Sony buying Michael Jackson’s stake in Sony/ATV for $750m

Sony Corp has entered into an agreement to buy Michael Jackson’s half share of the lucrative Sony/ATV for US$750 million.

The 3 million-strong catalogue owns works The Beatles, Bob Dylan, David Bowie, Queen, Taylor Swift and Eminem, and is valued at $2 billion.

“This agreement further demonstrates Sony’s commitment to the entertainment businesses and our firm belief that these businesses will continue to contribute to our success for years to come,” Sony Corp. President and CEO Kazuo Hirai said.

The agreement is expected to be completed by March 31 and come into effect either late 2016 or early 2017. It does not include rights to Jackson’s master recordings or songs that he wrote, which are represented by Mijac Music. The Jackson estate will continue to have a 10% stake in EMI Publishing, Inc which was acquired by a consortium for $2.2 billion back in June 2012, and which included Sony and David Geffen.

Analysts had initially predicted that Sony would have to pay $850 million for Jackson’s share, explaining how streaming is increasing the value of music assets. But Sony has a 25% discount to market rates, from a clause negotiated when Jackson was staring at possible bankruptcy.

“This transaction further allows us to continue our efforts of maximizing the value of Michael’s Estate for the benefit of his children (Prince, Paris and Blanket, as well as his mother, Katherine),” the co-executors of Jackson’s estate, attorney John Branca and music executive John McClain, declared. “It also further validates Michael’s foresight and genius in investing in music publishing.”

The sale is expected to wipe out the $500 million debt that Jackson had at the time of his June 2009 death. Since then, new music and movie projects have, since 2009, added $100 million each year to the estate’s coffers.

Jackson bought ATV in 1985 for $41.5 million. Many of his advisers at the time thought he was paying too much for it. But Jackson’s business acumen told him that his mentor Berry Gordy expanded his Motown empire through publishing.

Jackson merged the company with Sony 21 years ago in exchange for $115 million. Jackson insisted that Sony’s publishing had to be exclusive to Sony/ATV, which meant that he also got a cut when Sony signed up the publishing of Eminem and Taylor Swift. It was his most lucrative asset when he died at age 50.