a lawyer for MJ Publishing Trust, Jackson and MJ-ATV Publishing Trust, wasn’t immediately available for comment.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aT0PEoxVhUnY&refer=us
Two days later Michael Jackson happily announced that the restructuring with the help of Sony was successful:
Michael Jackson Restructuring Finances
MANAMA, Bahrain, April 13, 2006 /PRNewswire/ –
Michael Jackson is pleased to announce that he has restructured his finances with the assistance of Sony Corporation of America, the long time co-owner of Sony/ATV Music Publishing LLC.
Following negotiations with several leading financial institutions, Mr. Jackson has concluded refinancing with affiliates of Fortress Investment Group, the lender that currently holds secured debts that were previously held by Bank of America. Citigroup structured the transaction for the parties. The terms of this new financing deal will not be disclosed. Mr. Jackson was supported on the refinancing by an advisory team that included Bahrain-based financial advisor Ahmed Al Khan and Qays H. Zubi Attorneys & Legal Consultants.
Source: MJFC / PRNewswire
However even after the restructuring and only a year after the ordeal of the 2005 trial Michael still couldn’t enjoy a moment of quiet. Several months later he faced a big lawsuit from Marc Schaffel plus some smaller ones. We’ll have to skip them and pass immediately to another mind-boggling event in Michael Jackson’s life.
9. THE “LIQUIDATION SALE” WHICH NEVER HAPPENED. A NEW CHARACTER ENTERS
The Liquidation Sale (of the Beatles catalog) was written about by Roger Friedman in March 2007 and was announced to take place on May 2008 a year later.
This Liquidation business is so confusing a matter that I would suggest you read Friedman’s article on your own to see how many new characters are introduced into the picture in addition to those we already know and how deadly was a game Michael’s so-called advisors involved him in.
It was at this stage that I suddenly recalled that John Branca had already resigned by then (he left in 2006) as he was totally unable to put up with what was going on around Michael Jackson at the time. To my big surprise I found out from the same article that the person who is terribly hostile towards Branca now was playing the key role in the 2005-2007 drama as well. Now it seems to me that the rivalry between them has a long history of its own. Who this person is you will find from the article below that broke the sensational news:
Michael Jackson Will Lose Beatles Catalog in ’08
Written By Roger Friedman
March 09, 2007
Michael Jackson had better hold on to whatever money he pocketed in Japan this week during a promotional tour.
I can report today that Jackson will lose his hold on the Beatles catalog and Sony/ATV Music Publishing on May 31, 2008. That date, revealed here for the first time, is known as the “Liquidation Sale” among insiders.
And Jackson knows this. He even hired a famous law firm, White & Case, to evaluate the deal he made with Sony and Fortress Investments when he refinanced his shaky empire last year.
This doesn’t mean that Jackson won’t still owe Fortress $300 million after the liquidation sale is over. He will, but he can pay them back from the money Sony pays him to buy out their half of the music company.
Its value is somewhere between $1.1 and $1.6 billion, according to a Fortress exec who was deposed last year in preparation for a $48 million lawsuit brought against Jackson by Darien Dash, who helms Prescient Capital Group and is a cousin of hip-hop entrepreneur Damon Dash.
Recently, both Jackson and Prescient have asked the judge in New York to speed things along, and an answer is pending.
At question is whether or not Don Stabler, an accountant hired by Randy Jackson, Michael’s brother, had the authority to enter into agreements on Jackson’s behalf.
Stabler agreed to pay Prescient/Dash a nine percent fee for finding financing to replace Jackson’s $270 million at Bank of America.
Dash found Fortress, which offered over $500 million to help Jackson buy out Sony in his agreement.
That much wasn’t needed, but Dash is asking for his fee on that amount.
The original Jackson-Prescient-Fortress deal went down in May 2005 while Jackson stood trial in Santa Maria, Calif., for child molestation. But, unbeknownst to anyone, the negotiations had actually begun in November 2004.
A year later, in the spring of 2006, Jackson — now bidden to Fortress — was out of money again and renegotiating his terms. Sony Music came to his rescue, but at a price: they would be able to trigger a purchase of Jackson’s entire stake, not just half of it, at the end of May 2008. [This is a MISTAKE which Friedman later admitted and corrected - the share was 25% only]
And Jackson agreed to more than just that: he also signed a promissory note with Fortress for $20 million. It comes due this October.
