Sony proceeds with plan to sell music publishing unit: WSJ

[barbee0715]

I'm not sure what is going on because all along it has been reported that Sony wants to sell their share?
Leaked emails and other reports indicate that it is Sony that wants to sell, so I don't where the talk about the estate selling anything comes from?
They have this clause that gives both parties buy or sell option, which according to reports they have entered.
I though it means that they talk if there is possibility that the estate will purchase Sony's half.
If it is not possible the estate to buy Sony's half, Sony will start selling proceedings to outsiders.
If the estate cannot buy Sony's share, they can just sit back and wait until Sony has sold their share to someone and then they have new partner, but as far as I can understand, the estate is not selling, Sony is.

Ps, I think if the estate cannot buy other 50%, they should buy at least 1%, so then they have majority51% ownership of ATV catalogue.


Where did you hear that heirs prefer to sell?

THIS makes much more sense to me than a forced shotgun/buy or sell clause.
If they could exercise such a clause, wouldn't it have made more sense to do so when Michael was in the middle of the 2005 trial? Would have been a slam dunk then.
Of course, most of these contracts and agreements with various managers, producers, labels, have been horribly complicated and unfair in a lot of ways so I shouldn't be surprised if there is such a clause.

Even though RS wrote the heirs are likely to sell, that's sheer speculation. He also wrote Paul bid against Michael for the ATV catalog and that's just simply not true.

 

[elusive moonwalker]

R.s prob think the jackson family are the heirs. of course they would sell and spend in a heatbeat

 

[InvincibleMJ]

From Michael Jackson, Inc.

https://twitter.com/DBAnderson1/status/652610405450293248

 

[Tygger]

It is illogical that the Estate would somehow be forced to purchase Sony’s share. Michael, as an individual in a partnership with a corporation, would most likely not have the funding to purchase Sony’s share outright. (This is not the thread however for a discussion of Sony allegedly pursuing Michael’s share over the years.)

Sony’s triggering of the buy-sell agreement is not a surprise to the Estate. Triggers are obviously detailed in the contract between Sony and the Estate and can be triggered by either party. Sony triggered an exit (quit) clause recently which allows them to divest themselves from this investment and invest monies elsewhere (hopefully not with a competitor). However; as per the Sony leaked emails, Sony has been planning to sell Sony/ATV (and eventually activate the exit clause) for some time. Branca petitioned to be a consultant for that future sale late 2013/early 2014.

Regardless of whomever eventually owns Sony/ATV (and what the catalog would be renamed by the new owner(s)), Sony would most likely continue to administer the catalog as they continue to administer Sony Pictures catalog sold to OLE. As per Sony leaked emails, Sony actively sought new and/or improved methods to create revenue streams based on streaming, etc and Xscape was the first album to support Sony’s One portal successfully.

Sony/ATV’s structure grants both partners the right to counter any offer to buy out the other side, as well as to bid for the half each doesn’t own.
http://www.marketwatch.com/story/sony-exploring-sale-of-music-publishing-unit-sources-say-2015-10-07

The buy-sell agreement allows a partner (Sony and/or Estate) to purchase the selling partner’s half which equates to right of first offer (ROFO). If the potential buying partner disagrees, the selling partner can then sell their share to another. There may be clauses that identify who would be considered an appropriate buyer (i.e, non-competitor vs. competitor, etc.). Each party can also counter any offer from a potential buyer which is right of first refusal (ROFR).

No one knows how the Estate will respond to Sony’s trigger of the buy-sell agreement. However; based on the information available and knowing there are ROFO and ROFR rights, the Estate will not be able to inaccurately state that its hands are tied or imply a contract Michael signed during his lifetime dictated a particular reaction by the executors that may be considered a negative action by some fans.

I am sure the Estate’s statement will be released in due time. I will admit I fear what it will say and how it affects the beneficiaries. I do not want them to potentially lose another asset.

 

[ivy]

Media reports have been quite confusing and sometimes even illogical.

To me ROFO (right of first offer) makes sense - that when one party decides to sell their share first ask other party if they are interested in purchasing and give them a chance to buy. If not, then sell it to a third party.

