Sony proceeds with plan to sell music publishing unit: WSJ

[SarahJ]

While it's certainly nerve wracking not being in the know on all this, I will say it's going to be a fascinating next several months watching all of it unfold. Crossing my fingers and toes for the Estate.

 

[Tygger]

Respect77, both Bandier and Lynton, as well as certain reports have stated Sony and the Estate have the option to buy each others’ shares which are 50%; not a portion of shares.

Personally I didn't say Estate buy 1% and leave the other 49% to Sony to sell.

Technically, you did but, I understand if you would prefer if the statement technically not mean how it technically sounds:

The only thing I'm curious is if Estate can arrange for a consortium that they contribute and in turn get not all but some of Sony's share - even only 1%.

The Estate will not receive controlling interest unless they purchase Sony’s full 50%. The article you posted states the same. A portion would mean the investment relationship would continue and there would be no need to trigger an exit clause. That is what happened when Michael attempted to cure his debts after the 2005 trial and gave Sony the option to buy 50% of his share. Sony never exercised that option even after Michael passed and after being courted by investors to purchase that share. If only a portion was available, there would be no need to trigger the exit clause which equates to the dissolution on an investment relationship.

By the way, the article you posted is not much different from Friedman’s article. Both seemed to have trolled discussion boards (maybe even fan forums) for speculative scenarios. The author of the HitsDailyDouble article at least admits to listing speculative scenarios. Unfortunately, the same author does not admit that the Sony leaked emails prove neither Sony nor the Estate were blindsided by these recent events as both parties discussed the possibility late 2013 via email. The author also does not admit that the debt on the catalog will make it difficult for Branca to gain investors. The author does agree with me that Sony will most likely continue administration of the catalog which was also discussed in Sony’s leaked emails.

 

[krikzil]

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.

If the bolded above pans out, I'll be interested to see who Branca turns to and what percentage of the consortium the Estate would have after it's all said and done. I was rather pleased when they ended up with 10% of EMI.

 

[ivy]

Technically, you did but

looks like we are having a confusion here. you wrote "the buying partner can purchase the other partner's share; not a portion. That is the full 50% ". I never suggested Estate can purchase a portion. As you kindly posted I suggested "if Estate can arrange for a consortium that they contribute and in turn get not all but some of Sony's share - even only 1%." Perhaps I wasn't being clear enough.

We both agree that Estate doesn't have the money to get sony's 50%, however technically it is possible to arrange for a consortium- aka other investors-, raise enough funds from multiple investors, get Sony's 50% and then investors divide it (sony's 50%) among themselves. In other words think like this Estate puts in $100 M and finds two investors to each put in $450 million. They raise 1 Billion and buy sony's 50%. Then they divide that 50% according to their investment level - in which the end ownership be at 55% Estate, 22.5% investor 1, 22.5% investor 2. I hope it's more clear now.

The Estate will not receive controlling interest unless they purchase Sony’s full 50%.

I didn't talk about controlling interest. I said they could become the majority owner.

The author does agree with me that Sony will most likely continue administration of the catalog which was also discussed in Sony’s leaked emails.

Sony? I think the article is saying Bandier will most likely to continue to run the catalog regardless who the owner is. Personally I don't equal Bandier to Sony .

 

[Tygger]

I hope it's more clear now.

The clarification is appreciated. Do you believe investors would find such a consortium attractive with the debt that is carried on the Estate's half?

I didn't talk about controlling interest. I said they could become the majority owner.

Care to explain the difference in this scenario?

Sony? I think the article is saying Bandier will most likely to continue to run the catalog regardless who the owner is. Personally I don't equal Bandier to Sony .

Tis fine if that is your view however; Bandier is employed by Sony as CEO of Sony/ATV. He is not an independent contractor. While it may read as my view, it is fact as per the Sony leaked emails that Sony would prefer a scenario where they continue to administer the catalog.

 

[ivy]

Care to explain the difference in this scenario?

correct me if I'm wrong but right now doesn't Sony have more voting power even though they and Estate have the equal shares? And we learned from Neverland example more % doesn't always equal to controlling power. That's all.

 

[Tygger]

correct me if I'm wrong but right now doesn't Sony have more voting power even though they and Estate have the equal shares? And we learned from Neverland example more % doesn't always equal to controlling power. That's all.

