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

[HIStory]

i will not be buying any further future releases from michael jacksons estate. im done

And how do you think that will punish Sony, Branca or anyone other than MJ?

 

[elusive moonwalker]

Does this deal mean that MJ's $300 million business debt related to the ATV catalog is wiped out since Sony now has 100% ownership, or must the Estate still pay this debt?

It was mjs personal debt not sonyatv so the estate have paid it off with money from the sale.

At the end of the day is it feasable for the estate to add another 750 mill of debt (if they could even get their hands on such money) to the estate. How ever much it hurts and by heck it does in a business sense its not workable.

They didnt need to kill him just activate the clause in the deal. next.

At the end of the day i have more problems buying estate products knowing they keep handing over money hand over fist to kj .the latest filing is yet another p*** take

 

[Autumn II]

I think there is more to this story, actually. I have three primary questions.

1. If there was fifty/fifty ownership (there was) what were additional contractual clauses that could have prevented this sale? Clearly, the sale was negotiated in some respects (both sides give something in an MOA), so it appears there was wiggle-room for the estate.

2. If Sony always had this take-over, buy-out, potential, why NOW?

And 3. (I'll go ahead and respond to this one, speculatively) Who benefits from this sale? The heirs benefit in the short-term with a flood of money. (but what about taxes on this non-pro-rated flood of income? Will be HUGE.) Yet, this catalog would only grow in value, and as an investment, was pretty much ideal long-term with no additional effort on the part of anyone (unlike new releases of MJ products, which would always be speculative). The executors will make an enormous income from this. ENORMOUS, in that they get a percentage of the estate's revenue. So an additional question would be, is this good for the heirs in the long-term, given the investment return increases that could have been expected over their lifetimes? I think it is not.

 

[Justthefacts]

This clause was activated last year not a few days ago.

 

[Koopa Troopa]

It was mjs personal debt not sonyatv so the estate have paid it off with money from the sale.

At the end of the day is it feasable for the estate to add another 750 mill of debt (if they could even get their hands on such money) to the estate. How ever much it hurts and by heck it does in a business sense its not workable.

They didnt need to kill him just activate the clause in the deal. next.

At the end of the day i have more problems buying estate products knowing they keep handing over money hand over fist to kj .the latest filing is yet another p*** take

But it was reported that all of MJ's personal debt was paid in full by the end of 2012. Only business debt remained and that was related to the ATV catalog. I was wondering if Sony's purchase meant that they took over the business debt that MJ accrued. I know that when Lisa Marie Presley sold the Elvis estate, the company that bought it paid off the debts too. I was wondering if this had a similar arrangement. Does anybody know?

 

[Autumn II]

This clause was activated last year not a few days ago.

I think there are contractual facts we just don't know. (the clause was activated last year, but acted upon only recently with the signing of the MOA.)

 

[ivy]

What i dont understand it why such a clause was agreed apon in 95. Is it normal because it sounds illogical to make such an agreement where one side can just buy out the other regardless.

It's an exit clause. Quite common.

By the way the same poster who is talking now about the estate being forced to do so by that clause, went on the offensive when the news first broke months ago to explain how it was not really either party being forced to sell or buy.

you don't need to be passive aggressive in your posting. If it's not obvious, everyone here posts based on the available information at the time. By time we can get more information and if we are reasonable human being with functioning brains we will evaluate the new information and make changes to our thinking as needed.

Initially the media reports sounded like a ROFO, ROFR (right of first offer, right of first refusal) in which one party gives the other party to buy their share before they sell it to a third party.

However the last statement wording made it sound like it's a shotgun clause which is quite different than ROFO/ROFR. In a shotgun clause 1st party makes an offer for the 2nd party's share. Second party can only buy the share of the 1st party or have to go with the offer.

Here read it here: https://en.wikipedia.org/wiki/Shotgun_clause

 

[HIStory]

But it was reported that all of MJ's personal debt was paid in full by the end of 2012. Only business debt remained and that was related to the ATV catalog. I was wondering if Sony's purchase meant that they took over the business debt that MJ accrued. I know that when Lisa Marie Presley sold the Elvis estate, the company that bought it paid off the debts too. I was wondering if this had a similar arrangement. Does anybody know?