The buy-sell like some media reported doesn't make much sense to me. "here buy my share or I'll buy yours" is a weird clause. I agree with Tygger,it's highly unlikely that Michael when alive and MJ Estate now would have enough money to buy Sony's share. So such clause wouldn't bring anything to the table for MJ but would mean Sony could have bought/can buy MJ's share anytime they want. However I'll be cautious . In my wildest dreams I couldn't imagine Neverland deal being as bad (not for this thread) so who knows if during the 2005/2006 refinancing unfavorable terms against MJ was included. There were reports at that time that Sony had the option to buy half of MJ's share.

Like I said before, the leaked emails showed Sony wanted to sell their share so I can't imagine why they would try to buy MJ's share if their goal is to sell. That's another thing that doesn't make much sense to me.

Quite confusing like I said.

 

[Bubs]

From Michael Jackson, Inc.

https://twitter.com/DBAnderson1/status/652610405450293248

I would like to know when that agreement was written and/or if that agreement was revised or changed since?
To me it sounds like that is from the time when MJ sold 50% to Sony.

Does anyone have Zach's book on hand and check that bit?

 

[barbee0715]

I agree that it sounds like the 95 deal and that was brilliant.
I can only hope that Branca will be involved with the sale so they can get a good partner. (If it works the way we think it does).

He negotiated the sale of Rodgers and Hammerstein's catalogue and the daughters remained as involved as ever as part of the deal.

 

[Tygger]

Quite confusing like I said.

It can be. Allow me to clarify below:

The buy-sell is one of the most important agreements, if not the most important agreement, between investors because it dictates agreed upon scenarios for the termination of the investing relationship. Allowing a current investor(s) to purchase the selling investor’s shares before another allows the investment to stay “in house” so to speak (ROFO). Allowing a current investor(s) to match another buyer’s offer continually allows the current investor(s) to retain the investment and again the investment may remain “in house” (ROFR). A ROFR offer may be more attractive than a ROFO offer in financial terms.

The partnership between Sony and the Estate for Sony/ATV has most likely not changed since its inception as the partnership between Michael and Colony for NL did not change. Changing debt repayment terms does not affect the original partnership terms; those are separate. In both cases, these contracts gave Michael very beneficial rights to retain an asset which we know was his preference. His Estate is in the position to choose if they will retain an asset or not which empowers them. Thus a contract Michael signed in his lifetime empowered his estate because it allows the executors to make a decision about retaining these assets (Sony/ATV and NL). Without ROFO and ROFR, they would be in a weakened position and they could accurately state they have their hands tied because they would not be granted the opportunity (afforded a right) to make a decision that is beneficial to the estate in their view.

So such clause wouldn't bring anything to the table for MJ but would mean Sony could have bought/can buy MJ's share anytime they want.

No. Michael would have to trigger an exit clause as Sony is now doing. Only then would Sony be able to purchase Michael’s portion. Michael preferred to retain his assets. Michael and his Estate have never triggered the exit clause. The Estate has been aware since late 2013 that Sony intended to trigger the exit clause.

Like I said before, the leaked emails showed Sony wanted to sell their share so I can't imagine why they would try to buy MJ's share if their goal is to sell. That's another thing that doesn't make much sense to me.

Sony cannot purchase Michael’s share unless the Estate triggers the exit clause which they have not. We have confirmation from Lynton’s email that Sony indeed triggered the exit clause so the Estate can purchase Sony’s share. The Estate is not in the position to do so however; they are in the position to decide if they will retain the asset (secure financing to purchase) or sell their portion to another. They can also trigger the exit clause while Sony is the current co-owner of Sony/ATV or trigger the exit clause after a potential buyer is secured. If the former, it does not mean Sony will purchase the Estate's portion at all. They will simply not exercise the ROFO/ROFR rights like the Estate is doing with NL and will most likely do here with Sony/ATV.

Adding:

I can only hope that Branca will be involved with the sale so they can get a good partner. (If it works the way we think it does).

No. It would be a conflict of interest for an executor to profit from the sale of an estate asset. As per the Sony leaked emails, Sony did consider Branca to be qualified however; they could not figure how to surpass the conflict hiring him for this position would pose.

 

[Bringing Brighter Days]

do we see the handwriting on the wall and what will eventually happen?