Selling his half of Sony-ATV back to Sony won’t be so easy for Jackson or so lucrative.
According to testimony in various Prescient depositions, Jackson could be charged as much as $250 million “off the top” by Sony for expenses they’ve incurred while running the partnership.
That would whittle down his potential $600 million windfall almost by half. A further subtraction of the $300 million loan to Fortress would leave him with little wiggle room.
Jackson, it’s also revealed in the depositions, once tried to sell his half of the company to billionaire Ron Burkle during the child molestation trial.
“I remember precisely at court in the bathroom stall with the cell phone in my hand, saying why don’t you just buy it? I want to sell it you,” Jackson said.
Burkle, Jackson said, declined, telling him he had to keep the music catalog for his children.
Jackson’s deposition in the Prescient case, which is now becoming public, is otherwise the usual symphony of “I don’t knows” and “I don’t remembers” that Jackson offers in these circumstances. It was conducted last June 12 at Jackson’s expense — possibly $100,000 — at a hotel in Versailles, France, at his request.
But Jackson is far from stupid. His answers and vagueness seem coached, but from the Marx Brothers and Abbott & Costello. At one point he starts calling the proceedings “ridiculous,” an adjective he invokes often. Asked what’s ridiculous about the case, Jackson answers: “Three Stooges.”
There is also a long debate about where he lives. He doesn’t know the address, can’t tell the difference between Bahrain, Dubai and Oman or the various palaces he’s been in. “The Muslim names are kind of confusing to me, so it’s hard,” he says.
Jackson is also fairly embittered by his experiences in the music business.
“It’s full of sharks,” he says to one of the lawyers, “charlatans and imposters. Because there’s a lot of money involved, there’s a bunch of schmucks in there.” Of course, it’s the wrong word: schmuck means, loosely, losers.
At another time, it’s implied that flashy Florida attorney Willie Gary made an offer to buy Jackson’s Neverland Ranch. Now shuttered, Neverland is leveraged by Jackson with a $25 million loan, also with Fortress.
There’s an upside to all this: Jackson, under the renegotiation, receives an annual advance from Sony of $6.5 million. He gets another $2 million under another clause. It’s not a lot for a celebrity who likes to travel, stay in expensive hotels and shut down toy stores for private shopping. But it’s nothing to sneeze at, either.
What’s interesting about all this now is that it’s no longer about Jackson. His career is finished. It’s now more about what a hot potato the Beatles catalog has become, and why its ever-increasing value has permitted Jackson to live outside the norm. It may be the wisest investment ever made by a celebrity.
Jackson should be sending thank you letters to John Branca and Frank DiLeo, his two former advisers, every day of the week.
http://www.foxnews.com/story/0,2933,258016,00.html#ixzz24mdWSKzU
Forget about Michael Jackson’s “finished career” according to Roger Friedman and other media – it was finished only when it was in the hands of people like the Fortress, Priscient and Randy Jackson. If the finances are in capable hands then what was a total catastrophe is turning into lucrative contracts, dozens of new opportunities and acquisition of new publishing rights worthy of billions.
But let us try to understand the meaning of what we’ve just read.
So almost a year before that, in April 2006 a refinancing deal was made by Sony in respect of Michael’s debt to Fortress. Fortress could be promised $300mln. instead of the initial $272,5 they bought from the Bank of America, and Sony was to buy 25% of Michael’s share in the catalog – probably as a guarantor that they would repay Michael’s debts.
In other words Sony was to buy half of Michael’s share in the joint venture and this way provide Michael with the funds that would enable him to repay his debts to Fortress. This is how I read the statement from Friedman which says :
- “This doesn’t mean that Jackson won’t still owe Fortress $300 million after the liquidation sale is over. He will, but he can pay them back from the money Sony pays him to buy out their half of the music company”.
We also find out that Fortress did not make a single step without deriving additional profit for themselves. Therefore they forced Michael to sign a promissory note with them for $20 mln. which was evidently covered by some of Michael’s assets. If he defaulted under it these assets were to be passed over to Fortress.
On the other hand we learn that under the same refinancing deal Sony was doing the impossible – it was providing Michael with “an annual advance of $6.5 million and another $2 million under another clause”.
It is surprising, but doesn’t Sony look like the best of all the characters taking part in this ugly play?
Another surprise is that it was Randy Jackson and his assistant Don Stadler who took an active part in finding a candidate to refinance Michael’s loan with the Bank of America.