I think yes, all debts to Sony are being paid out with this:

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.

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

 

[HIStory]

And 3. (I'll go ahead and respond to this one, speculatively) Who benefits from this sale? The heirs benefit in the short-term with a flood of money. (but what about taxes on this non-pro-rated flood of income? Will be HUGE.) Yet, this catalog would only grow in value, and as an investment, was pretty much ideal long-term with no additional effort on the part of anyone (unlike new releases of MJ products, which would always be speculative). The executors will make an enormous income from this. ENORMOUS, in that they get a percentage of the estate's revenue. So an additional question would be, is this good for the heirs in the long-term, given the investment return increases that could have been expected over their lifetimes? I think it is not.

4. What could the Estate have done to prevent the buy-out if the shotgun clause really exists?

5. Would anything they could have done be financially reasonable and responsible for the Estate?

6. Would it be healthy for an Estate to put all their financial resources into one business like that and be dependent on one business alone or is having a diverse portfolio of investments better?

7. Are there other investments that could secure as good or better profits for the Estate on the long term? Is being out of this the end of possible good investments for the Estate and MJ's heirs or not?

 

[Galactus123]

The important thing is that they still own the rights for Michael's music, videos and concerts.

 

[elusive moonwalker]

But it was reported that all of MJ's personal debt was paid in full by the end of 2012. Only business debt remained and that was related to the ATV catalog. I was wondering if Sony's purchase meant that they took over the business debt that MJ accrued. I know that when Lisa Marie Presley sold the Elvis estate, the company that bought it paid off the debts too. I was wondering if this had a similar arrangement. Does anybody know?

I think ivy stated earlier that the reports at the time were false. Theres also different debts. Mjs personal were he used atv as calatoral and sony/atvs own debt which is mentioned in one of the press releases

 

[barbee0715]

How to you feel about this Barbee? Does it hurt that MJ knew they were trying to kill him?

How do I feel about the sale? I feel horrible. This is a sentimental loss. An emotional loss. No artists appreciated the history of music like Michael did and I was always proud that he owned that catalog. It couldn't have been in better hands.
I don't believe Sony was trying to kill him for the catalog tho-obviously they weren't since they could have exercised this option any time and I am quite frankly surprised Sony didn't exercise this buy out clause back in 2006 when Michael's back was against the wall. Rather a human thing to do for a heartless business.

I also don't blame Michael for that debt either. That's the multitudes of people he was taking care of, as well as the money hungry extortionists and 'hangers on'.

Are you asking me if I think Michael was killed? Yes, by Chandler-and Sneddon and the Arvizos-and the press. Murray just finished the job.

 

[ivy]

I think there is more to this story, actually. I have three primary questions.

1. If there was fifty/fifty ownership (there was) what were additional contractual clauses that could have prevented this sale? Clearly, the sale was negotiated in some respects (both sides give something in an MOA), so it appears there was wiggle-room for the estate.

2. If Sony always had this take-over, buy-out, potential, why NOW?

There are two possible explanations to these. Either there was other clauses that prevented them from exercising this one until now. Or they had no interest in Michael's share until now.

And 3. (I'll go ahead and respond to this one, speculatively) Who benefits from this sale? The heirs benefit in the short-term with a flood of money. (but what about taxes on this non-pro-rated flood of income? Will be HUGE.) Yet, this catalog would only grow in value, and as an investment, was pretty much ideal long-term with no additional effort on the part of anyone (unlike new releases of MJ products, which would always be speculative). The executors will make an enormous income from this. ENORMOUS, in that they get a percentage of the estate's revenue. So an additional question would be, is this good for the heirs in the long-term, given the investment return increases that could have been expected over their lifetimes? I think it is not.

There is a lot of assumption involved here. First starting with Executors will make enormous income. We don't know if that's true.

This is the initial executor compensation details : "The men agreed in February 2010 to accept 10 percent of the gross entertainment-related earnings of the estate, minus money generated by Jackson’s 50 percent interest in the Sony-ATV music catalog and earnings from “This Is It,” a film compiled from the singer’s final rehearsals."