Colony/Estate is a partnership for NL as is Sony/Estate for the catalog. With NL, the Estate must respond to each and every sale offer (ROFR) so Colony does not have more power in the sale than the Estate does. The Estate had to reject ROFO for the sale to continue to third parties.

I have not heard Sony has more voting power and ROFO/ROFR plays here as well.

With NL and Sony/ATV; they are equal partners. One cannot perform the sale action without the other's consent.

 

[ivy]

^^
Let me just say that I disagree about "equal partners" and I'll leave it at that.

 

[Tygger]

Ivy, no worries.

I hope that the roles and responsibilities of these partners is not being confused with the investment relationship of said partners.

ROFO/ROFR with both NL and Sony/ATV ensure both partners are equally agreeable to any actions that will result in the dissolution of the partnership such as a sale of the asset each partner is equally invested in.

 

[HIStory]

As Sony/ATV Mulls Over Sale, Questions Arise Over Martin Bandier's Succession

ARTICLESBUSINESSMAGA ZINE FEATURE
By Ed Christman | October 15, 2015 10:00 AM EDT

Despite record earnings, the publishing giant, run by Martin Bandier and co-owned by the Michael Jackson estate, could be changing hands. What happens next?

When Sony Entertainment CEO Michael Lynton announced on Oct. 8 the company had initiated a buy/sell process for Sony/ATV Music Publishing -- in which one of Sony/ATV’s two joint owners, Sony Corp. and the Michael Jackson estate, is obligated to buy out the other or open up the bidding to additional parties -- all eyes turned to veteran chairman/CEO Martin Bandier. Would the 74-year-old head of the country’s top music publisher survive a changing of the ownership guard?

While both Lynton and Bandier sent reassuring memos to their staffs -- with Bandier’s boasting “our best years are still ahead of us” -- the buy/sell takes place against a backdrop that includes a new contract negotiation for Bandier (sources say his deal is up at the end of March 2016 and he’s pushing for an extension) and Lynton’s weariness with what insiders describe as a prima-donna attitude displayed by Sony Music executives in general and Bandier in particular. (Bandier declined comment for this article.)

Is Sony Really Trying to Sell Its Publishing Giant? Behind the Scenes of the Sony/ATV Deal

In fact, sources say one reason Sony would want to sell its lucrative publishing business, which has an estimated value of $2 billion (its songwriters include Taylor Swift, Lady Gaga, Ed Sheeran, Lennon & McCartney and Leiber & Stoller) and has ranked as Billboard’s top publisher for more than three years, is because there is no succession plan in place for Bandier, who has spent his 40-year career in publishing.

Prior to taking the top job at Sony/ATV in 2007, Bandier spent 18 years at the helm of EMI Music Publishing and, in 2012, helped engineer the acquisition of his former employer. (Sony’s share of EMI is not a part of the buy/sell.)

Bandier has mentored a generation of top publishing executives during his decades in the business, and his top proteges, Jody Gerson and Jon Platt, are now running two of his competitors -- respectively, Universal Music Publishing Group (with revenue of about $1 billion) and Warner/Chappell Music (revenue of about $500 million). This, says an insider, leaves no obvious successor at Sony/ATV and reminds Sony upper management of the sting of Gerson’s departure in 2014 -- an exit many viewed as a failing on Bandier’s part.

Martin Bandier Writes Letter to Songwriters Warning of Justice Dept. Changes

Insiders point to several possible heirs apparent. Guy Moot, who serves as Sony/ATV’s president of U.K. and European creative, is said to be Bandier’s favorite. Other front-runners include Sony/ATV U.S. co-presidents Rick Krim and Danny Strick, CFO Joe Puzio, executive vp business and legal affairs Peter Brodsky and executive vp advertising, film and TV Brian Monaco. Another contender is John Branca, a trustee of the Jackson estate with John McClain. “Branca really wants to take this over,” says a source. While Branca’s relationship with Bandier had been close, a source says it has become strained in recent months due to Bandier quashing the estate’s voice in the Sony/ATV dealings. (Reps for Sony Corp. of America, Sony/ATV and the Jackson estate declined comment.)

Although it’s no secret within Sony that Lynton is not a fan of Bandier, sources expect the latter’s contract to be at least partially extended for the sake of continuity. “If you are launching this process, there are already enough moving parts,” says one insider.