This was taking place during the trial when Randy Jackson was attending to all Michael’s business matters and Michael didn’t have a chance to go into details. Is this why Michael didn’t know of the transition of his loans from the Bank of America to a third party and could it really be negotiated behind his back?
The good investor found by Prescient on instructions from Randy Jackson was Fortress Investment Group. For the honor of getting this investor finance Michael’s business Randy Jackson and his assistant agreed to pay to the middle man Darian Dash of the Prescient group 9% of the funds provided.
What’s interesting is the Prescient offered Michael the chance of $500 mln. to enable him to buy out Sony’s share in the Sony/ATV catalog, but it turned out that this wasn’t really needed.
It was probably needed or initiated by Randy Jackson and this is why Prescient clever guys asked their 9% fee on the full $500 mln. amount promised and not the amount actually used to pay to the Bank of America for the loan passed over to Fortress.
Incidentally we also learn that Fortress acquired all Michael’s debts:
- the $200mln. loan was backed by the Beatles catalog,
- the $72,5 mln. were backed by the Mijac catalog
- and Neverland which was estimated at the price of $25mln was also in the Fortress loans porfolio!
All these assets were to pass over to Fortress Investments Group in case of Michael’s default in payment.
What did we forget? Oh, we forgot that Prescient was threatening Michael with stories that Sony would not pay the money due to him for his share in the catalog and would charge him $250mln for the expenses they incurred during that partnership. No such thing ever happened, but this is what Prescient thought or at least said in their depositions (evidently betraying their own ways of doing business with partners).
We also learn that billionaire Ron Burkle turned out to be a very decent man who refused to buy Michael’s catalog and said he should keep it for his children.
Michael did not lose his share in the catalog as the Barclays bank brought over by Sony refinanced his deal with Fortress Investments and Sony did not buy half of Michael’s share which under the terms of their agreement could be bought at any time at a fixed price of $250 mln.:
“As part of the agreement under which Barclays ultimately refinanced that debt, Mr. Jackson granted Sony an option to buy half of his stake in the company at any time for a fixed price of $250 million. At the time that was a generous valuation”
http://online.wsj.com/article/SB10001424052748703438604575315364195884770.html
Several months after these events, in June 2007 Michael Jackson chose to settle the $48 mln. Prescient lawsuit, evidently to save the Jackson family from further embarrassment:
Michael Jackson’s court case settled
New York | June 20, 2007Singer Michael Jackson decided to settle a $48 million lawsuit, which was filed against him in New York by a New Jersey finance company.
The lawsuit alleged that Jackson had stiffed businessman Darien Dash and Prescient Acquisition Group after they helped him refinance a $272 million bank loan and helped secure $573 million in financing to help the superstar buy out Sony’s half of the Beatles’ song catalogue.
Lawyers announced Monday that the case had been settled out of court for an undisclosed sum just as Manhattan federal Judge Kevin Castel was preparing to select a jury.
We’re very pleased with the settlement, said Dash’s lawyer, Steven Altman.
Court records also revealed that the jurors were supposed to watch a recorded deposition from Jackson in which he accuses former financial advisers of swindling him out of money while he was in court to face child-sex charges.
http://news.webindia123.com/news/ar_showdetails.asp?id=706200117&cat=&n_date=20070620
Though this article does not name the sum paid by Michael Jackson Roger Friedman reported that the sum of the settlement was $5 million:
- “Jackson has recently settled a lawsuit brought by Prescient Capital for $5 million”.
http://www.foxnews.com/story/0,2933,287075,00.html
10. RANDY JACKSON
A couple of days prior to the news about the settlement information about Michael being extremely angry with his brother Randy appeared in the NYDaily News:
World of Jax & robbers
Singer says his brother and pal tried to cheat him out of fortune
BY THOMAS ZAMBITO
DAILY NEWS STAFF WRITER
Sunday, June 17th 2007Michael Jackson claims he was nearly swindled out of his fortune during his kiddie-sex trial and only the wise counsel of the Rev. Jesse Jackson and billionaire Ron Burkle saved him.
The behind-the-scenes battle over the pop star’s finances is detailed in a sworn deposition he gave for a federal lawsuit scheduled to go to trial this week.
There is a possibility that Jackson himself might even be called to testify.
The seven hours of transcripts obtained by the Daily News reveal that the agitated entertainer was convinced his money woes were fueled by a cadre of disloyal advisers who stole from him while he was busy fighting criminal charges.
