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

[Soundmind]

From their statement:
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.

The estate is aware of the age of PPB, soon enough they want houses, marry, set up companies etc, and their obligation is to provide those.
They have to have enough money to provide all that, and as mentioned above statement, "taking into account the debt of the company", which I believe means Sony/ATV is already heavily in debt because the catalogues purchased in recent years, so tying more money to it is not option that they consider beneficial for PPB for their future.

Unless the kids want to live the life of the sultan of Brunei I can't see how their spending would affect the estate. This is a very poor explanation for their decision. By the way no where in the part you quoted do they claim they were forced. These were factors or execuses they used to sell their decision. Not like anything we say will change anything. They will be more than willing to pay for prince next big project aka Omar next revolutionary music video and are already arranging to give Katherine a check she probably has never received in her life time so she can hand it over to randy and jermaine. So everything is sealed. All I hope that Branca won't betray mj the ultimate betrayal by giving the kids their inheritance earlier than mj instructed. They will spend it on their family and their "big family projects" in no time.

 

[#MJforever57]

nothing but excuses. I thought they needed 750 millions and IRS , it is now it could be a who has more control. Mark my word, they will settle with Robinson and safe duck since they liquidated mjs assets they would want to "protect" the cash by settling of course.

I hope that doesn't happen

 

[ivy]

That looks like a good deal then.

Math on this deal is quite interesting.

According to the available information they got $17 Million annually. In the last accounting they put $16.5 M of it to loan payment. In other words they put all the money they received from Sony/ATV to pay the debts on Sony/ATV. WSJ says $250 Million debt on Sony/ATV was outstanding. Assuming they would put all the money they get to debt payment, it would take them 14 years to pay the debt on Sony/ATV. That would also mean that Estate will remain in probate for that long.

I would classify it as debts paid + 30 years of profit.

Edited to add

Also I think the debt really limited them. According to the last accounting, as of end of 2013 they only had $25 Million in cash& equivalents. Two kids are 18. Starting 21 they are also entitled to income from the earnings. Plus the will says Estate should pay for kids education, house, marriage and business attempts (as long as they are good). They might have wanted to debt free and cash at hand for it.

Now the next important thing is IRS. If they can win or settle that for a reasonable amount, they could be debt free and substantial cash at hand.

 

[Soundmind]

By the way how much they will pay the IRS? Almost half the cash they got with their fees . So they will end up with a couple of hundred millions at best while they were in their way to pay all mjs loans in the next few years and keep his name tied to a multi billion dollar empire. With a single signature mj kids ceased to be the heirs of a multi billion empire and are now merely millionaires and god knows what the Jacksons, McLain and Branca have in mind regarding those millions.

 

[Autumn II]

Math on this deal is quite interesting.

According to the available information they got $17 Million annually. In the last accounting they put $16.5 M of it to loan payment. In other words they put all the money they received from Sony/ATV to pay the debts on Sony/ATV. WSJ says $250 Million debt on Sony/ATV was outstanding. Assuming they would put all the money they get to debt payment, it would take them 14 years to pay the debt on Sony/ATV. That would also mean that Estate will remain in probate for that long.

I would classify it as debts paid + 30 years of profit.

^^^ That does make sense. With that said, I've never been a fan of the estate. They are businessmen, first, and they really do profit from revenue generated from the estate. The more revenue the estate generates, the more they make, by percentage. The opposite would have been true had they tried to buy out Sony. Money going out, not coming in. True, they do communicate with fans at times, but I'm sure the motivation there is at least in part to give fans what they want/will BUY. One thing I've not seen factored in that I'm curious about is taxes, and whether or not this large buy-out will cost much more in taxes than a more gradual revenue generation would have done?

 

[jtabbott8]

Somethings not right.. I'm not a conspiracy theorist, but let us not forget that it was no secret that MJ was not only afraid of losing the catalogue, but even voiced that he was afraid he would be killed for it.. Why would he be afraid of that if Sony could come in and buy it at any moment? and why wouldn't they have bought it when MJ was going around boycotting Sony? (https://www.youtube.com/watch?v=k3OcHA0yaOA)

 

[ivy]

By the way how much they will pay the IRS?

you know they pay taxes on the $17 million too as well, right?

