By The Last Tear (Lou)
On October 8, 2015, Michael Lynton, the CEO of Sony Entertainment declared that his company plans to sell its share of ATV catalog or to buy Michael Jackson’s share from his Estate. A third bidder is also allowed to come into the picture. This is of course a huge event not only in the history of the music industry, but also in connection with MJ and his Estate.
Actually, emails – which were shared by hackers who hacked in Sony Pictures in 2014 – revealed that Sony’s leaders in Japan were talking about the future of ATV catalog at least in mid-2014.
By the way, Sony hacking is an interesting story which should be studied in details. We hope to be able to do that in future!
Since we do not know yet all the details about the future of Sony/ATV catalog, I prefer to watch the evolution of the event and analyze it later if necessary. I thought the best course of action would be to gather here all the information. In this blog, you will find several articles published about the music industry, but also about Sony/ATV. I will update the post until we have all the info.
Perhaps you wish also look at our blogs Michael Jackson, Captain EO and the business of conquering the world – Part 3- The Music Industry and Michael Jackson, Captain EO and the business of conquering the world- Part 8b- “This Is It”
First, you will find an article published in 2012 which gives us an important piece of information about Sony, the Estate of MJ and their shares in EMI Music Publishing.
 According to the document, EMI will be owned by two consortium companies: Nile Acquisition LLC, referred to as the Sony Sub, which consists of Sony and the Michael Jackson estate; and Nile Acquisition Holding Co. Ltd., which would be owned by Mubadala, Jynwel, GSO and other investors under the name EMI West. The documents reveal that the Sony consortium will appoint four board members, and Mubadala would also appoint four members of the 12-member board overseeing EMI. The percent-ownership of each were edited out of the report, although sources say Sony and the Jackson estate would own 38%  (Sony owns 29% and the estate owns 10% of EMI Music Publishing). According to some of the articles below, Sony intends to keep its EMI’s shares.
In the second part, you will read about some changes and issues in the music industry.
Lastly, you will find several articles about Sony/ATV catalog. You will see speculations, assumptions and “scenarios” on what might happen. The latest article will come first. The Financial Times and The Wall Street Journal do not allow copy and paste their articles. I will only share links.
In his latest article about Sony/ATV catalog , Zack O’Malley Greenburg gives us good news! He wrote:
John Branca, the co-executor of Jackson’s estate, told me that it’s too early to know who all the bidders would be, but that the estate would be among them. Said Branca: “We intend to buy the company.”
This is indeed great news! Congratulations to the Estate of MJ! You are not just defending Michael against liars and cheats like Wade Robson (see Estate’s answer to Robson’s complaint) but you are also re creating Michael’s world and vision.
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EMI Music Publishing
Updated: Sony-Led Group Closes Purchase of EMI Music Publishing
By Ed Christman | June 29, 2012 10:54 AM EDT
Updated: Sony-Led Group Closes Purchase of EMI Music Publishing
The Sony Corp. of America led investor consortium completed its acquisition of EMI Music Publishing today, just hours after the Federal Trade Commission issued a statement saying it closed its antitrust investigation of the $2.2 billion deal — which meant it received regulatory approval.
The investor group — comprised of Sony Corporation of America, the Estate of Michael Jackson, Mubadala Development Company PJSC, Jynwel Capital Limited, the Blackstone Group’s GSO Capital Partners LP and David Geffen – won a bidding war with BMG back in November. With the closing of the deal, Sony/ATV Music Publishing, a joint venture between Sony and the estate of Michael Jackson, will serve as administrator for EMI, which means that it will oversee more than 2 million songs, 1.3 million from EMI and its own 750,000 copyrights.
“Music publishing, along with the rest of our entertainment companies, has been a bright spot in our business portfolio, and we expect that trend to continue with this important acquisition,” Sony Corp. president and CEO Kazuo Hirai said in a statement.
Meanwhile, Sony/ATV chairman and CEO (and former head of EMI Publishing) Martin Bandier added in a statement: “Today is a truly special day. … As I become reunited with the company that has many of the greatest songwriters and songs of all time, I look forward to helping create the best music publishing company in the world, with the extraordinary talent — artists, songwriters and staff — at the combined Sony/ATV and EMI.”