According to this they don't get money from Sony/ATV. So I'm curious to learn what makes anyone say Executors will be paid for this sale.

As for the asset wise. It's an asset valued at $1.5 Billion to $2 Billion for the whole Sony/ATV and $750 Million for Estate's share according to this sale. However Estate only got $17 Million annually in guaranteed income and most of it went to debt payment. So this sale means they got 43 years worth of income from the catalog. While the catalog value will grow, I'm not sure that would mean the revenues will grow especially given the status of the music industry. Furthermore buying Sony's share would mean additional debt to repay and that would probably lower the income received as well. So you tell me, is it better in the long term?

 

[SmoothMJ]

MJ was backed into a corner when he made this deal so, as they don't have $750 in small change going spare, The Estate had little choice but to do a deal.

Considering the clause, and the state of the music industry, I think they did well to get this amount of money.

As others have said, the ownership of MJ's songs is the most important thing.

 

[Autumn II]

Thanks for responding.

There are two possible explanations to these. Either there was other clauses that prevented them from exercising this one until now. Or they had no interest in Michael's share until now.

Right. We don't really know the clauses that applied here.

There is a lot of assumption involved here. First starting with Executors will make enormous income. We don't know if that's true.

This is the initial executor compensation details : "The men agreed in February 2010 to accept 10 percent of the gross entertainment-related earnings of the estate, minus money generated by Jackson’s 50 percent interest in the Sony-ATV music catalog and earnings from “This Is It,” a film compiled from the singer’s final rehearsals."

True, we don't really know. There are a lot of factors -- the existing debt, and especially, taxes in receiving a lump-sum instead of a (necessarily) pro-rated payout as income has been generated yearly.

According to this they don't get money from Sony/ATV. So I'm curious to learn what makes anyone say Executors will be paid for this sale.

The executors gain income from any revenue generated by the estate, in a percentage. That is their payment for their work in managing the estate, and it is to their advantage to generate the estate's revenue. So if the sale generates revenue for the estate in terms of the sale amount, the executors will get a percentage of that amount. That's not revenue after bills/debts, but my understanding it's REVENUE, i.e. money coming in.

As for the asset wise. It's an asset valued at $1.5 Billion to $2 Billion for the whole Sony/ATV and $750 Million for Estate's share according to this sale. However Estate only got $17 Million annually in guaranteed income and most of it went to debt payment. So this sale means they got 43 years worth of income from the catalog. While the catalog value will grow, I'm not sure that would mean the revenues will grow especially given the status of the music industry. Furthermore buying Sony's share would mean additional debt to repay and that would probably lower the income received as well. So you tell me, is it better in the long term?

Good points, and especially about the rapidly changing music industry. Not sure if it's better in the long term. Only time will tell.

 

[Soundmind]

I know very well what a shotgun clause is because at the time I was the one who first wondered whether this is what they were talking about, a fear which of course you dismissed at the time. At this point the estate has lost all its credibility with the fans, not that they really care considering they are making tons of money selling everything mj fought nail and tooth to keep.

 

[SmoothMJ]

I know very well what a shotgun clause is because at the time I was the one who first wondered whether this is what they were talking about, a fear which of course you dismissed at the time. At this point the estate has lost all its credibility with the fans, not that they really care considering they are making tons of money selling everything mj fought nail and tooth to keep.

The Estate have only "lost all its credibility" with fans that don't understand the detail.

If you must blame someone, and it seems you must, then MJ, unfortunately, is the only one you can really blame for this outcome.

Me? I blame nobody. MJ did what he had to do at the time, and The Estate did well getting this large amount of money for a 50% share in a dying industry.

 

[mjchris]

o m g. now they have won. murdered him, and now have what they want. everyone who gets now money from this, you have blood on your hands ... ROT IN HELL!!!
why selling the 50% ? why now? it was said there was no debt, in 2012?

 

[Galactus123]

o m g. now they have won. murdered him, and now have what they want. everyone who gets now money from this, you have blood on your hands ... ROT IN HELL!!!
why selling the 50% ? why now? it was said there was no debt, in 2012?