The Gloved One even fingered a man close to his older brother Randy as a key villain.
It was an ordeal that left Jackson bitter about the industry in which he’s spent his entire life.
“It’s full of sharks, charlatans and imposters,” he said in testimony taken last summer in Paris [another article says that Michael had to fly all lawyers to Paris at the cost of $100,000 as he himself was living outside the US].
“Because there’s a lot of money involved, there’s a bunch of schmucks in there,” Jackson said. “It’s the entertainment world, full of thieves and crooks. That’s not new. Everybody knows that.”
A Santa Maria, Calif., jury acquitted him of child molestation charges in June 2005, after which he retreated into the seclusion of his Neverland ranch.
But during breaks in the trial, Jackson says he was being pressured to sign off on a multimillion-dollar financing deal by Don Stabler, an associate brought in by brother Randy, his go-to guy on financial matters during much of his career.
Jackson initially took a liking to Stabler after Randy introduced them.
“He reminded me of people that live in mid-America like Indiana,” Jackson testified.
Stabler was persistent, at one point during the trial sending a message through one of Jackson’s Nation of Islam security guards that questioned the singer’s faithfulness to his African-American heritage.
It was a sore point for someone who has denied he purposely lightened his skin.
By then, Jackson had turned to Burkle, the billionaire pal of former President Bill Clinton, for financial help. Burkle brought in Jesse Jackson, who’s known Michael Jackson since his Jackson 5 days, to help with the consultation.
Burkle was calling him on the cell phone during bathroom breaks, warning him not to sign anything, Michael Jackson said. Stabler wasn’t happy, Jackson said.
“[Stabler] said, ‘What’s the problem? You’re not down, you’re with the Jews now. You’re not down with blacks anymore,’” Jackson testified.
“It was unkind,” Jackson added. “It was mean. It was meanspirited. It was nasty. Simply because he couldn’t get me to sign something that he wanted me to sign.“
The next time Jackson saw Stabler “he wanted to take my head off.” And his brother Randy wasn’t too happy, either.
Randy later claimed that Jackson and his staff had run up a $700,000 bill on his American Express card during the trial, which Jackson said he would repay.
It wasn’t the first time that Stabler teamed with Randy in trying to get him to sign off on a deal, Jackson claimed.
At a meeting in a bungalow at the Neverland ranch, Jackson said he had his mother at his side when he fought off another proposal.
“And I vehemently told them, ‘No, I am not signing this,’” Jackson recalled. “And I just remember how angry, the intensity of the anger in the room. And so they marched out.”
Jackson made his comments when he was grilled by lawyers for the Hackensack, N.J., finance company that is suing the singer in Manhattan Federal Court. The firm, Prescient Acquisition, is owned by businessman Darien Dash, who claims Jackson stiffed his company out of $48 million.According to Dash’s lawyer Steven Altman, Dash was due the money for helping Jackson refinance a $272 million bank loan and secure $573 million in financing to buy out Sony’s half of the Beatles’ song catalogue that Jackson co-owned.
But Jackson claimed he’s never heard of Dash, a cousin of hip-hop impresario Damon Dash, and doesn’t remember signing any agreement.
http://www.nydailynews.com/entertainment/gossip/world-jax-robbers-article-1.225010
The next article says that Michael blamed Randy for his financial troubles and said that he and his associate tried to pressure him to sign off on various deals and do it against the advice of other financial advisors.
I can bet whatever you like that the “other financial advisors” for sure included John Branca (in 2005 he was still on Michael’s team) and this is from where Randy Jackson’s hostility towards Branca stems. This is evidently also the reason why Branca left the team in 2006:
|
I doubt that Randy Jackson wanted to steal anything from Michael. Most probably he had some ‘ideas’ on how to improve Michael’s finances. It is also clear that he took a very anti-Sony position then as it was surely his initiative to buy out Sony’s share in the Beatles catalog (for the $500mln. procured by Prescient which Michael never used but for which he paid some millions in fees).