 

[mjjmsc]

I think it would be an interesting idea for the Estate to find an investor and buy Sony's part, this would mean another partner, but at least they could choose one they find convenient now...

 

[krikzil]

If anyone can pull it off -- buying Sony's share -- it's Branca. I'm sure he'd like to be the one overseeing a reunited catalog.

 

[marc_vivien]

BANDIER TAKES CARE
OF BUSINESS
The atmosphere at Sony/ATV was understandably tense following last Thursday’s revelation the higher-ups at Sony Corp. had activated the buy/sell process, bringing uncertainty to the futures of the pubco and its employees. Leave it to Sony/ATV ruler and publishing legend Marty Bandier to restore order and stability. He did it with a memo to staff, delivered in a firm, confident voice resonant with gravitas—a heavyweight throwing a controlled but forceful punch. Here’s the complete text of Bandier’s address to the troops.

---

Dear all,
By now all of you have probably seen the note from Michael Lynton, as well as reports in the press, regarding a potential sale of Sony/ATV. I know this must have come as a surprise to most of you. As the note explained, Sony Corporation of America has recently initiated a process that may result in a change in the ownership of Sony/ATV. There are several potential outcomes, including Sony or the Estate of Michael Jacksonacquiring the other’s 50% stake in Sony/ATV. We are at the beginning of a process that will play out over the next several months. One thing I can tell you is that I will do my best to keep all of you informed of significant developments as they occur.
While the future ownership structure of Sony/ATV might be uncertain, one thing has always been clear; Sony/ATV is and will remain the world’s leading music publisher with the largest and most diverse catalog of songs, the best roster of artists and songwriters and the most talented executives. Doing what is best for our songwriters has always been our goal and I’m sure that will continue to be our primary focus.
I am proud, as you should be, of the work we've accomplished, including a record year last year both creatively and financially and a very promising 2015 as we prepare to move to terrific new offices in both New York and L.A. I remain confident that for all of us it will be business as usual during this process and that our best years are still ahead of us.
Regards,
Martin Bandier
Chairman & CEO
Sony/ATV Music Publishing


http://hitsdailydouble.com/news&id=298030

 

[Bubs]

If anyone can pull it off -- buying Sony's share -- it's Branca. I'm sure he'd like to be the one overseeing a reunited catalog.

He needs to have someone with plenty of money to back him up, then then make that someone as partner.
Seemingly it is going to be long process:timer:

 

[krikzil]

He needs to have someone with plenty of money to back him up, then then make that someone as partner.
Seemingly it is going to be long process:timer:

Yes, although I suspect he's been working on it for a while now.

 

[Bubs]

Yes, although I suspect he's been working on it for a while now.

We should start making list of possible partners

Now, who has extra billion lying around?

 

[krikzil]

We should start making list of possible partners

Now, who has extra billion lying around?

Given Branca's connections, it could end up being a fascinating consortium beyond the usual suspects we've discussed.

 

[Annita]

Roger Friedmann is such a idiot. He is really not able to give any information acurat in his paper, mixing all together and his obsession of Michael losing the catalig is going on.


showbiz411- by Roger Friedman - October 11, 2015
Michael Jackson’s Long Financial Saga with Sony
Maybe Coming to An End

The long — and I do mean loooong– financial soap opera involving Sony
Music and Michael Jackson may finally be coming to an end.

Michael’s estate and Sony jointly own Sony/ATV Music, which in turn
owns the Beatles catalog. Michael and Sony merged their resources in the
mid 1990s. From then until his death in 2009, Michael amassed $320
million in loans using his stake in Sony/ATV as collateral.

Now come reports that Sony has pulled the trigger on an amendment in
which either side has the right to buy each other out. Sony either wants
to buy Michael’s portion and then sell the whole thing, or just Michael’s
stake and call it a day.

Coincidentally, the Michael Jackson estate has just suffered a setback in
a lawsuit brought by former Neverland kid Wade Robson. A judge has ruled
that Robson can go ahead and sue Jackson’s companies for sexual harassment
because Robson was an employee. Robson had previously been denied in his
efforts to get money from Jackson’s estate.

