Sony and Jackson Estate reach agreement for Sony to acquire remaining half of Sony/ATV Music Publish

[Justthefacts]

I.B. BAD BREAKS DOWN THE BUY/SELL ON SONY/ATV (UPDATE)
On Monday (3/14), Sony Corp. exercised the buy/sell on Marty Bandier’s Sony/ATV, acquiring full ownership of the world’s largest music publisher for $750m. Sony/ATV was set up as a joint venture, with Sony and the Michael Jackson Estate each owning 50%. Estate attorney Joel Katz and co-executor John Branca were believed to have amassed a sizable war chest with the aim of buying Sony/ATV themselves, but Sony has come out on top, while the Estate is getting an enormous consolation prize.

The Estate retains its stake in EMI Music Publishing, which was acquired in 2012 by a consortium comprising Sony, the Estate, Mubadala Development Co., Jynwel Capital Ltd., the Blackstone Group’s GSO Capital Partners LP and David Geffen. The price tag was $2.2b, or just under eight times EMP’s net publisher share (NPS), which was then in the $300m range. The Sony/Jackson Estate’s piece of EMP is about 40%, with Sony owning three-quarters of that total. Sony/ATV had an approximate valuation of $1.5b in 2015, and its stake in EMI Music Publishing was valued at $860m at the time of the acquisition. But the acquisition impacts only Sony/ATV proper, not ithe ownership of EMP.

Sony/ATV has annual revenues north of $600m a year. Although mechanical royalties have been hit hard by the decline in sales, it’s hoped that the advent of mass-market streaming will offset this revenue loss.

Jackson was days away from filing for bankruptcy in 2006 when Sony chief Howard Stringer and CFO Robert Wiesenthal bailed him out. In return, Sony took greater operational control of Sony/ATV and received an option to buy half of Jackson’s share. The loan, estimated at $280 million, was connected to the Sony/ATV catalog and secured by Barclays. The interest rate was negotiated down to 2.9% from 5.8% shortly after the Jackson’s death in July 2009. At that point, he was roughly half a billion dollars in debt.

That 10-year-old loan impactied the current buy/sell situation in that its terms provided Sony with a discount of around $150m on the purchase price.

In November 2012, a representative of the Jackson Estate confirmed to Forbes that the estate had just paying off a loan connected to MiJac Music. That payment meant that the estate had eliminated the last of Jackson’s outstanding personal debts, thanks to Jackson’s considerable posthumous earning power resulting from This Is It, the highest-grossing concert film in history; a $250 million record deal with Sony, the largest ever; and the Michael Jackson Immortal World Tour—a joint venture with Cirque du Soleil.

In 2014, for what it’s worth (and it’s worth a great deal in this case), the Jackson Estate was valued at $1.18 billion. The second most valuable estate is that of Elvis Presley, which has a reported net worth of $300m.

http://hitsdailydouble.com/news&id=300204

I'm not sure whether that article is reliable but Sony getting 150 million discount price when they buy MJ's share sounds a bit odd, or terms agreed in 2006 weren't very beneficial to Michael!

And that's the part no one wants to admit. Sony could have gotten the catalog in 06

 

[HIStoric]

I'm not sure whether that article is reliable but Sony getting 150 million discount price when they buy MJ's share sounds a bit odd, or terms agreed in 2006 weren't very beneficial to Michael!

Looks like it is. This NY Times article from 2009 backs up what you bolded:

"The deal, negotiated in Mr. Jackson’s suite at the Burj Al Arab hotel, saved the singer from bankruptcy. In return, Sony took greater operational control of Sony/ATV and received an option to buy half of Mr. Jackson’s share."

 

[OnirMJ]

I don't believe that Michael Jackson or any sane person would sign such a stupid contract with such stupid clause in 1995. I think this is bullshit or Sony would have bought him out in 2001/2002. Either that clause was added to the contract by the Estate after MJ died or it was added while Michael was alive in 2006-2009 time period when he had big debt against the company, because of the restructuring of his loans. This has to be explained to the public and fans! No one is THAT stupid to sign such contract. I know Michael never read "small letters" on the contracts, but this is just too unbelievable. Sony could have bought him out immediately the next day in 1995 after signing the contract or at least in 2001 when he leaves the company and when they first expressed their interest in buying the Michael's share.