Whatever Randy Jackson’s motives were the results of his involvement in Michael’s business affairs were disastrous:
- Michael had to endure a long period of new litigation and depositions soon after the ordeal of the 2005 trial
- The depositions were especially painful as he was asked questions even about the “molestation” issues over which he had been acquitted already and which had nothing to do with finances
- Michael was brought into a partnership with Fortress Investment Group which provided him extremely unfavorable terms. Let us remember their 9,5% interest rates, for example
- Michael also had to settle the $48 mln. suit with the Priscient intermediary who brought Fortress in and charged for their services a fee at the interest rate of 9% on the $500 mln. The money was meant for purchasing Sony’s share which Michael evidently did not want or need
- Michael incurred tremendous additional expenses during the 2 years of litigation with Prescient and had to pay $5mln. in settlement of the deal he said he had never seen or signed.
11. SONY
A little later the storm in a teacup regarding the “imminent sale of Michael’s share to Sony” calmed down and even Roger Friedman admitted there was no cause for worry that Sony would buy the catalog in May 2008 (or any other time):
7-12-2007
FYI: Friedman: Beatles Songs ‘Safe for Now’
I have been telling you for some time now that on May 31, 2008, Michael Jackson will lose the Beatles catalog. Sony has the right to buy it all out from him thanks to a 2006 refinancing deal.
But sources tell me that Sony isn’t so eager to pony up the $300 to $600 million this purchase would entail. For now, at least, my sources say, “the company is happy with its passive partner. Michael isn’t bothering us and we’re not bothering him.”
Recently, Sony/ATV Music Publishing has made some excellent strategic purchases thanks to new president and financial partner Martin Bandier. They picked up the Famous Music catalog and will continue to expand in the next year. So Jackson is safe, but this also means he can’t raise cash against the catalog anymore. He would have to go back to work to do that.
Source: MJFC / Fox News / Fox411;
http://www.foxnews.com/story/0,2933,288899,00.html
The strategic purchases Sony/ATV was making were indeed excellent. While guys like Randy Jackson was creating unnecessary drama in Michael Jackson’s life and forcing him into more debt and trouble, Sony/ATV was busy buying the Viacom catalog which includes Eminem, Bjork, Shakira and others.
The deal was agreed on at the very end of May 2007:
Viacom sells Famous Music to Sony/ATV
Posted 5/30/2007 10:31 AM |
NEW YORK (AP) — Viacom Inc. said Wednesday it is selling Famous Music, a music publishing business whose catalog has more than 125,000 songs including “MoonRiver” and “Footloose,” to a unit of Sony Corp. for about $370 million.
Famous Music was founded in 1928 to publish music from movies and owns the themes to many films including “The Godfather” and “Beverly Hills Cop.” The deal includes the assumption of about $30 million in debt.
Famous Music is being acquired by Sony/ATV Music Publishing, a joint venture formed in 1995 between Sony and trusts set up by Michael Jackson. It is not part of Sony BMG Music Entertainment, a business that combines the music operations of Sony and BMG, a unit of the German media conglomerate Bertelsmann AG.
Sony/ATV Music Publishing owns or administers more than 500,000 copyrights by artists including The Beatles, Beck, Joni Mitchell and Roy Orbison.
Viacom owns cable networks such as MTV and VH1 and the Paramount movie studio. Famous Music was its only property in the music business. Famous Music’s roster of songwriters includes Shakira, Akon, Linda Perry and others.
Through its Extreme division, Famous Music also supplies recordings and musical compositions for use in television and radio advertisements, film and television productions, trailers, and major network and cable broadcast promos.
The Associated Press
http://www.usatoday.com/money/economy/2007-05-30-2986621890_x.htm
Jackson buys Eminem rights
- Rosie Swash
- Thursday 31 May 2007
Michael Jackson now owns the rights to Eminem’s back catalogue, after his partnership company Sony/ATV purchased the publishing company Famous Music for $370 million.
Bjork, Shakira and Beck are also among the many artists whose publishing rights were sold by Viacom, of which Famous Music is a subsidiary, at auction yesterday afternoon.
The acquisition comes just months after speculation that Jackson would be forced to give up the rights to the Beatles back catalogue because he was facing bankruptcy. Jackson outbid Sir Paul McCartney in 1985 for the rights to the Beatles music at a cost of $47.5 million, but rumours that the singer has been living beyond his means were reinforced when he sold 25% of Sony/ATV back to Sony last year [WRONG. Michael never sold his 25%. Even the Guardian is unable to report correctly!].
Yesterday’s deal means Sony/ATV own the rights to over 125,000 songs, of which Eminem is one of the most high-profile and profitable. In an interesting twist, Jackson once attempted to have the video to Eminem’s songJust Lose Ittaken down because it features the rapper dressed as Jackson and later rapping the words: “Come here little kiddies on my lap / Guess who’s back with a brand new rap / And I don’t mean rap as in a new case of child investigation accusate.”