One thing I've not seen factored in that I'm curious about is taxes, and whether or not this large buy-out will cost much more in taxes than a more gradual revenue generation would have done?

It would have no effect, make no difference. I'm looking to 2016 tax brackets . for corporations over $18 Million is 35% income tax. For individuals over $500,000 is 39.6% tax rate. As MJ's annual income would definitely be over $500,000 or $18 Million, the tax rate wouldn't change.

--
BTW I'm still waiting for any source for claiming Executors will get paid from Sony/ATV sale. Especially given there is information saying that money generated by Sony/ATV isn't included in their compensation

 

[Bubs]

As I said before , in my understanding they classified the debt on MIJAC, debt on the houses and creditor claims etc as personal debt. They didn't see Sony/ATV as a personal debt.

Majority of the money they received from Sony went to paying the debt on Sony/ATV.

I'm doing my best trying to explain what I mean. I their statement they wrote:
"after taking into account the debt of the company"
I took it that they mean debt of Sony/ATV (company), not MJ personally. I suppose that dept is from the catalogues purchased in 2007 and EMI, so all/some(?) profits went to pay those catalogues, maybe the estate didn't see it beneficial to purchase a company(Sony/ATV) that was heavily in debt because then they would have spent years paying back MJ loan against his share, then more years not getting money out of it as profits went to pay acquired catalogues.

 

[MJNTJ]

750 Million? :bugeyed getting worse ...:no:

 

[Snow White luvs Peter Pan]

It's still hard to process, probably I'm still in shock but as long as this deal is beneficial to Michael, it should be the important thing. For what I could undertand is that this sell means Michael is debt free with Sony.

 

[innuendo141]

I just tried making a poll to see how divided people are on this but it appears I am a moron and can't seem to figure it out.

Would be interesting to see how the numbers go either in favour or against whats gone down. I dont event know what I think, I keep going back and forth

 

[Snow White luvs Peter Pan]

Does it mean the Estate just owns Michael's music, videos, etc?

 

[ivy]

I'm doing my best trying to explain what I mean. I their statement they wrote:
"after taking into account the debt of the company"
I took it that they mean debt of Sony/ATV (company), not MJ personally. I suppose that dept is from the catalogues purchased in 2007 and EMI, so all/some(?) profits went to pay those catalogues, maybe the estate didn't see it beneficial to purchase a company(Sony/ATV) that was heavily in debt because then they would have spent years paying back MJ loan against his share, then more years not getting money out of it as profits went to pay acquired catalogues.

Oh I got it. You mean this

It shows there is a hundreds of millions of loan by Sony/ATV as well. It's probably the money they borrowed to buy all the catalogs. You are right.

I don't remember the numbers but the catalog as whole was bringing $600 Million in gross. After all the expenses and payments to the artists, they had $100 Million. They used it for debt payment on the company loans and the guaranteed income to Estate and Sony. Something about $23 to $17 Million (and I think those are the gross and net numbers).

definitely a complex asset to deal with.

 

[HIStory]

Does it mean the Estate just owns Michael's music, videos, etc?

They own everything MJ yes. Plus their share of the EMI catalog is still theirs. Which is, based on my calculations, still about $220 million worth in music publishing (apart from MiJac).

 

[elusive moonwalker]

Mijac also includes other artists aswell

 

[Bubs]

Oh I got it. You mean this

It shows there is a hundred million loan by Sony/ATV as well. It's probably the money they borrowed to buy all the catalogs. You are right.

I don't remember the numbers but the catalog as whole was bringing $600 Million in gross. After all the expenses and payments to the artists, they had $100 Million. They used it for debt payment on the company loans and the guaranteed income to Estate and Sony. Something about $23 to $17 Million (and I think those are the gross and net numbers).

definitely a complex asset to deal with.

Thanks Ivy. I thought I was losing my head trying to explain

So the estate still have to pay EMI catalogue share (about 10%) or how its been paid?

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.

