By now you should have all heard about Michael Jackson’s death. Although it is tragic that such a pop icon could die at such a young age, so much of the news coverage seems to be focusing on the bizarre aspects of Michael Jackson’s life, what appears to be a serious drug addiction and his financial debts. When Michael passed last week, he died in debt to the tune of approximately $500 million, at least if the reports we are hearing turn out to be accurate. What seems to have started Michael’s financial decline was when in 1993, he paid the family of 13 year old Jordy Chandler, $22 million dollars to settle the lawsuit they had pending against him. From that point forward he was not really viewed the same, his last album was a failure and yet his taste for expensive things and his ability to spend became legendary. But did you know that in 1985, Michael Jackson paid $47.5 million dollars to purchase and ATV Music Publishing, which happened to own the copyrights of more than 200 songs written by the Beatles’ John Lennon and Paul McCartney? While Michael Jackson will likely be remembered for many things, perhaps right now we should focus on what he did that made him the icon he was. There will be plenty of time later for the sordid details, and the unsavory side of the pop legend, but there were aspects to Michael’s life that demonstrate him to be almost a Renaissance man; namely Michael the inventor, Michael the King of Pop and Michael the shrewd businessman who say the value of owning perhaps the most lucrative copyright portfolio of all time.
Few people know that Michael Jackson outbid even Paul McCartney himself as well as John Lennon’s widow, Yoko Ono, to own the coveted copyrights to the Beatles’ music. By owning the copyrights to these timeless songs, Michael earned royalties every time Beatles songs were either played on the radio or performed or sold in stores. While so many are star-struck by musicians and performers, the reality is that the money is in owning the copyrights. Most musicians will never get to the point where they can own their own copyrights free and clear. Record companies lock musicians and performers up in tight, multi-album deals where the ownership of the publishing rights resides with the record label. Only when a musician, band or performer has made it big, fulfilled their multi-album deal and still remains relevant is there much of an opportunity to actually own the lion share of the most lucrative asset in the entertainment business – the publishing rights to the music. So while so many are remembering Michael Jackson in unfavorable ways presently, his foresight to pay what was no doubt a staggering amount of money in 1985 for the Beatles’ collection was without doubt the best business decision he ever made, and perhaps the best business decision ever made by an entertainer.
In 1995, Michael merged his ATV collection (minus the rights to his own music) with that of Sony, creating what is now known as Sony/ATV. In late 2005, being in financial difficulty, Jackson provided Sony an option to buy 50% of his one-half interest in Sony/ATV and Sony gained more control over Sony/ATV. (See NY Times and USA Today) It does not appear as if Sony ever exercised its option to buy 50% of Jackson’s interest, although reports on this range from clearly contradictory to vague. What reports do agree on is that at least 50% of his interest in Sony/ATV, presumably the 50% he retained complete control over, was pledged as collateral for a $270 million to $300 million loan. Reports vary widely with respect to the value of Sony/ATV, ranging from $1 billion to $3 billion. One report estimates the value at $30 billion, but that was likely a typo copy of the $3 billion figure. I cannot imagine the catalog is worth that much, but if the $3 billion figure is accurate that would mean that even with Sony have rights to half of Jacksons ownership interest there would be enough value in the remaining 25% interest in Sony/ATV to cover Jackson’s reported debts and still have several hundred million dollars left over. So expect a fight with much more detail to come.
With his death however, Sony plans to keep their rights and control over the Beatles songs. Sony/ATV holds the rights not only to more than 200 songs written by John Lennon and Paul McCartney, but also has rights to songs written by many others as well. It is said that Michael had planned to leave the rights to Paul McCartney in a will because some say that Michael’s purchase of ATV caused some strain in their once close friendship which ultimately led to the end of their friendship. There are rumors of a will, and the tabloid media as well as some popular media outlets are starting to question whether the will is legitimate and guessing whether it can be authenticated. The 24/7 coverage of the death of Michael Jackson is already leading to speculation, rumor and innuendo, and that is likely only going to get worse in the days, weeks and months to come.
Currently Sony/ATV owns or administers over 600,000 copyrights held in the works of other artists, some of which are very well known and current and others which are less known, such as Beck, Brooks & Dunn, Leonard Cohen, Neil Diamond, Bob Dylan, The Everly Brothers, Fall Out Boys, Jimi Hendrix, John Mayer, Joni Mitchell, Graham Nash, Willie Nelson, Roy Orbison, Linda Perry, Richie Sambora, Kraftwerk, Shakira, Akon, Wyclef Jean, KT Tunstall, and Diane Warren. There is no doubt, however, that the Beatles collection is the “straw that stirs the drink,” to quote another famous Jackson – Reggie Jackson, which Reggie said shortly after he became a Yankee. Maybe there is just something in the name “Jackson” that means larger than life.