Speaking about yesterday’s acquisition, Sony/ATV CEO Martin N. Bandier said: “The Famous Music catalogue is a world-class asset filled with evergreen songs that people know and love. The depth and breadth of the catalogue is what truly makes it great.”
These events took place in Michael’s life when we thought he had a chance to finally relax after the 2005 trial. We have not touched upon other lawsuits during the same period, however even the Prescient/Fortress/Randy/Don Stabler case in comparison with what Branca is doing now for Michael enables us to come to certain conclusions and makes me ask questions which I initially did not intend to ask.
Isn’t all of the above a perfect example of how some people do proper business while others are keen on creating drama only?
Doesn’t this information show which advisor brought what element into Michael Jackson’s life – one of them brought stability, success and prosperity into it, while the other one a lot of mess, confusion and unnecessary losses?
Isn’t it clear to anyone unbiased that passing over the Estate into the hands of the latter person would be a disaster to say the least? Even if it were entrusted to some lawyers whom he will recommend as new executors of the Estate?
Can his judgment in choosing the right people be relied upon?
And will these new people be as dedicated to Michael Jackson as the lawyers currently working for the Estate?
I must admit that initially I was neutral to this Michael’s sibling. He looked like a nice guy and his appeal to Thomas Mesereau for help to his brother was priceless. It came just in time, saved Michael Jackson from grave injustice and should never be forgotten or underestimated. But the very same person has a very unstable temper, has a difficulty in differentiating right from wrong and adheres to very peculiar views on how to handle other people’s business affairs.
In short, if he or his protegees ever come close to Michael’s finances and assets all we will be able to say is a quick good-bye to them.
So let him stay a brother of Michael Jackson only.
And let the Estate go on with the job they are doing so well for Michael Jackson’s legacy, his children and his mother.
* * *
Deborah
lacienegasmiles
lisathelawyer
lynande51
Mona
sanemjfan
sara101mj
susannerb
thetis7
A very interesting article about Michael’s finances was published by Forbes. It makes a lot of things clearer. The subjects raised there were discussed in points 3 and 4 of this post, and that is why I am adding it here.
As I thought the money generated by various projects of the Estate did not go into paying off the remaining $280 ‘business loan” because it was spent on buying copyrights for new songs (under the deal with EMI as far as I understand).
This was done because more songs generate more money, so it is not really ‘spending’ and certainly not ‘squandering’ – it is investing money.
Forbes says that all personal MJ’s debts will be paid by the end of the year and only a “business loan” of $280 will remain. It may be paid out very quickly “if necessary” but at the low rate of 2,9% a year “paying back the loan quickly, in full, may not even be financially expedient—the company’s funds could be better utilized by buying up new, money-generating copyrights”.
You remember that we were wondering why the remaning debts were not paid despite so much money generated by the Estate? Now it is clear why – it was invested into buying new music catalogs!
“I explained this previously but will try and explain it using an example this time. If you owned a company with a net worth of $1 million and you defaulted on your home mortgage which carried a first loan of $200K and second loan of $100K, the mortgage company could only sue you for the total amount of loans only i.e., $300K. The mortgage company, by law, has no legal standing to take your $1 million business and could NEVER act on your behalf or your sole representative” – Susan Joyce
Susan, you don’t have to expain to me basic things like that. I didn’t answer you because I thought you were familiar with what I had written about all this before. Now I see that you are not. So let me also explain to you a couple of things.
The overall sum which had to be paid by the Estate to AEG was in excess of $40mln according to their first financial report. This was the sum which Michael would have had to return had his contract with AEG been severed. Those millions were made up of the $6,2 advance given to Michael and production costs which were fully placed on Michael’s shoulders (which is an outrage in and of itself).
In addition to those $40mln. next comes a sort of a forecast of the events that would have followed. AEG reserved the O2 Arena for Michael and would have surely claimed compensation for their losses in connection with their arena being vacant for all the period covered by the “contract”. They would have claimed loss of anticipatory profits - for sure. And how much is that alone? One third of a billion? Half a billion? More? To get the right figure we need to know the sum AEG got from the tickets sold plus the anticipated profit from the shows including all the merchandize, releasing the film footage, etc.
