Michael Jackson's Estate: Saved by the Beatles
By Stephen Gandel
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Will Michael Jackson's three children — Michael Joseph Jr., Paris Michael and Prince Michael II — end up paupers? The answer rests on the value of the performer's largest asset: his 50% stake of a music-publishing company called Sony/ATV Music Publishing.

Jackson, who died on June 25, left behind as much as $500 million in debts. That includes a $315 million loan owed to British bank Barclays, as well as millions of dollars in bills. "Jackson never paid his bills," says a lawyer who did work for Jackson over the years. "Countless professionals who worked for him are still waiting to get paid." In May, the singer's longtime publicist Raymone Bain sued Jackson for $44 million in unpaid fees.


But whether those debts will mean Jackson died bankrupt depends heavily on the worth of Sony/ATV. Jackson had other assets, including rights to many of his own songs, as well as about 1,000 hours of rehearsal footage leading up to this summer's London concert tour and possibly about 100 unreleased songs. But none of those assets are likely to be nearly as valuable as his stake in Sony/ATV, which has been valued at anywhere from $390 million to $1 billion.

Jackson's 1985 purchase of ATV Music, which included in its catalog some 250 Beatles tunes, for $47.5 million formed the basis of his stake in the music-publishing business and was by far his shrewdest music deal. Yoko Ono, John Lennon's widow, and Paul McCartney had considered bidding a combined $20 million for the collection, but Ono decided that was more than the collection was worth. Jackson's purchase price of more than double that is still far less than what the songs would sell for now.

In 1995, Jackson agreed to merge ATV with Sony's music-publishing business. The Japanese corporation paid Jackson $150 million to complete the deal and split ownership of the new company with the performer 50-50. In March 2007 an audit of Jackson's finances valued his half of Sony/ATV at $390 million.


But just two years later, it is likely that Jackson's stake in Sony/ATV is worth much more than that. First of all, music-publishing has not been hit nearly as hard as the rest of the music industry by the shift to music downloads and away from compact discs. Unlike a record label, a music publisher does not get paid only when an album or other original recording of a song is sold. Publishers retain the rights to a song and get paid every time it is performed or appears in a movie or advertisement by the original artist or any other performer. "I have talked to a number of music publishers who tell me last year was their best year in a while," says Susan Butler, a former music-industry lawyer who now writes the newsletter Music Confidential. "Guitar Hero and other games have created a lot of opportunity for the publishers."


What's more, in early 2007, Sony recruited industry veteran Martin Bandier, who turned rival EMI into a publishing powerhouse, to lead the unit. The hire seems to have paid off. Bandier has re-energized Sony's publishing company, completing a number of acquisitions and landing some popular new acts, including former American Idol contestant Elliott Yamin and rising music star Lady Gaga.

Along with the Beatles, Neil Diamond and Bob Dylan, the company's 750,000-song catalog now includes the Jonas Brothers, Ruben Studdard and Taylor Swift. In the first quarter of this year, Sony/ATV ranked as the second largest music publisher in the U.S., with just under 20% of the market, up from fifth largest three years ago.

Its Lady Gaga hit "Just Dance" was the best-selling song in the first three months of the year. The result: industry sources estimate Sony/ATV's revenue has grown more than 60% in the past two years, to an annual $500 million. Net publisher's share —a closely watched figure in the industry, which is sales minus payments to artists — has doubled, to an estimated $200 million. "The music-publishing business is ripe with opportunities, and we are continuing to grow our business," says Bandier.


What does that mean Sony/ATV is worth? In a recent financial filing, Sony said the division had $1.3 billion in assets and $479 million in debt. That would give the division a net value of about $850 million.

But it would be likely to fetch much more than that in a sale. When Universal Music bought BMG Music Publishing in September 2006, Universal paid $2.1 billion, or nearly 12 times BMG's estimated net publisher's share. Sony/ATV probably wouldn't get the same multiple in today's market. But even at 10 times its current publisher's earnings, the company would be worth $2 billion.

Jackson, though, might not be able to sell his interest in Sony/ATV for its full $1 billion value. In 2006, as part of a deal to restructure his mounting debts, he gave Sony/ATV an option to buy half of his holdings in the company at a later date. Sony will not disclose the terms of that deal, but it probably limits what the Japanese company would have to pay Jackson for half of his Sony/ATV stake.

Still, the quarter of the publishing business that Jackson does own outright would be enough to clear his debts. And Sony would still have to pay many millions for the rest, even with the option. The bottom line: Michael Jackson's estate is probably more than solvent. "People are focused on the amount of money Michael owed, but you have to look at the assets too," says Ivan Thornton, who worked as a financial adviser to Jackson on and off for the past decade. "He's in debt, but he is certainly not bankrupt."
[Edited 7/10/09 6:09am]

ehuffnsd said:

there is a special fund that handles this sort of thing, and $1.4 million is a drop in the bucket for this city.

most ppl forget even if the ATV catalog is sold. Taxes need to be paid on the profit if his portion is worth 500million
then the tax will be on $450m -- fed taxes should be close to 40% and cali state taxes 10% but i am not entirely sure of the tax rates

but in the end u get $275mil and u owe more then ur net worth

kibbles said:

however people wouldn't be up in arms over it if the city was in better fiances.

errant said:

Actually, there's noting idiotic about his statement. First of all, we don't know what the question was to judge the context of his answer. Although for a number of decades, Deepak has written and spoken extensively about how our own spiritual self awareness can lead to greater synchronicity not only in our immediate environment, but throughout the world. He already wrote a book about this, the central theme being that if the globe could amass a majority with this heightened level of spiritual consciousness, devoted to healing our minds, bodies, the environment, sustaining economies, helping developing nations, etc.,then we would have less to fight over, and thus less international conflicts.