I'm very disappointed with the Estate even if they had to do it because of that unbelievable clause that apparently didn't exist back when Michael was alive. 750 MIL they'll spend, 80 MIL annual profit would last them forever. Very bad business decision. If Conrad didn't kill Michael, this would definitely killed him today. Very sad. I guess it's good thing that he's gone so that he's not seeing what is happening with his most prized asset for which he worked for his entire life and eventually died for.

This is Estate's worst decision yet, including the release of the fake songs! But I guess it doesn't even matter anymore as Michael is dead and not here anymore.

I just hope the Estate will be more transparent about this buy out and explain how, when and where that clause was added to the contract. We deserve to know as we were with Michael the entire time during his fight for that catalogue. And some were not.

 

[HIStoric]

I'm very disappointed with the Estate even if they had to do it because of that unbelievable clause that apparently didn't exist back when Michael was alive.

It did exist when he was alive, Michael himself signed the contract that allowed this in 2006 (look up a bit, we're just discussing it now).

 

[Soundmind]

Yes but they did not and they lost the right to buy the shares after two years and now out of the blue they are talking about their right to buy it from the very beginning which makes no sense at all.

 

[Soundmind]

That clause of the 2006 deal to buy mj shares expired in 2008. They are claiming this was part of the first deal in the 1990s.

 

[Soundmind]

Let me guess they will give Katherine a huge big check to get her blessings and this is really what she and her whole family wanted from the very beginning. Sell the assets and give her her share so she can will it to her family.

 

[Ms. BlueGangsta]

Whether or not MJ's estate had any control over what happened, after doing this they have to announce some positive news soon because something like this will most likely overshadow anything positive that they've done up to this point in people's minds.

 

[OnirMJ]

Jackson was days away from filing for bankruptcy in 2006 when Sony chief Howard Stringer and CFO Robert Wiesenthal bailed him out. In return, Sony took greater operational control of Sony/ATV and received an option to buy half of Jackson’s share.

Ok. That make sense. Thanks for this! This is what Estate could have told us in their statement. So it's Michael's fault, not Estate's.

 

[Bubs]

I didn't see the estate's statement to fans posted here?

STATEMENT FROM THE ESTATE TO MICHAEL'S FANS

As you may recall, last October Sony triggered the “buy-sell” clause in the partnership agreement which provides for one partner to buy out the share of the other at the highest possible price. As has now been announced, the Estate and Sony have signed a memorandum of understanding for Sony to purchase the Estate’s interest in Sony/ATV. A copy of the official press release is also being sent to you. In the intervening months, we explored several options that would have positioned the Estate as the buyer, rather than Sony, and we had substantial interest from potential partners to work with us in doing so. Ultimately, however, Sony’s offer was in the best interest of Michael’s children and we made the difficult decision to accept that offer. The arrangements will further secure the financial future of Michael’s heirs. The amount that Sony is paying, $750 million, is a substantial premium on the Estate’s interest in the company after taking into account the debt of the company, the Purchase Option and other adjustments required under the partnership agreement. It is also a huge testament to Michael’s business acumen that his original investment appreciated so substantially over the last 30 years.

There are several reasons that led to our decision. We will use a portion of the proceeds to repay the loan balance on monies borrowed by Michael and secured by his interest in Sony/ATV which means that after starting with more than $500 million in debt seven years ago, the Estate is now completely debt free with substantial assets in cash and other property. The balance of the proceeds from this sale, after taxes, fees and expenses, will be held by the Estate and ultimately will be transferred to a trust for the benefit of Michael’s beneficiaries. Furthermore, the transaction allows the Estate to diversify assets which, to date, have been highly concentrated in music intellectual property.

We would like to underline that the sale has no effect whatsoever on the 100% ownership of the publishing on all of the songs that Michael wrote, which all remain part of Mijac Music, as well as those songs written by many of Michael’s favorite songwriters, that he acquired outside of Sony/ATV. These songs include "After Midnight”, "Love Train", "I Got A Woman", “When A Man Loves A Woman”, "People Get Ready", "Great Balls of Fire", "Runaround Sue", the entire Sly and the Family Stone catalog and other songs. The Estate also continues to own its 100% interest in all of Michael’s solo master recordings and short films. There is no intention of selling any of these wholly-owned assets.

