As the world watches the saga of the death of Michael Jackson, Wall Street is watching as well.
Several major financial firms have been making inquiries into purchasing Michael’s estate’s fifty percent share of the Sony/ATV Music Publishing, the company that holds most of the Beatles song catalog. Among them are Colony Capital, Kohlberg Kravis Roberts, Plainfield Asset Management and media mogul Haim Saban, according to people who have been briefed on the matter.
The Sony/ATV catalog is the most valuable asset in Michael’s estate. His fifty percent holding could be worth as much as $500 million. Michael bought the majority portion of the Beatles catalog in 1985 for $47.5 million after an informal business discussion with Paul McCartney about investing in song catalogs.
Since that time, Sony/ATV, which formed a 1995 partnership with Sony, has bought up rights to thousands of artists including Bob Dylan, Joni Mitchell, Beck and taylor Swift. Recent years has brought a big push into television production that helps balance out its radio business.
“Sony/ATV’s really started to gain greater value in recent years,” said Barry Massarsky, a music industry consultant who has done work for Sony/ATV and its rivals. “I’m very bullish on its prospects.”
John Branca, the lawyer who structured Michael’s first purchase of the Beatles catalog is now of the of two executors of his estate. He delclined by comment via e-mail Sunday, saying that the Jackson stake in Sony/ATV “is not for sale.”
Mr. Branca and John McClain, a music executive will be making decisions about Michael’s estate pending confirmation at an Aug. 3 hearing in Los Angeles.
However, this has not stopped financiers from approaching the members of the Jackson family and Sony, as reported by people who were briefed on the discussions. Some of these already have connections with the family.
For example, Colony is a co-owner of the Neverland Valley Ranch. Colony’s chairman and chief exec, Thomas J. Barrack Jr. has contacted representatives for the family. Plainfield, that lent money to Mijac, an entity toat owns Michael’s own songs as well as those from artists like Sly and the Family Stone, has also contacted the family. Mijac has the estimated worth of $50 million to $100 and will only grow with the pickup in sales following Michael’s death.
Michael almost lost his stake in Sony/ATV in 2006. He was on the brink of bankruptcy when chief exec Howard Stiringer dispatched his chief financial officer, Robert Wiesenthal to Dubai to broker a saving deal. Michael was living in Dubai at the time.
Duross O’Bryan, a forensic accountant at the consulting firm said that “His (michael’s) finances were in complete shambles. There were serious issues with regards to his ability to meet debt when it comes due.”
The deal that was negotiated in Michael’s suite at the Burj Al Arab hotel saved him from bankruptcy. In return, Sony took a greater operational control of Sony/ATV and received an option to purchase half of Michael’s share. Despite earning many hundreds of millions of dollars during his lifetime, Michael was well known as having a moutain of debt. Expenses were incurred over the years because of maintaining Neverland, costly music and tour production and proculivity toward purchasing art and antiques. Michael’s estate still maintains debt of $400 to 500 million. Barclays holds about $300 million of debt against the estate stake in Sony/ATV.
Sony could possibly seek to use its option, leaving the Jackson family with 25% in the business. Some of the private equity firms have proposed aligning with Sony to purchase the remaining state from the family..
A spokesperson for Sony said that the company was not interested in selling its stake. Reps for Colony, K.K.R. and Mr. Saban declined to comment. A rep for Plainfield couldn’t be reached for comment.
At the Allen & Company retreat for media bigwigs at Sun Valley this month, speculation regarding the Jackson stake in the Sony/ATV was a hot topic. Many attendees said that Mr. Stringer fielded inquiries into the possibility over dinner. Mr. Sabanreportedly made an informal inquiry then.
The stoke in Sony/ATV is only going to grow in value. Some members of the Jackson family have considered the merits of selling and others have proposed eventually putting together a consortium to buy out Sony’s share in the publisher.
Source: MJFC / NY Times
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