Some reports suggested that Jackson’s estate could actually buy Sony/ATV’s
half of the company, but that seems unlikely and/or impossible. Sony would
love to shore up Sony/ATV as a valuable asset and then leverage it for anywhere
from one-to-two billion.The Beatles catalog remains a HUGE gem in the crown
of all music publishing. Sony could sell the whole thing and make up losses
from its movie and electronics divisions.

The Robson part of it is interesting because the judge is saying Michael’s
companies can be sued.

As for the publishing side, the Jackson estate suddenly getting rich
from a sale to Sony could affect the ongoing IRS claim of over $700 million in
back taxes.

http://www.showbiz411.com/2015/10/11/mic…oming-to-an-end

 

[krikzil]

Typical Friedman.

 

[HIStory]

Someone should explain to Friedman the Robson case because he doesn't seem to get the legal process. And it has nothing to do with the catalog. Oh and if it happens to be Sony who sell their part (as it was in those leaked Sony e-mails one year ago) and Michael's Estate ends up with a majority of it Friedman will get a heart attack.

 

[barbee0715]

^^This article was so off the wall and absolutely contrary to everything I had read up about this sale clause upto this point.

If this is an example of Friedmans articles written in 2003-2005, I understand why he's got a black mark in the fan community.

 

[HIStory]

^^This article was so off the wall and absolutely contrary to everything I had read up about this sale clause upto this point.

If this is an example of Friedmans articles written in 2003-2005, I understand why he's got a black mark in the fan community.

Actually in 2003-2005 he was better - he had some good sources then. It depends on which sources he teams up with. He was horrible when he teamed up with Schaffel as a source during the MJ-Schaffel lawsuit. So much crap.

 

[pug]

Paul McCartney's publishing rights revert back to him in 2018 so the value of ATV will change. Maybe that has something to do with the desire to sell.

 

[HIStory]

Paul McCartney's publishing rights revert back to him in 2018 so the value of ATV will change. Maybe that has something to do with the desire to sell.

The catalog has over 2 million songs now - only a very, very tiny portion of those are the Beatles songs. Even IF some songs revert back to McCartney (and it's still not clear to me whether they indeed will) it will still be worth a LOT and it will still be the world's largest and most valuable music catalog. Sony wouldn't sell it just because of some songs reverting back to PM IMO. And if songs will indeed revert back to McCartney then I'd think that anyone who buys Sony's part would calculate that into the price.

 

[Tygger]

do we see the handwriting on the wall and what will eventually happen?

I believe it is clear what will happen.

There are several potential outcomes, including Sony or the Estate of Michael Jackson acquiring the other’s 50% stake in Sony/ATV.

This concept that the Estate could somehow purchase 1% of the catalog from Sony and have a controlling interest is a concept that exists only in this thread. Tis fine as it supports the belief Michael's beneficiaries will retain this asset, however; it is not the reality. As per several reports and an email from Bandier himself, the buying partner can purchase the other partner's share; not a portion. That is the full 50% and the Estate cannot afford it. It is also unlikely they could secure investors for such a purchase as the Estate's share is not clear of debt. It is unfortunate to see the beneficiaries potentially lose the two major assets Michael retained at all costs; NL and this catalog.

Sony can decide if it will purchase the Estate's share or not. Regardless, they will most likely maintain administration duties for the catalog.

Paul McCartney's publishing rights revert back to him in 2018 so the value of ATV will change. Maybe that has something to do with the desire to sell.

It does not. Sony leaked emails showed their desire to sell the catalog to support weakened divisions (i.e. their consumer electronics division) yet, maintain administrative duties. As per Bandier's email, the catalog would still be "the world’s leading music publisher." There is no failure with the catalog; the failure is Sony's consumer electronic's division. Whatever McCartney receives in 2018, he may very well employ Sony to maintain administrative duties for a very nice fee.

 

[HIStory]

As per several reports and an email from Bandier himself, the buying partner can purchase the other partner's share; not a portion.

That's actually not what Bandier's sentence means.

There are several potential outcomes, including Sony or the Estate of Michael Jackson acquiring the other’s 50% stake in Sony/ATV.

The sentence states that there are "several potential outcomes, including..." This doesn't mean these are the only two potential outcomes, it just means that the several potential outcomes include these possibilities.

