Jacko's woes could force sale of lucrative song catalogs
When it comes to investments and business decisions, the Michael Jackson empire has been dominated by one prevailing principle: Indecision.
Jackson has alternately heeded and disregarded the advice from a series of advisers, even as he “invested” in a menagerie of exotic animals, million-dollar tchotchkes and the bones of the Elephant Man while lavishing gifts on his friends and associates.
But with his future in the hands of a Santa Maria, Calif., jury and a 7-year-old investment group, Jackson is being forced to make moves lest he end in fiscal ruin, even if it means selling his prized music catalog to the company he calls “evil Sony.”
Jackson, since he shot to superstar status with “Thriller” 21 years ago, has responded only to the urge to buy. The voices around him are mostly saying “sell.”
The crown jewel of Jackson’s recording-publishing-real estate domain is his half of Sony/ATV Music Publishing: It controls 251 songs by the Beatles plus 1950s R&B hits from Little Richard and songs by Willie Nelson, Bob Dylan, Oasis, Mariah Carey and about 35 other acts.
The company could be generously valued between $800 million and $1 billion, and, were he to sell, Jackson could quickly resolve a number of his financial troubles.
Yet he’s been reluctant to sell any portion of his Sony/ATV stake or his other publishing company, Mijac, which oversees his compositions plus the music of Sly and the Family Stone.
Key for Jackson is to eliminate a $270 million debt that Fortress Investment Group assumed after purchasing Jackson’s loans from Bank of America in May, according to a Wall Street Journal report on Jackson’s finances.
Fox News reported in April that Jackson was presented with — and rejected — a deal whereby he would sell his 50% interest in exchange for payment of the Bank of America loans and elimination of debt at Neverland Ranch.
Loans against Mijac would also be paid off, and Jackson would wind up with $10 million in cash and continue to receive about $7 million a year from Sony/ATV. Debt-free, Mijac would be worth more than its current estimated value of $100 million.
The Journal reported that supermarket billionaire Ron Burkle is among those who believe Jacko can reorganize without a sell-off.
Among advisers favoring a sale are Charles Koppelman, whom Jackson hired about two years ago to oversee his affairs, and John Branca, who has been Jackson’s attorney and a key confidante — off and on — for nearly two decades. The two were apparently on the outs when Jackson was arrested and charged with 10 counts related to child molestation: Just hours after the bust, Branca was at L.A.’s Conga Room taking in a perf by an unsigned band.
Pop music history has shown that when performers land in legal trouble, the quickest solution is the concert trail (Witness James Brown, Steve Earle and Rick James).
During the trial, Jackson announced that he would reunite with his brothers for a worldwide tour, but the last two times Jackson has announced global tours he has canceled. (Speculation has focused on whether, at the age of 46, Jackson is still capable of his flashy dance moves.)
If Jackson can’t hit the stage and get those immediate payoffs, his worth is tied up in catalogs. And he can’t take his share of Sony/ATV into the open market — Sony has the right of first refusal to purchase the half of the catalog it doesn’t already own.
Sony Corp. of America may make an offer to the Sony/ATV board of directors, but not until it is assured that the offer will be accepted. And while Jackson has long asserted that it’s a billion-dollar property, the company may only be worth half that.
The byzantine nature of the biz and the value of music rights have confounded artists for a century, but the smart ones — Al Jolson, Ray Charles, Elvis Presley, Paul McCartney — have made sure that publishing remains a steady, income-producing asset.
A song like “Beat It,” which Jackson wrote and publishes via Mijac, earns the singer at least $150,000 for every million plays it receives on radio, a number it continues to top annually. He has another dozen or so million-players. Every time a Beatles song is played on the radio, Jackson and Sony are splitting, at a minimum, 6¢. (Bonuses kick in at various levels of airplay.)
That becomes even more valuable when the hits stop coming. Jackson’s last album, “Invincible,” released in October 2001, sold 2 million copies in the U.S. and yielded no hit singles.
Now Jackson’s contract with Sony BMG’s Epic has reached the point where he owes no more than a song or two to the label. The likelihood of another label signing him and giving him the financial leeway he has enjoyed since “Thriller” is nil; he really only has the option of making an album and then attempting to license it.
While he may need to self-finance a recording, in the catalog department he retains superstar status — which can be a double-edged sword in licenses for film and TV.
Jackson songs command significant fees, which limit the number of offers for his material that are made and accepted. High fees mean that when a song of Jackson’s is used in a film, cost alone dictates that it become a centerpiece of the movie, which effectively takes the tune off the market for a number of years.
Last year, the Sony-Columbia pic “13 Going on 30” used “Thriller” twice in the film as well as in the picture’s trailer. In 2001, Paramount’s “Zoolander” used “Beat It” prominently.
But should he sell Mijac, it’s almost guaranteed Jackson songs would appear in many more commercials.