While the sale of Michael’s interest in Sony/ATV is bittersweet for all of us – especially for those of us involved in helping Michael create this company back in 1995, the fact that we are even in this position in the first place further validates Michael’s foresight and genius in investing in music publishing. As we noted in the official press release, Michael’s ATV catalogue, purchased in 1985 for a net acquisition cost of $41.5 million was the cornerstone in the 1995 formation of Sony/ATV and, as evidenced by the value of this transaction, is still considered one of the smartest investments in music history.

We are aware that some fans were hoping that the Estate would be the buyer of Sony’s share in Sony/ATV, rather than the reverse. That was our goal as well when we started on this path last year, but ultimately, Sony’s offer made more sense for the reasons outlined above. We are dedicated to protecting and growing Michael’s legacy, and maximizing the value of his Estate for the benefit of his children. This sale allows us to protect the assets most dear to Michael (his own songs and those he acquired and retained outside of Sony/ATV), close out his debts, and continue to grow his legacy for future generations.

 

[HIStoric]

His children doesn't even seem to care either. Paris is apparently bigger fan of David Bowie and any other artist other than her father. Prince doesn't seem to be interested in music AT ALL and Blanket is just too young or was too young when Michael died so that he can properly appreciate it. I guess it's better for those kids to have the money than to have assets they doesn't seem to care to much about.

Wooooooooow are you actually serious right now? Did you actually manage to twist this into attacking his own children?

Seriously, what gives you the right to speak on their behalf? You're basing such accusations on such little evidence, evidence that can barely even lead to such conclusions. I mean Prince barely even lets his thoughts known to the public and as for Blanket, his age is irrelevant when it comes to the appreciation of his father's work. Just because he was 7 when his father passed away does not mean he is incapable of understanding the importance of his father's legacy and appreciating it. Going by that logic, I am not able to appreciate most of Michael's work because I wasn't born until after HIStory came out.

Paris posting a few photos on Instagram paying tribute to David Bowie doesn't necessarily mean she likes him more than her own father (who also appears on there from time to time). Besides, why does it matter if Paris is a bigger fan of David Bowie than Michael? That doesn't mean she or her siblings don't appreciate their father's work because - and I can't believe I'm actually having to say this - they very obviously do.

 

[Soundmind]

No where do they say in their statement that they were forced. It is simply they believed it is wiser to sell. Very carefully drafted statement but still they could not lie because talking about being forced seems one big hell of a lie .

 

[innuendo141]

Paris is apparently bigger fan of David Bowie and any other artist other than her father. Prince doesn't seem to be interested in music AT ALL and Blanket is just too young or was too young when Michael died so that he can properly appreciate it. I guess it's better for those kids to have the money than to have assets they doesn't seem to care to much about.

Shame on you man, seriously. I'm annoyed and confused but your comment is despicable.

 

[HIStoric]

I didn't see the estate's statement to fans posted here?

It's posted here, just not on the front page. Ivy posted it on Page 2

 

[Bubs]

That article in the previous page stated:
"That 10-year-old loan impactied the current buy/sell situation in that its terms provided Sony with a discount of around $150m on the purchase price."

The estate's statement says:
"agreement which provides for one partner to buy out the share of the other at the highest possible price."

I wonder if that means that in 2006 terms said that if Sony buys MJ's share, they get 150 million discount, and if MJ/his estate buys Sony out, they would have to pay highest possible price?

 

[OnirMJ]

It did exist when he was alive, Michael himself signed the contract that allowed this in 2006 (look up a bit, we're just discussing it now).

I know now . When I was writing my post that information was not posted yet.

 

[OnirMJ]

That clause of the 2006 deal to buy mj shares expired in 2008. They are claiming this was part of the first deal in the 1990s.

Source please.

 

[OnirMJ]

Shame on you man, seriously. I'm annoyed and confused but your comment is despicable.

Shame on you man, seriously. I'm annoyed and confused often by some of your comments that are often despicable to me. Opinions.

 

[HIStory]

The Estate retains its stake in EMI Music Publishing, which was acquired in 2012 by a consortium comprising Sony, the Estate, Mubadala Development Co., Jynwel Capital Ltd., the Blackstone Group’s GSO Capital Partners LP and David Geffen. The price tag was $2.2b, or just under eight times EMP’s net publisher share (NPS), which was then in the $300m range. The Sony/Jackson Estate’s piece of EMP is about 40%, with Sony owning three-quarters of that total. Sony/ATV had an approximate valuation of $1.5b in 2015, and its stake in EMI Music Publishing was valued at $860m at the time of the acquisition. But the acquisition impacts only Sony/ATV proper, not ithe ownership of EMP.