One more possibility is that they could have sued him for “fraud” as regards his health and their resulting payment for the multi-million insurance policy from Lloyds. Add to it such minor things like the $150,000 monthly salary to Murray which they would have also charged to his account (multiplied by several months) as well the $100,000 monthly salary to Tohme (which was initially their responsibility, but as a result of a trick with production costs salary to Tohme also became Michael’s business) – and I think everyone understands that after adding up all that it is even impossible to calculate the resulting multi-million sum which Michael would have had to pay.
Sorry, I forgot the legal fees for the many months of the litigation process with AEG.
Inevitable as those lawsuits were, even without them AEG had full access to everything Michael had. According to their Promissory note (for the advance of $6,2 mln.) if Michael delayed payment by 5 days a major default would occur and Michael would pass to AEG everything he ever had or would have.
There are two interesting points as regards this event of default:
- it could arise in case Michael did not pay at least one monthly repayment installment. The “contract” never said a word about any monthly repayments of the advances made, however the Promissory note mentions them, but somewhat in passing. What these installments are and how are they to be paid is a huge mystery because there is no schedule of how much and on what dates they should be repaid back.
But let us suppose that the monthly repayment was to be $1mln. If Michael was unable to pay this $1mln, five days later a full default of payment was to be declared, as a result of which Michael was to pay the full $40mln.
- if Michael’s company could not pay (which of course it could not), the “contract” had a tiny piece hidden in some funny miscellaneous clause which said that AEG would have access to all Artist’s assets as an individual. This was a direct road to all other Michael’s assets, even the ATV catalog, shielded by two Trusts.
Since the catalog was well protected access to it could be made only as a result of a lawsuit. However this was no problem as the forecast above shows it.
The Promissory Note also said that as a result of a default AEG would become the full Attorney-in-fact acting on behalf of Michael’s company and enjoying full rights. Let me say it again that though the Promissiry note emphasized that the matter concerned only Michael’s company and not the Artist individually, the contract contradicted this point and said that it did concern Michael as an individual (and therefore concerned all his belongings).
There is a short piece I wrote about it in this post: http://vindicatemj.wordpress.com/2012/03/13/the-aeg-contract-with-michael-jackson/. If this is not enough I can expand this subject further (if you like):
Part of the Promissory Note:
And this is where the “monthly payments required” are mentioned (to our great surprise we find them in “Prepayment” clause:
Here is a piece i also wrote about that Miscellenous clause (its point 16.3):
P.S. Susan, your other statements were answered in your message. I do it for economy of space and time.
“Helena, if you quote from an article you should credit that journalist otherwise we think it’s your writing. You primarily stated AEG would seize control of MJ’s musical estate…., I responded secondarily following you talking about events after MJ’s death”- Susan
Susan, the above was stated in an article sent by Truth Prevail: http://www.dailymail.co.uk/tvshowbiz/article-2197337/Michael-Jackson-Leaked-emails-reveal-star-basket-case.html
My reply was:
For some reason you selected only the quote not paying attention to the context, and now demand that I should have credited the journalist who said it. Can I ask you in return to be more attentive next time? And not give me lectures on the quotes you do not like and mistakenly attribute to me?
True, I expressed this thought long ago – when I analyzed AEG’s “contract” – but this time it wasn’t me who said it.
We can blame Murray, AEG, even Michael himself for his own death.
But I simply blame Evan Chandler, Sneddon, the Arvizo’s and the media for his death. Not for them, he would never have been on meds at all. He would still be here.
Question: “Then explain to me what could possibly motivate his siblings to suggest such a thing.”
1. Janet Jackson told Robin Roberts in her first interview after MJ passed away that she and her siblings went to MJ’s home in Las Vegas in 2007 for an intervention but MJ’s bodyguards wouldn’t let them in
[VMJ: This is only what they thought about Michael but it isn't proof that he was taking drugs at the time. He did take Demerol earlier though and when he did he spoke about it himself, quite openly, in that Morphine song. No one dragged this information from him, he volunteered it himself]
2. The siblings also tried an intervention with MJ at Neverland and did talk with MJ. Janet was crying during the intervention. MJ told them he was okay. If I recall correctly, it was Jermaine that told this story.
[VMJ: Whatever problem Michael had with Demerol it was over. There was no Demerol found in his system, the autopsy report found no trace of it and this is all there is to it]
3. Elizabeth Taylor arranged for MJ to go to rehab in Mexico then he left there and went to Europe. I don’t recall the time frame….I’m guessing it was the mid-1990′s.