Estate couldn't have said no if I understand right.

 

[ivy]

I know very well what a shotgun clause is because at the time I was the one who first wondered whether this is what they were talking about, a fear which of course you dismissed at the time.

Good for you. A lot of people didn't know what it was. Even Estate according to WSJ. At that time a lot of people based their opinions on the leaked emails which had Sony talking about potentially selling their share.

"The Wall Street Journal reported in October that Sony and the estate were in talks on the future ownership of the venture, after Sony triggered a clause in their partnership agreement that allowed either party to buy out the other. That move came as a surprise to the estate, which had guessed that Sony wanted to sell its share, and lined up two partners to help it finance a buyout, according to a person familiar with the matter. A potential sale had been mentioned in emails among top Sony executives in November of 2014, which were among those posted online by hackers.But in recent months Sony made it clear that it actually wanted to buy the other half of the music publisher, offering the estate a better deal than it had expected to receive, this person said. "

 

[maja]

o m g. now they have won. murdered him, and now have what they want. everyone who gets now money from this, you have blood on your hands ... ROT IN HELL!!!
why selling the 50% ? why now? it was said there was no debt, in 2012?

Then we'll all rot in hell, since we will also profit from this deal through new releases etc. :smilerolleyes:
I suggest you read the news articles first before you start making wild accusations.

 

[Rhilo]

I feel gutted.

Michael clung to that catalog for dear life. Even when he was cash strapped, selling it was not an option.

Good business decision or not, I feel the Estate let down Michael's wishes.

I remember sometime back they said they would hang on to the catalog as an asset for the beneficiaries.

What a let down.

 

[Koopa Troopa]

The Estate have only "lost all its credibility" with fans that don't understand the detail.

If you must blame someone, and it seems you must, then MJ, unfortunately, is the only one you can really blame for this outcome.

Me? I blame nobody. MJ did what he had to do at the time, and The Estate did well getting this large amount of money for a 50% share in a dying industry.

I blame Chandler and Sneddon.

 

[SmoothMJ]

Am I the only one who gets tired of reading posts from people who haven't bothered to look at the detail beforehand? It's like some people read the thread title, and that's it!

It would only take a few minutes to understand what is actually going on before adding another pointless post. Is that too much to ask?

Rant over.

 

[ivy]

it was said there was no debt, in 2012?

they said his personal debts were paid. The debt on Sony/ATV was and is still being paid.

 

[mjchris]

Then we'll all rot in hell, since we will also profit from this deal through new releases etc. :smilerolleyes:
I suggest you read the news articles first before you start making wild accusations.

we??? :busted: ... no.. i make no money when i buy something? :smilerolleyes:

 

[mjchris]

Estate couldn't have said no if I understand right.

thats a question. does someone know?

they said his personal debts were paid. The debt on Sony/ATV was and is still being paid.

how much is that?

 

[mjchris]

I feel gutted.

Michael clung to that catalog for dear life. Even when he was cash strapped, selling it was not an option.

Good business decision or not, I feel the Estate let down Michael's wishes.

I remember sometime back they said they would hang on to the catalog as an asset for the beneficiaries.

What a let down.

this catalog was like an life insurance.

 

[Galactus123]

thats a question. does someone know?

Read this:
http://www.mjjcommunity.com/forum/t...ublish/page2?p=4140777&viewfull=1#post4140777

 

[Koopa Troopa]

I feel gutted.

Michael clung to that catalog for dear life. Even when he was cash strapped, selling it was not an option.

Good business decision or not, I feel the Estate let down Michael's wishes.

I remember sometime back they said they would hang on to the catalog as an asset for the beneficiaries.

What a let down.

Well, MJ agreed to a clause that gave Sony an option to buy half of MJ's ATV ownership. So like with Neverland, maybe MJ himself knew that these sales were inevitable. Either way, it's been a great investment, earning MJ's heirs hundreds of millions of dollars. The Estate's two deals with Sony in 2010 and now has earned them $1 billion (250+750).