So that means the Estate's share in the 2012 EMI purchase will remain theirs, it's not included in this deal.

 

[innuendo141]

Shame on you man, seriously. I'm annoyed and confused often by some of your comments that are often despicable to me. Opinions.

A tirade on children yeah? Whatever floats your boat. Have a great day Onir. You've outdone yourself.

 

[innuendo141]

So that means the Estate's share in the 2012 EMI purchase will remain theirs, it's not included in this deal.

Also, wasnt a lot of this to be reverted to Paul a few years ago? Did he not say that was a reason he didn't go after it at one point? I'd be fairly certain this was in the mid 2000's, if not early 2000's.

 

[Ms. BlueGangsta]

*looks at last few pages*.

 

[elusive moonwalker]

Let me guess they will give Katherine a huge big check to get her blessings and this is really what she and her whole family wanted from the very beginning. Sell the assets and give her her share so she can will it to her family.

Shes probably already filed a request for a bigger allowance like last time!

 

[maja]

Not that it has got anything to do with the topic discussed here.. but why shouldn't Paris be a 'greater' Fan of David Bowie or whoever??
Michael Jackson was a great superstar and he has many fans. But surely Paris is more than a fan of him. She is his daughter! Children don't necessarily worship their parents as we fans would do. They love them, which is far more important.

I can't believe that some people go to such lenghts to spread negativity. The kids' love for their father can't be measured in Instagram posts or tweets. It's personal and, frankly, none of our business.



And concerning the Sony deal, I don't think that Prince, Paris and Blanket at their young age understand all the legal stuff that is going on. Nor do they care, probably. And that's fine because they're young and they all have to find their own path. That is why Michael made sure there's an estate who's taking care of these things.
And I have to say I rather see him represented by the estate than by his family. But that's a different matter.

 

[elusive moonwalker]

Also, wasnt a lot of this to be reverted to Paul a few years ago? Did he not say that was a reason he didn't go after it at one point? I'd be fairly certain this was in the mid 2000's, if not early 2000's.

it was only in the USA where they revert.based on what year they were released/registared

 

[Bubs]

Shes probably already filed a request for a bigger allowance like last time!

06/30/2016 at 08:30 am in department M at 1725 Main Street, Santa Monica, CA 90401
Hearing On Petition(FEE PETITION; PETITION FOR FEESAND FAMILY ALLOWANCE PETITION)

03/14/2016 Order (INSTRUCTING AND AUTHORIZING EXECUTORS TO MAKE LOAN TO BENEFICIARY; )
Filed by Attorney for Plaintiff
03/14/2016 Declaration (OF JERYLL S. COHEN IN SUPPORT OF PETITION FOR ORDER INSTRUCTING AND AUTHORIZING EXECUTORS TO MAKE LOAN TO BENEFICIARY )
Filed by Attorney for Plaintiff
03/14/2016 Ex-Parte Application (FOR ORDER INSTRUCTING AND AUTHORIZING EXECUTORS TO MAKE LOAN TO BENEFICIARY; )
Filed by Attorney for Plaintiff

 

[HIStory]

Also, wasnt a lot of this to be reverted to Paul a few years ago? Did he not say that was a reason he didn't go after it at one point? I'd be fairly certain this was in the mid 2000's, if not early 2000's.

Yes, there were news about a law that reverts back the right to the original songwriters after a while. It's a gradual thing because when it will be reverted back depends on when a song was originally released. However, the Sony/ATV catalog is a LOT more now than the Beatles.

 

[elusive moonwalker]

?? thank you bubs i think!

Do we know if its kj or jr say for university

 

[Soundmind]

She might get a consultant fee also in the millions and most Probably TJ will see a significant increase in his salary. Please someone check whether the estate produced the "big family project " that prince talked about for months as his first direction experience but it turned out to be Omar's new video clip. Probably this is how the estate understands MJs instruction to finance the kids business projects.

 

[innuendo141]

It would be interesting to see if they plan on looking at another catalogue to purchase. Although I'm not sure what this practice is like in 2016 when the music industry is still pretty much in a crisis.