[VMJ: Goodness gracious, you don't even know when Michael went to a rehab! It was in November 1993, when he was in the middle of the Dangerous tour and was totally shattered by the hue and cry over the Chandlers' lies]
4. The search warrants from Neverland revealed the many prescription bottles with other people’s names typed on them.
[VMJ: You talk again and again about the past. Michael fought his habit and managed to beat it. In the later years Michael did not take any narcotics, he was given (by doctors!) various sleeping pills and that is all]
5. A doctor in Japan said MJ wanted meds for anxiety and to be able to sleep, but the doctor wouldn’t prescribe any to him.
[VMJ: So what? If some of us are insomniacs or feel anxiety and ask doctors for sleeping pills or sedatives, is it a crime or what?]
When MJ first died, the siblings and Katherine denied MJ was ever addicted to prescription meds. In 2010, they began opening up and talking about it. Joe Jackson claimed he knew a few months prior to MJ’s passing and wanted Katherine to come with him to intervene but she wouldn’t go.
[VMJ: Katherine and the siblings didn't know a thing about Michael. Many of them had not talked to him for years. And in your interpretation "prescription meds" sound almost like heroin, while all it means is that doctors prescribed Michael sleeping pills like they do for millions of people worldwide. Do you "intervene" when someone takes sleeping pills?]
Was MJ an addict? I don’t know because I wasn’t there or knew him personally. In my opinion, I do believe that MJ did use prescription meds at times to sleep or for stressful events, but I don’t believe he took them on a daily basis for 5, 10 or 15 years.
[VMJ: You don't have to know someone personally to know the truth. He did take Demerol at some time (and when he did he spoke about it himself), but that was over. In the later years of his life Michael had a huge sleeping problem and doctors tried on him all sleeping pills that are available to medicine. None of them helped and he had cases when he didn't sleep for four days running as we learned from his recently auctioned note to Lisa Marie Presley. Someone tried propofol on him and it did work. So when Michael's insomnia became unbearable and he was in a particularly demanding situation he asked for propofol as this was the only thing that helped. Insomniacs will understand his desperation]
September 6, 2012 2:40 pm
Helena- “If Jackson were to back out then AEG would seize control of his musical estate to recoup its losses, something the singer knew all too well.”
My response – I politely disagree – Susan Joyce
****************
Today, Sept. 7, 2012
Helena – Susan, why don’t you send your disagreement to the journalist who published this statement? It isn’t just my word only – it is a quote from an article. And we are not talking of the events after Michael’s death, we are talking of the situation when Michael was still alive.
My response – Helena, if you quote from an article you should credit that journalist otherwise we think it’s your writing. You primarily stated AEG would seize control of MJ’s musical estate…., I responded secondarily following you talking about events after MJ’s death.
Helena – AEG threatened to pull the plug and withdraw from their contract. In this case Michael was to return all the money AEG spent on producing the show (as AEG put all production costs on his shoulders).
He was also to return the advance they gave him. If he was not able to return the full amount of money immediately (not just the first instalment) AEG had the right to all assets of his company. They had the right to fully act on his behalf and be his sole representative.
My response – I explained this previously but will try and explain it using an example this time. If you owned a company with a net worth of $1 million and you defaulted on your home mortgage which carried a first loan of $200K and second loan of $100K, the mortgage company could only sue you for the total amount of loans only i.e., $300K. The mortgage company, by law, has no legal standing to take your $1 million business and could NEVER act on your behalf or your sole representative. Regardless how the AEG & MJ contract was written, it cannot overrule the law to automatically receive $1 million when the mortgage company was only financially harmed by $300K. If this was the case, everyone would be suing everyone and most people in our country would be penniless and homeless.
And maybe everyone here has misunderstood what I was saying about Murray.What I have said before and will stick by forever is this. MICHAEL DID NOT ASK FOR THIS DRUG UNTIL SOMEONE SUGGESTED IT. He did not seek this for sleep until someone told him it was okay. He did not do it without being told by someone that it was okay. Michael Jackson was not a drug addict. There was no evidence of it at all. Then explain to me what could possibly motivate his siblings to suggest such a thing.
Amen to most of this except the parts about the siblings. I’ve seen interviews where Latoya and Jermaine have outright said Michael was not an addict. Why do you feel like the family is painting him like an addict?