“Marty eventually pushes away, or out, anybody he perceives as a threat to his leadership,” says a former employee, noting that with the veteran publisher’s options being limited (he’s not likely to take over UMPG or Warner/Chappell), his bargaining power is only so strong. Another insider adds, “There is no succession plan, and that’s by Marty’s design.”

This article was first published in the Oct. 24 issue of Billboard.

http://www.billboard.com/articles/business/6730107/sony-atv-martin-bandier-succession

BRANCA SETS THE BIBLE STRAIGHT

Mega-Attorney Disputes Story About Sony/ATV's Fate


The Bible has messed up again. In a story posted this morning about the possible sale of Sony/ATV (triggered by Sony’s activation of a buy/sell provision), Ed Christman described John Branca, mega-attorney and executor of the Michael Jackson Estate, as a “contender” to succeed Marty Bandier as Chairman/CEO of the world’s biggest publishing company.


To support this claim, the reporter quoted an unnamed source as stating, “Branca really wants to take this over.” The source is then paraphrased as saying that Branca’s relationship with Bandier had been close but has become strained in recent months due to Bandier quashing the estate’s voice in the Sony/ATV dealings.


Our source is somewhat more reliable, and we can name him: Branca himself. “I did not talk to them,” he wrote in an email, “but Marty has been my dear friend for 30 years, and I completely support him. The story says we want to take the company over—true—but I do not want Marty's job.”


Christman notes that “Reps for Sony Corp. of America, Sony/ATV and the Jackson estate declined comment”—thus, the veracity of the story hangs on one ill-informed anonymous source as well as “a former employee.” Wonder who those are?

http://hitsdailydouble.com/news&id=298086

 

[Bubs]

Our source is somewhat more reliable, and we can name him: Branca himself. “I did not talk to them,” he wrote in an email, “but Marty has been my dear friend for 30 years, and I completely support him. The story says we want to take the company over—true—but I do not want Marty's job.”

Awesome and exiting:clapping:

MJJ/ATV music publishing sounds good.

 

[Soundmind]

http://www.billboard.com/articles/business/6730107/sony-atv-martin-bandier-succession



http://hitsdailydouble.com/news&id=298086

Amazing. Go Branca :bow:

 

[ivy]

BMG not interested in buying Sony/ATV stake

by Tom Pakinkis

All eyes are on the future of Sony/ATV after parent Sony Corp began a buy-sell process last week with the publisher's co-owners, the Michael Jackson estate. But one firm has already ruled itself out as a potential buyer for any part of the company should the opportunity arise.

Speaking to the Financial Times, BMG boss Hartwig Masuch said without question that he would not be tempted to acquire, saying that "the risks associated with integrating a company of that size outweigh whatever the potential benefits are."

The potential 100% acquisition of Sony/ATV by either Sony or the Michael Jackson estate was confirmed in a memo to staff by Marty Bandier earlier this week.

BMG has made a number of significant acquisitions in recent months, with Infectious Records being the most notable buy in the UK last September.

 

[krikzil]

Our source is somewhat more reliable, and we can name him: Branca himself. “I did not talk to them,” he wrote in an email, “but Marty has been my dear friend for 30 years, and I completely support him. The story says we want to take the company over—true—but I do not want Marty's job.”

From the horse's mouth. Go Branca!

Awesome and exiting:clapping:

MJJ/ATV music publishing sounds good.

It does indeed.

 

[Tygger]

Our source is somewhat more reliable, and we can name him: Branca himself. “I did not talk to them,” he wrote in an email, “but Marty has been my dear friend for 30 years, and I completely support him. The story says we want to take the company over—true—but I do not want Marty's job.”

The Estate did not respond to the UK PCC complaint and they did not respond to the reporter who questioned them about the £134m claim against Michael yet, Branca responded to the negative comments attributed to him regarding Bandier the same day the article was released. The Estate is always quick to respond in an effort to defend themselves.

Interesting that Branca would state the Estate desires control of Sony/ATV. The questions are: how will they financially position themselves to be able to do so and what will be their response if they are not successful?

I truly hope the Estate will do whatever necessary to maintain this asset for the beneficiaries.

 

[marc_vivien]

Sony/ATV Music Publishing has made a killing from famous songs like the Beatles' "Yesterday," but what tomorrow brings is far from certain for the company that controls some of the world's biggest hits.