The closing meand that Citigroup received a $2.2 billion payment in the sale, but it now must wait and see how the regulatory agencies will treat Universal Music Group’s proposed $1.9 billion acquisition of EMI’s recorded music operation.
The FTC announced its approval today one day before the June 30th deadline to complete its review of the deal had expired. This week it began to look like the FTC would approve the deal by not issuing a comment on the deal before the deadline, which means that the deal would gain approval by default, a tactic that the agency sometimes employs instead of outright approving the deal. Since June 30 falls on a Saturday, the buyers requested that the FTC move up the deadline one day so that they could complete the deal when the banks are open, according to sources. But at the last second, the FTC surprised the buyers by making a statement approving the deal.
This event will now trigger the sales of the Virgin music-publishing catalog, Famous Music U.K. catalog and assorted other songwriters, both classic and younger ones. It will also allow Sony/ATV, which will serve as administrator to EMI Music Publishing, to get into the company for the first time and get hands on information on what they will be managing so that decisions can be made regarding employee competency and redundancies, among other integration tasks ahead of it.
Yet, in releasing a report yesterday in how it made its April 19 decision, the EU said that one of the factors behind its approval of the deal was the ownership structure, which consists of two consortiums owning EMI; and with EMI’s ownership also kept separate from Sony/ATV.
According to the document, EMI will be owned by two consortium companies: Nile Acquisition LLC, referred to as the Sony Sub, which consists of Sony and the Michael Jackson estate; and Nile Acquisition Holding Co. Ltd., which would be owned by Mubadala, Jynwel, GSO and other investors under the name EMI West. The documents reveal that the Sony consortium will appoint four board members, and Mubadala would also appoint four members of the 12-member board overseeing EMI. The percent-ownership of each were edited out of the report, although sources say Sony and the Jackson estate would own 38%.
The EU gave its approval after the buyers’ offer to sell off a catalog that generated 10-20 million euros annually and then revised that offer by complementing the assets it initially suggested by adding more songwriters and making the Virgin deal global in basis, instead of just selling the Virgin rights for Europe, which increased the divested annual revenues to the 20-30 million Euros range.
Meanwhile, Impala, the European trade group for independent record labels which has been challenging the sale of EMI, has issued a statement that indicates that it might not be done fighting the approval of the EMI Music Publishing component of the deal, even as it actively fights Universal Music Group’s deal for EMI’s recorded music operation, which is under intense regulatory scrutiny.
In its statement, Impala notes that while the EU market-tested the first proposed divestitur, “this decision was reached without market-testing the revised remedies.” Impala also noted, “neither did the EC open a more detailed investigation as it decided to do for the proposed Universal/EMI recording merger.”
Impala forced the EU to take a second look at the 2004 merger between Sony and BMG on a technicality, by taking them to court and claiming the initial review wasn’t comprehensive in scope and the European Commission Court of First Instance agreed with Impala.
Impala may be considering challenging the EMI ruling too, any maybe even on the same technicality. In a statement, it said, “We believe the remedies do not go anywhere close to securing future competition. We now need to study the EC’s reasons in detail with our legal team to decide next steps.”
Meanwhile, the EU document disclosed that among the catalogs of the Virgin songwriters and other individual songwriters that will be completely divested are: Duffy, Matt Cardle, Bullet For My Valentine, Orchestral Manoeuvres in The Dark’s Andy McClusky, Bryan Ferry, Culture Club, Devo, Fine Young Cannibals, Iggy Pop, Lenny Kravitz, the Prodigy’s Liam Howlett, Martha and the Muffins, Guru Josh AKA Paul Walden, Richard Ashcroft, Robbie Williams, Soul II Soul, Stereo MCs, Tears For Fears, Terence Trent D’arby, Texas, the Beloved, the Human League, Ben Harper, the Goo Goo Dolls, Ozzy Osbourne, Kurt Cobain, John Barry, Jim Steinman, the Crystal Method, Tool, Warrant, Mark Ronson, and Take That’s Gary Barlow, Jason Orange and Howard Donald. It will also divest Famous Music U.K., which includes song catalogs of Ian Dury and Chaz Jankel, Placebo, and the Kooks.
The EU document suggests that it would prefer the catalogs be sold in whole to a new entrant to the music-publishing sector, and it is appointing a trustee to monitor the divestment, which must be completed within six months.