 

[ivy]

So the estate still have to pay EMI catalogue share (about 10%) or how its been paid?.

Hard to say. I imagine it would be similar to how they paid sony/atv debt. From the revenues of EMI.

 

[etoile 37]

Why couldn't the Estate just buy Sony's share and then resell part of it to third-parties to pay whatever they had to borrow? That way they could keep MJ's 50% share or even more if they can afford.

 

[Autumn II]

Why couldn't the Estate just buy Sony's share and then resell part of it to third-parties to pay whatever they had to borrow? That way they could keep MJ's 50% share or even more if they can afford.

I believe they had a variety of options. This is the one they chose. For whatever reasons they chose it.

 

[SmoothMJ]

Why couldn't the Estate just buy Sony's share and then resell part of it to third-parties to pay whatever they had to borrow? That way they could keep MJ's 50% share or even more if they can afford.

So, "borrow" another $750 million, to go on top of the hundreds of millions already owed? What interest rate were you thinking of, for this extra $750 million? If not too high, then I reckon The Estate could have it paid off in about 100 years or so.

What's the point of more debt on top of debt, for something you just want to 'own' for bragging rights? It makes no sense to me.

 

[Bubs]

I still don't know what to think of this and absolutely hate seeing headlines "Sony buys Michael Jackson's music catalogue"

Rational me thinks this is ok, but irrational me silently screams inside:-(

 

[etoile 37]

So, "borrow" another $750 million, to go on top of the hundreds of millions already owed?

They said they had found investors but decided to sell instead. If they had investors then they could have just bought Sony's share and sold it right away to those investors. Meaning they would have kept MJ's share and would have had no additional debt.

 

[Snow White 1937]

I believe they had a variety of options. This is the one they chose. For whatever reasons they chose it.

Really? Name three feasible ones, please.

 

[ILoveHIStory]

WE WILL NEVER FORGET THIS!

 

[SmoothMJ]

They said they had found investors but decided to sell instead. If they had investors then they could have just bought Sony's share and sold it right away to those investors. Meaning they would have kept MJ's share and would have had no additional debt.

Wouldn't the "investors" own it then?

 

[OnirMJ]

yes. a good investment. but no need to stop that. in 1995 michael made a false decision to sell 50%. and he have known that. maybe his biggest mistake ever, after using drugs.

Prescription medications. So you think it's better to live in constant pain? When you have a headache do you take a pill or do you suffer?

 

[etoile 37]

Wouldn't the "investors" own it then?

Yes, they would own Sony's share and the Estate would own Michael's share.

 

[OnirMJ]

i've understand that allready. do you know if such deals are normal? normal back in 1995?
i dont get it why michael signed such an deal. maybe that he thought he can later buy it back? but then he would have known that sony always have much more money than himself.
and i want to know why now? why not 10 or 15 years ago, when sony would have to pay less money for this?

It is a mistake in the new statement. That clause was added to the contract in 2006. Search this thread for that article. It explains everything.

 

[OnirMJ]

Blame mj for what exactly? his debts are no longer an issue. The executors are wealthier than ever even before they struck this deal. Stop acting like they are miserable human beings for having to deal with the shit mj left them. He left them an empire by any means and they are taking advantage of every possible opportunity to profit. The executors are not even claiming they were forced to do this, this is the interpretation that some of their hardcore fans want to shove our throat. They are saying while there were others willing to join them in acquiring Sonys share they chose to sell instead of buying. In other words, stop acting like they were forced to fork 750 million which is not true at all. They admitted that they did not suffer from shortage of investirs willing to get their hands on sony's share rather they believed that getting their hands on 750 millions seemed a better business decision to them. Of course if you calculate their percentage of this deal it makes a perfect sense for them to sell for no other deal the estate will ever do bring them the profits they get now. Do us a favor and stop repeating this is mj mistake, and it is nothing but insult to say this sale is in the best interest of his kids.

Well, it is MJ's fault. He signed that deal in 2006.

 

[Justthefacts]

So it would have been better for Michael to not sign the deal in 06, it would have been better if he would have filed for bankruptcy and probably would have sold it for less money?