The music publisher manages 3 million copyrights and a roster of songwriters that includes the likes of Taylor Swift, Lady Gaga and Ed Sheeran. Since 1995 it has operated as a joint venture, split evenly between Tokyo-based tech giant Sony Corp. and the estate of Michael Jackson.

Ownership of the world's largest music publisher is likely to change now that Sony has begun a process to potentially sell its half of the enterprise, which as a whole is said to be worth close to $2 billion. Sony's bankers are trying to determine the joint venture's current valuation, and music executives and financiers have held meetings in the last week to discuss the catalog's future.

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The Jackson estate appears to want to use this moment as an opportunity to find a new strategic partner, according to a person familiar with the talks who was not authorized to speak publicly. Potential candidates include rival music companies like Warner Music Group, as well as private equity firms such as Apollo Global Management, the person said.

A transaction could generate a big cash pile for Sony, which has struggled lately in other areas of its electronics business. Speculation about a sale has been in the wind for roughly a year, and even came up in emails exposed in last year's cyberattack on Sony Pictures.

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The impending changes come at an uncertain time for music publishers, which handle the songs and compositions behind the sound recordings heard on iTunes, radio and streaming services. Sony/ATV and rivals have been trying to get higher royalty rates from the growing industry of online streaming services such as Pandora, Spotify and Apple Music.

"When, at some point, the current debate around royalties and streaming gets worked out, this may prove to be a shortsighted trade," said Joe Rapolla, a music professor at Monmouth University and former record label executive. "But since no one knows how long that will take. Sony may want the cash now."

Sony executives told employees this month that the company has triggered a clause in its contract with the Jackson heirs that could lead to a change of ownership, allowing either Sony or the estate to buy out the other partner's 50% stake. It's one major step in a process that "will play out over the next several months," according to an internal memo Chief Executive Martin Bandier, 74, sent to staff.

"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," Bandier wrote.

Indeed, Sony has continued to make deals with songwriters, announcing worldwide publishing agreements with singing group Pentatonix and Norwegian deejay Kygo in just the last month. It's also preparing to move into new offices in New York and the Los Angeles area. The L.A. operations will relocate from Santa Monica to Sony Pictures' Culver City lot.

When, at some point, the current debate around royalties and streaming gets worked out, this may prove to be a shortsighted trade.
- Joe Rapolla
Theories abound over Sony/ATV's future.

In one of the scenarios being discussed, Sony would sell its half and the Jackson estate would also cash out a portion of its share to a new co-owner. The estate may want to partner with a company already in the publishing business.

Warner Music Group, the third-biggest record label, is expected to take a look, and it already owns a major publisher in Warner/Chappell Music. Rights management company BMG, a subsidiary of German media firm Bertelsmann, could kick the tires with the help of outside investors. However, BMG Chief Executive Hartwig Masuch told the Financial Times this week that it would not be tempted to make a play.

Vivendi-owned industry titan Universal Music Group is not expected to be a buyer, due to antitrust hurdles.

Sony/ATV did not make Bandier available for interviews.

Representatives for Sony Corp. of America, the estate of Michael Jackson, Warner Music Group, Universal Music Group and Apollo Global Management declined to comment.

Jackson paid $47.5 million for ATV Music, the publishing company that owned the Beatles catalog, in 1985. That deal sent shock waves through the music industry at the time and would badly damage the relationship between Jackson and former Beatle Paul McCartney, who had collaborated on songs like "The Girl Is Mine" and "Say Say Say."

In 1995, Jackson merged the business with Sony's music publishing arm to form Sony/ATV. Jackson died in 2009.

See the most-read entertainment stories >>
Sony took in $591 million in revenue from music publishing in its most recent fiscal year, according to a public filing from the company, up about 6% from the previous year. By comparison, the Sony Music record label that represents the likes of Adele and Beyonce generated nearly $3.2 billion in sales during the same period.

Larry Miller, director of the music business program at NYU Steinhardt, said the publishing business could be particularly attractive to companies looking for long-term, stable bets rather than assets they can flip in a few years. Publishers make money when their songs are placed not only with recording artists for their albums, but also in TV shows, movies, video games and commercials.

"There are more uses for music every day," Miller said. "Music publishing as an asset class is looking better and better."

Though publishing remains a valuable business amid the industry's shifts, analysts believe one stumbling block to a deal includes Sony/ATV's high valuation. Many logical buyers would have to raise money to make a play. A bid from a major competitor, such as Warner Music, would also invite regulatory scrutiny.