In studying how Sony/ATV and EMI will look after the deal is completed, the EU noted that the two parties combined share of overall music publishing revenues exceeds 40% only in Romania (40-50%). The Parties’ combined share of such revenues ranges between 30-40% in seven countries (Belgium, Estonia, Greece, Hungary, Poland, Sweden and the UK). On an EEA-wide level the Parties estimate their combined share of overall music publishing revenues to be in the region of 25%, closely followed by Universal (20-30%).
As for other considerations behind the EU approval decision, Impala implied it could have implications for the much more thorough scrutiny of UMG’s deal to buy EMI’s recorded music operation, “The decision sets out the Commission’s reasons for reaching its conclusions, some of which will have a broader impact,” the IMPALA response continues. “For example, it confirms that neither online customers nor piracy are capable of restraining excessive market power.”
However, now that Sony and its consortium has received its approval on its own deal to buy EMI Music Publishing, which will be administered by Sony/ATV, sources say they expect Sony Music Entertainment, the recorded music operation, to become a very vocal critic of UMG’s planned acquisition of EMI’s recorded music operation. It may not have the chance to publicly state like Edgar Bronfman Jr. has in recent weeks, including the Senate hearing on that acquisition, but sources say Sony will now begin to vigorously and vocally oppose the UMG deal behind closed doors. Sony didn’t respond for a request for comment.
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The Music Industry: Issues and changes
Martin Bandier: The 2015 Billboard Power 100
By Ed Christman | February 05, 2015 8:00 PM EST
Last Year’s Rank: 5
In late 2014, when Pharrell Williams‘ “Happy” and John Legend‘s “All of Me” were nominated for Grammy Awards, Martin Bandier used his platform as chief executive of the world’s largest music publishing company to excoriate digital services like Pandora and Spotify for undercompensating artists. In a fiery letter to staffers that went public, Bandier groused that the songwriters of those hits had barely earned any royalties from streaming and on-demand airplay. In the first three months of 2014, 55 million plays of “Happy” had generated just $3,400, and 43 million plays of “All of Me” made $2,700. “This is a totally unacceptable situation and one that cannot be allowed to continue,” he charged in the letter.
Bandier is doing more than complaining: He has threatened to completely withdraw the Sony/ATV and EMI Music Publishing catalogs from all performance rights organizations unless changes are made in how songwriters are compensated. Such is Bandier’s power that this is no idle threat. “We have taken every legitimate approach we can to get better rates for our songwriters,” he tells Billboard. “We are hoping for the best, but we are preparing for the worst.”
Meanwhile, the chairman, who’s married with three children, dealt with more at year’s end. Email leaks from the Sony Pictures hack had Sony corporate executives considering the sale of its music publishing assets. Bandier maintained, with typical cigar-chomping brio, that while no such sale was in the works, “given we are without a doubt the world’s leading and best music publisher … who wouldn’t want to own a company like that?”
Fair point: In its most recent fiscal year ended March 31, 2014, Sony/ATV’s annual revenue grew to about $664 million for the year, up from $560 million in the prior year. Additionally, Sony/ATV, in a joint venture with the Michael Jackson estate, owns 39 percent of EMI Music Publishing, which itself generates about $750 million in annual revenue.
“Sony/ATV produced the best year I ever had as the head of a music publishing company,” says Bandier. “Look at the Grammy category for record of the year: Sony/ATV is a publisher for each song nominated. We own The Beatles and Motown song catalogs.” In short, he declares, “We are the greatest content holder in the music publishing era.”
Publishers Q2 Report: Sony/ATV Is Holding Onto the No. 1 Spot — But Barely
By Ed Christman | August 20, 2015 12:00 PM EDT
The publisher wins its 12th consecutive No. 1 ranking by a fraction as The Weeknd’s “Earned It” helps drive runner-up Warner/Chappell to its best quarter since Billboard rankings began in 2006.
Sony/ATV has had a lock on the No. 1 spot in the publishers ranking for three years running. But the second quarter of 2015 saw the company holding its lead by just 0.3 percent — and, for the first time since Sony/ATV began administering EMI Music Publishing in July 2012, its market share dipped below 20 percent.
