The news of Sony purchasing Michael’s 50% share in Sony/ATV has resulted in anger, emotional outbursts and heated discussions among the MJ fans. Recently The MJCast had a Sony/ATV purchase roundtable at their 27th podcast. The podcast started with a quite balanced discussion of all sides and all possibilities surrounding the purchase of MJ’s share. The podcast also featured an interview with Lynton Guest – the author of “The Trials of Michael Jackson”. While listening to the show, I realized Lynton Guest provided some new and interesting insights to the Sony/ATV purchase. We as fans operate on limited available information so for me any piece of new information is quite valuable to better understand the situations. Therefore with permission from The MJCast, I prepared a transcript of a short section of the Lynton Guest interview.
The full The MJCast podcast can be listened to here :
or can be accessed from The MJCast webite at http://www.themjcast.com/episode-027-sonyatv-purchase-roundtable/
The below transcript starts at 01:13:00 (or 73 minute) mark.
Q of The MJCast: Just in a nutshell what is the history of the catalog in question?
Lynton Guest: Catalog you refer to is known as Sony/ATV music publishing. It was originally just called ATV publishing. British publishing company formed in the 1960s as a division of the television franchise. It happened to acquire hundreds, and then thousands and now almost 2 million songs. The most famous of which of course Lennon and McCartney songs of the Beatles. ATV was suffering in the 1980s and 1990s and was sold and it was Michael Jackson that bought the company. That’s how he acquired it.
In fact you could say the investment that Michael made was one the shrewdest business investments ever not just in the music industry but in any industry. I would like to say that music publishing is one of the most lucrative areas of music money making. […] Anyway Michael Jackson paid somewhere between 40 and 50 Million dollars for ATV Music. He used the huge amount of income he received from the Thriller album to invest in that. Contrary to what you might read elsewhere, he then sold 50% of that company to Sony for between 40 and 50 Million dollars. Therefore he got this publishing catalog for nothing. Today Michael’s Estate has sold or close to selling the whole company to Sony for $750 Million. Now if you can find me a better investment than that anywhere in the world I’ll be very interested to hear it.
I don’t think Michael bought it simply for money making in the first place. I think he had two motives. One was that he had this pile of money from Thriller which had to be invested somewhere. And he was someone who actually had a great sense of music history. Of course owning the Beatles songs and a lot of other 1950s Rock n Roll titles contained in that ATV catalog. He thought that he would like to preserve them and make sure that they had a home which would not exploit them outlandishly. […] I think those were the two motives. As it happened of course it was a massive money spinner and hence why there has been so much involvement in other companies trying to get ahold of it. Now it’s going to Sony. I don’t know whether if Michael was still alive, he would want to do that but he is not and Estate has sold it to Sony.
Jamon of The MJCast: What extent do you think Sony planned to try to acquire that catalog when Michael was alive after the mid-90s?
Lynton Guest: There are two reasons. First of all because they wanted to make money from the total ownership of the company. When they bought the 50%, they were quite happy with that at the time. However they were not allowed by Michael to exploit the catalog as much as they would like. I mean on numerous occasions Michael would veto how some of the songs used. Would not allow Sony to license some of the songs for projects which Michael didn’t think commensurate with how he saw the value of the songs outside the simple money making. So Sony started to coming around the view that they would like to acquire the whole catalog so they would not have to go and ask Michael for permission every time they wanted to license a song say to be used in a movie or a TV advertisement or something like this. So that’s when the beginnings of this came. As the time went on […] more moral campaign. When Michael was accused originally in 90s in the child molestation of Jordan Chandler. Sony started to get cold feet about their association with Michael. They couldn’t do a lot about it at the time but at the end of Michael’s trial in the 2000s Sony saw a chance to be able to get ahold of this whole catalog. This eventually 10 years later what they have done. I got to explain how that works. You might be interested in why the Estate in this point in time is selling this catalog when a lot of people as you said earlier agree this was one of Michael’s proudest achievements and probably if he was still alive wouldn’t want to sell it.
Q of The MJCast: I’d like to hear that if you’d like to share
Lynton Guest: Well this goes back to, you can trace this back to the release of the Bad album. Bad sold around the world 20-25 million copies which for any other artist would be the most fantastic thing. Michael’s problem was Thriller sold over 50 million copies. What he had done was create an organization in the belief that Bad would sell equally around the world as Thriller had done. When it didn’t, Michael was [..] to change the organization but unfortunately he did not have the income [..] over a large amount of time. He therefore borrowed something like $220 Million from Bank of America. As time went on he was always in difficulty […]. It was particularly difficult for him when he was put on trial to actually service his loan. Of course during the trial he had massive amount of legal fees he had to pay out.
At the end of trial, his debts, they were almost about to foreclose on his debts. Sony stepped in, this is in 2006. Created a structure where by they assumed the responsibility for the debts, the interest on that debt was frozen. In return Michael signed a deal where by within the next 10 years Sony could buy Michael’s share of Sony/ATV or Michael could buy Sony’s share of Sony/ATV. Had Michael been alive possibly he might have been able to raise the money to buy Sony’s share. But because he is not alive and now it’s the Estate that’s dealing with it. That 10 year agreement is set to expire this year in 2016. Sony therefore last year opened negotiations with MJ Estate to resolve this issue, this 10 year issue of total ownership. MJ Estate claims they went into it to try and see if there was a way they could buy out Sony. That may be true but it was never a realistic possibility. Therefore Sony really had all the cards. So the only question then was how much will it be sold for. We hear that it’s $750 Million. That’s how Sony acquired it because of this 10 year agreement relating to Sony assuming Michael’s huge debts following his trial.
It’s not as if MJ Estate will receive $750 Million in cash. There is still the issue of the historic debts so my guess is they would probably receive somewhere in the region of $250 million because of debts will take care of the other $500 Million. I would like to say one other thing everyone is saying what a fabulous amount of money they sold it for. I don’t agree with that. In my book I predicted that the income from this catalog will rise year on year exponentially and in my opinion that 50% worth over $1 Billion. That’s just my opinion.
Jamon of The MJCast: Ultimately what are your thoughts on the sale?
Lynton Guest: Well my thoughts are basically the Estate had no choice. It was locked into this 10 year agreement. It was also the case of historic debts. Now when you got those two things in the end they were between a rock and a hard place. They could not raise the finances to buy the Sony share and even if they had they would have the problem of administrating the company etc. So much as we might think that it is not a very nice move on the part of the Estate to sell it, in the end I don’t think they had a choice.
The interview call with Lynton Guest continues with discussing Branca being on Sony/ATV board and whether Estate is doing a good job both from a financial and legacy perspective. For the full Lynton Guest interview as well as the roundtable discussion about Sony/ATV purchase please listen to the The MJCast podcast. Below you will find all the links for the The MJCast.
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