Analysts do not expect the sale of Sony/ATV to be simple.

"The whole thing's an animal," said a music executive who asked not to be named as to not damage business relationships. "If you're going to sell it, you have to clean it up.''


http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-sony-atv-music-20151017-story.html

 

[marc_vivien]

Are the Jackson kids going to be a billion dollars richer this New Year?
The estate of the late Michael Jackson co-owns the world’s biggest music publisher, Sony/ATV, which spins off around $100 million in profit each year under the aegis of its popular chief executive, Martin Bandier.
The asset is being evaluated by its two owners to figure out who buys out whom.
Sony Corp. has hired investment bank Allen & Co. to work on valuing its portion of the lucrative asset. The Japan-headquartered consumer-electronics giant recently triggered an option to acquire the 50 percent stake owned by *****’s estate.
But Sony isn’t the only one coming up with a valuation. Jackson’s estate, repped by music lawyer John Branca, is also said to be talking about finding backers to buy out Sony. Most estimates put the Sony/ATV asset at around $2 billion to $2.5 billion.
The difficult challenge facing Branca is persuading the Jackson kids (Paris, Prince and Blanket) to forgo the giant check and double down and allow him to oversee the acquisition of the entire company with fresh backers.
Sources tell On the Money that probate courts would likely have to OK any decisions made on behalf of Jackson’s estate.
As if things couldn’t get more complicated, there’s the side issue of the EMI catalog, which is owned separately but managed by Sony/ATV. A change of control might trigger an exit for the owners of the catalog, who potentially could move somewhere else.

http://nypost.com/2015/10/25/michael-jacksons-estate-explores-sony-buyout/

 

[Bubs]

Only new thing in that article is that Sony has got company to evaluate the catalogue, but I don't think Branca will ask Bigi's opinion of buying Sony out

 

[Annita]

Only new thing in that article is that Sony has got company to evaluate the catalogue, but I don't think Branca will ask Bigi's opinion of buying Sony out

Who is Bigi ?

 

[Bubs]

Who is Bigi ?

Didn't Blanket want to be called Bigi?

 

[Koopa Troopa]

I really hope The Estate manages to buy Sony's half. MJ's name, prestige and power would go through the roof! It would also compensate for the loss of Neverland. If anybody can do it, I know it's Branca.

 

[InvincibleMJ]

Didn't Blanket want to be called Bigi?

I think they call him blanket in the 3T reality

 

[HIStory]

Didn't Blanket want to be called Bigi?

Wasn't that just a tabloid rumour?

 

[barbee0715]

I saw an Access Hollywood with Jackie, Tito and Marlon and they confirmed it. But I'm sure it's hard to remember to say it.

 

[Bubs]

I think I saw Blankets yearbook and in it his name was Bigi as per his wishes.

 

[Soundmind]

If Branca is going to ask the beneficiaries then there is zero doubt Katherine will say BIG NO. The Jacksons want the estate to sell the assets and distribute the money so Katherine could get her share and will it to her family. I doubt anyone in that family would want the estate to be engaged in a long term loan. Nothing but a nightmare to the Jacksons except the kids of course.

 

[barbee0715]

If Branca is going to ask the beneficiaries then there is zero doubt Katherine will say BIG NO. The Jacksons want the estate to sell the assets and distribute the money so Katherine could get her share and will it to her family. I doubt anyone in that family would want the estate to be engaged in a long term loan. Nothing but a nightmare to the Jacksons except the kids of course.

Is that true? Is that what would happen if they sold the assets? Katherine is not part of the Family Trust?

I hope Branca can get Sony's half, actually. I loved the fact that Michael bought the ATV catalog back in the day-as a single owner-I can't think of another better investment for him-the history and the heritage of the music of the past and future is how Michael was himself.

 

[Annita]

I don`t think Branca/McClain need permission from Kathrine and kids for buisiness-decissions, but they must have permission from probate court for such a big deal.

 

[elusive moonwalker]

No its not true. Kj gets a monthly allowance and nothing else. Of course she could ask for an increase like she does most years. But it would have to be a big one

 

[Tygger]

The Estate does not have to ask permission of beneficiaries to sell assets. Using that flawed logic, Michael's oldest would have agreed to sell NL only to later retweet he preferred to retain NL.