Additionally, anyone who is familiar with Deepak Chopra's books(and his children's work by extension) is intimately familiar with his themes in the New Thought Movement that center on joy, divine love, and peace which are a direct result of individual and universal heightened consciousness.

For whatever personal demons Michael Jackson suffered while here, we can at least say that through his music and humanitarian efforts he was person who absolutely embodied the priciples that Chopra has been teaching for over 20 years as bestselling author, a professor at Tufts, Harvard, Boston U, and arguably one of the most esteemed contemporary philosophers of modern times. Out of the dozens of books he's written, one comes to realize it's not that far of a stretch to look at cultural icon like Jackson, the public message his music and quiet activism represented and understand what Chopra is actually trying to say about human interdependence and how we can affect each other, and affect positive change in the world.

At any rate, one thing I'm learning from the hoopla surrounding Jackson's death, or any other public figure is that it's generally best to watch to watch these types of interviews and the subject is actually speaking, and in its' entirety. It's too easy to twist the context or misrepresent the person quoted. This is not only unfair to interview subject, the person interviewed, but it also disrespects the audience as it undermines our intelligence, and our ability to give informed opinions.

[Edited 7/10/09 0:25am]

These are not Michael's children. I don't care how you squint your eyes or and look sideways. They are not his biological children. If he had vitiligo and lupus, it made a lot of sense not to produce sperm to form a child.

A while back I read Michael was strongly thinking about adopting another child. It's a good thing that didn't happen. Everybody keeps saying Blanket favors Michael but I don't believe he is Michael's biological kid either.

They are his children because he adopted them.

Money talks and bullshit walks, you can get just about anything for the right price!!!

OldTeenager said:

I have heard that a combination of lupus,and vitiligo can.

BoOTyLiCioUs said:

ok i went over the footage and said the dude said "guy was a cm." That so fuckin disrespectful. entitled to ur own opinion but to do that at someone's own funeral I wish i hadn't of heard this but knowing my luck, i always hear the worst things. That really bothered me. That's why I believe that it should of been only open to friends and family.
[Edited 7/10/09 0:55am]

suga10 said:

the allegations are what killed michael.

hmmmmm "Blanket" Brando?...lol
[Edited 7/10/09 1:46am]

PvMarchingStorm05 said:

I can't even take this seriously, lol.


I feel 100% certain that Blanket is Michael's child. The proof is in his face, which looks nearly identical to MJ's when he was a young boy.

Timmy84 said:

Copycat said:

DesireeNevermind said:

Yea, I'm kinda wondering why people's collections weren't up to par beforehand. As "problematic" as he was in the later years, I always accumulated the stuff I really liked even if it was just a song here or there. & I've always had a healthy dose of J5/Jacksons stuff. I don't get it.

A friend of mine on FB is claiming an MJ song as her favorite song EVER. Bitch ain't got ONE ALBUM This is twistin' people up, for real

Marrk said:

I know you don't mean that to be funny, but it is. Not many people wish to be killed so it's kinda obviously against his wishes Ahh, nevermind

Marrk said:

Michael Jackson dermatologist Arnold Klein says he will take DNA test to end paternity rumors
http://www.nydailynews.co....html#ixzz0KqdAQMJ6&D

CalhounSq said:

AGHHH I Hate Oprah! FAT WHORE!!!

PvMarchingStorm05 said:

It's funny that you say that, because my immediate thought when it comes to the paternity of Prince was Marlon Brando. Now that you mention it Blanket does look alot like Miko. And I'll say it again but Blanket is just not cute enough to be the spitting image of Michael. From the side he looks even more like Miko, they have the same weird cheek and eye area
[Edited 7/10/09 3:47am]

P2daP said:

Damn. Exhale.

Marrk said:

Horrible.

I really hope Oprah doesn't pull a Bill O'Reilly during her show about Michael. But if she does, I hope Al Sharpton is there to set her straight, lol.

CalhounSq said:

I have more Jacksons/Jackson 5 albums than Michael Jackson solo albums, I've always preferred his earlier music. If people are just recognizing his music after his death, whether it's from History or some J5 album, than that is ashame. If you couldn't appreciate any of MJ music whilst he was alive than I don't see the point of getting into it now that he is dead.

Arnotts said:

whatever you people are insane

cdcgold said:

i guess jermajesty isn't a jackson either cause he sure isn't as cute as blanket

i guess jermy isn't either

like i said insane

Blanket does look a helluva lot more like a Brando than a Jackson, at least to my eyes. He looks closer to Miko's brother Christian than Miko though, and if it's found out that he is a biological Brando - especially if it was Christian! - then it might never become public knowledge.

The only kid I'm 99% on is Paris. She's almost certainly Rowe's biological offspring. 100 times prettier, but the same face nonetheless.
[Edited 7/10/09 4:59am]

The family should really repay the city for the $1.2 million. Taxpayers should not have to pay . . . not ever, but especially not in this economy.

WaterInYourBath said:

Oprah used to LOVE Michael,but I think the Martin Bashir documentary may have changed her feelings.She discussed it on her show and made a negative comment about the "sleepovers" with young boys."It's inappropriate to share your bed with a young child and I would say the same thing to my own brother if he was doing that",she said.

Later,during MJ's 2005 molestation trial,she appeared on Larry King Live and was asked about it.She didn't wanna say too much,but I could tell that she had doubts about MJ's behavior and whether or not he was innocent.She seemed conflicted.

Se7en said:

The family has no money at all

plus even if they sell the atv catalog and pay taxes they wont have money to pay off the debt.

of course in 5-10yrs there will be net positive money coming in

mynameisnotsusan said:

Oprah is a saint. For me, she's the female Jesus.