Sony To Buy Michael Jackson’s Half Of Sony/ATV Estate For $750 Million

Sony is set to buy the Sony/ATV estate of Michael Jackson for $750 million, seven years after the King of Pop’s death.

According to reports, the Jackson’s three children: Prince Michael II, Paris, and Michael Joseph, will be receiving the money from the purchase. Sony was able to strike the deal with the late singer’s representatives and get involved with the giant global music publishing company. Sony/ATV holds the rights to almost three million songs from well-known artists in the music industry such as John Lennon, David Bowie, Taylor Swift, Paul McCartney, The Rolling Stones, The Beatles, Marvin Gaye, and many others.

Michael Jackson owns half of the company, and it was expected that Sony will be making the move anytime soon. Sony confirmed the news in a statement released recently, saying that the parties involved in the music publishing company are expected to “execute a definitive agreement by March 31, 2016.”

Sony’s chief executive, Kaz Hirai, added that the agreement further demonstrates the company’s commitment to the entertainment business as well as their firm belief that such businesses will continue to contribute to their success in the future.

Sony Entertainment CEO Michael Lynton also released a statement saying that the acquisition will enable their company to adapt to changes in the music publishing business while continuing to be an “unparalleled leader” in the industry. Lynton added that Sony is looking forward to working with the estate to expand Michael Jackson’s legacy.

The press release by Sony also stated that the Michael Jackson estate will maintain their interest in EMI Music Publishing, whose songs are also managed by Sony/ATV as part of another agreement. It is also owned by Sony, the Michael Jackson estate, and other owners such as Blackstone Group’s GSO Capita, David Geffen, and other junior partners.

It will also be retaining the 10 percent interest that it holds in Mijac Music, the publishing company that owns the songs written by Michael Jackson and other artists, as well as the King of Pop’s master recordings.

However, it was reported that the $750 million tag price on the music publishing company was lower than expected. Damian Thong, an analyst with the Macquarie Group contested that the value of music assets is all the more increasing with the growth of streaming technology. He pointed out that Sony is “paying less than the stake is worth.”

The business is valued at around $2 billion or more, but Sony has a 25 percent discount to market rates. This was stated in a clause negotiated during the time when Michael Jackson was facing possible bankruptcy.

It has also been reported that a portion of the $750 million will be used to pay the remaining amount from the $500 million debt that Sony/ATV incurred seven years ago. It remains unclear how much exactly will be transferred to the beneficiaries of Michael Jackson, as the money will still undergo taxes and fees.

At the height of the Sony email hacks in 2014, it was revealed that Sony Chief Financial Officer Kenichiro Yoshida had emailed Hirai and asked about the possibility of rationalizing ownership of the music assets of the company. However, a source familiar with the matter claimed that Sony wanted to sell their share and even had two partners to fix the financing for a buyout.

Michael Jackson acquired ownership for the ATV music catalog for $41.5 million in 1985 and has had a joint venture with Sony for 21 years since 1995. The latest acquisition will allow Sony to have sole control over the publishing operation of the company.

Michael Jackson’s investment in the music publishing business has been dubbed as a genius move by the King of Pop despite the discouragement of some people around him. The estate is currently selling 15 times more than what he initially paid for.

[Image by Phil Walter, Getty Images]