 

[Bubs]

Paul McCartney's publishing rights revert back to him in 2018 so the value of ATV will change. Maybe that has something to do with the desire to sell.

A little correction - starting to revert back to Paul, it doesn't mean that that all of them revert back at 1 go:
"The U.S. Copyright Act of 1976 gave songwriters the ability to recapture the publishing share of the copyright on pre-1978 works after two consecutive 28-year terms or 56 years. That means Beatles compositions registered in 1962 will be eligible for reversion in the United States in 2018, while songs written in 1970 will be eligible in 2026."

http://www.reuters.com/article/2009/08/10/us-beatles-idUSTRE5790IA20090810

 

[elusive moonwalker]

Paul McCartney's publishing rights revert back to him in 2018 so the value of ATV will change. Maybe that has something to do with the desire to sell.

thats only in the USA and those songs are a tiny portion of the cat so mean nothing when talking about the cat as a whole as its now the biggest in the world sony have been in the s*** for along time so want to sell off assets

 

[ivy]

This concept that the Estate could somehow purchase 1% of the catalog from Sony and have a controlling interest is a concept that exists only in this thread. Tis fine as it supports the belief Michael's beneficiaries will retain this asset, however; it is not the reality. As per several reports and an email from Bandier himself, the buying partner can purchase the other partner's share; not a portion. That is the full 50% and the Estate cannot afford it. It is also unlikely they could secure investors for such a purchase as the Estate's share is not clear of debt. It is unfortunate to see the beneficiaries potentially lose the two major assets Michael retained at all costs; NL and this catalog.

While you are correct it is something only mentioned on this thread and more like a wishful thinking, technically it could happen. Personally I didn't say Estate buy 1% and leave the other 49% to Sony to sell. What I suggested was a consortium and exactly how the EMI was bought. Remember a bunch of investors came together and they bought the whole EMI catalog but divided it among themselves (with sony 20%, Estate 10% and rest by other investors). Technically it is possible for Branca to bring together a consortium and buy Sony's 50% share and then the investors can divide that 50% among themselves.

 

[ivy]

I guess we aren't the only ones

http://hitsdailydouble.com/news&id=298051


UNCERTAINTY SHAKES #1 PUBCO: Last Thursday (10/7), The Wall Street Journal broke the news that Sony Corp. had recently triggered a clause in its contract with Sony/ATV co-owner the Michael Jackson Estate, which allows one party to buy out the other. The initiation of the buy/sell process was confirmed by Sony Entertainment chief Michael Lynton in an email to Sony/ATV employees disseminated as a result of the WSJ report and intended to calm troubled waters.

The initiation of the buy/sell clause by the Sony Corp. leadership in Tokyo reportedly blindsided Lynton, Estate executor John Branca and Sony/ATV ruler Marty Bandier, an odd move indeed given that Sony and the Estate are 50/50 partners in the pubco. In a typical scenario, the partners would meet behind closed doors and come to a joint decision. It’s clear that Sony’s move has been a major disruption for everyone involved and will continue to be a distraction until the situation is resolved.

Sony/ATV’s estimated value is around $2 billion, and is expected to appreciate in the coming years. The company has been throwing off sizable profits; according to Sony regulatory filings, the pubco generated $560m in revenue last year with $580 projected for 2015. Sony owns 29% and the estate owns 10% of EMI Music Publishing, which was acquired by a coalition of investors in 2012.

Sony will buy out the Jackson Estate or vice versa, depending on which party is more highly motivated and willing to write the bigger check. Branca is expected to aggressively pursue the acquisition, and most believe he’ll no trouble building a war chest through investment banks, sovereign funds or a combination of the two. Either way, it’s a win-win for the Estate, which will wind up with the world’s most valuable publishing company or a huge check. If struggling Sony takes full ownership of Sony/ATV, it could conceivably put the pubco on the block and initiate an auction, which would likely draw plenty of suitors in pursuit of much-needed cash to pay down debt. But this is pure speculation.

In any case, those close to the action expect Bandier and his executive team to continue running the company, no matter which of the two parties winds up owning it.

 

[barbee0715]

Wow-blindsided? Too bad Sony didn't just decide to dump their electronics division, since that's the part that losing the big bucks!!!!!