For the quarter ended June 30, Sony/ATV generated a 19.7 percent market share by landing 52 of the top 100 radio songs — a nearly 5 percent drop from the first quarter, when it turned in a 24.3 percent share on the strength of 55 songs. Walk the Moon’s “Shut Up and Dance,” the second quarter’s No. 2 song, was its top performer; the company also was the top country publisher.
The quarter’s big gainer? Warner/Chappell Music, which scored its highest market share — 19.4 percent — since Billboard began ranking the top 10 publishers in the second quarter of 2006. Leading the way for Warner/Chappell was the quarter’s top song, The Weeknd’s “Earned It (Fifty Shades of Grey).” The company placed 42 titles in the top 100, the same number it had in the first quarter, when its share was just 14 percent.
BMG also had a big quarter, with slightly less than an 11 percent share on the strength of 27 top 100 titles, the company’s best showing since it first entered the rankings in Q2 2010 — and a big step up from its 7 percent and 22 songs in Q1. Its top cut was Jason Derulo’s “Want to Want Me.” Universal Music Publishing Group was down slightly, to 15.1 percent from 15.3 percent in the first quarter — and dropped from No. 2 to No. 3.
Indie Black River Entertainment landed in the top 10 for the second time since 2006, with 1.8 percent on four cuts in the top 100, including the No. 23 song, Sam Hunt’s “Take Your Time.”
The publishers ranking measures the market share of publishing administrators, and are based on Nielsen Music rankings of the top 100 radio airplay songs for the quarter and song splits compiled by The Harry Fox Agency. Nielsen Music detects airplay on 1,569 pop radio stations and 224 country outlets.
This article first appeared in the Aug. 29 issue of Billboard
Martin Bandier Writes Letter to Songwriters Warning of Justice Dept. Changes
By Ed Christman | September 08, 2015 10:51 AM EDT
The leading publishing executive shares his concerns with changes being considered by the Department of Justice to the long-standing consent decrees.
In a letter to Sony/ATV Music Publishing songwriters, chairman/CEO Martin Bandier warns that songwriters’ incomes may be negatively impacted by changes being contemplated by Dept. of Justice’s continuing review of the consent decrees by which collection societies ASCAP and BMI operate.
The major publishing companies requested that the DoJ review the 75-year-old consent decrees in an attempt to secure the right to withdraw digital rights from blanket licenses, but remain with ASCAP and BMI for all other performance licensing. The DoJ’s review became necessary in the wake of both ASCAP and BMI’s rate court judges having ruled that partial withdrawals of digital rights were not allowed under the consent decree; publishers either had to be all-in or all-out.
While the DoJ appeared to be initially considering granting that wish, “this process has taken an unexpected turn in recent weeks that, if not addressed, could have a significant impact on your earnings as well as restrict how you work creatively,” writes Bandier in his letter to songwriters.
As reported first by Billboard, “the DoJ is considering requiring ASCAP and BMI to engage in what is called 100% licensing,” the letter states, in which any writer or rights holder can issue a license for 100 percent of a song.
Bandier issued the letter urging songwriters to attend a “Songwriter Town Hall” being held by the National Music Publishers Assn. tomorrow (Sept. 9). The purpose of the meeting is to update songwriters on the changes that are currently being considered by the DoJ.
While the law states that each stakeholder in a song has the right to license the entire song without seeking the permission of other stakeholders, industry practice has been that each stakeholder would only license their portion of the song, according to music publishing executives. But some music licensees, i.e., radio and certain digital music services, have never acknowledged this industry practice and have long maintained that all they need is the license from one of the songs rights owners.
If the DoJ comes down in favor of the stance favored by music licensees, Bandier warns “a streaming service could bypass you and your PRO and go to your collaborator’s PRO to obtain a license for the entire song without your consent.” If that happens, writers would then be subject to that PRO’s rate, even if it is lower than their own PRO’s rate, he concludes. Moreover, Bandier wonders how a songwriter would receive payment, if that songwriter has no relationship with the other PRO.
“This would substantially disrupt the well-established practice of licensees entering into agreements with each PRO representing whatever piece of a song they control and create significant accounting inefficiencies as PROs would have to pay royalties to songwriters not affiliated with them,” writes Bandier.
Once that starts happening, songwriters might reconsider who they collaborate with, he suggested.
“Requiring PROs to grant 100% licenses would be an unprecedented change to well-established licensing practices create widespread administrative confusion and potentially undermine a songwriter’s relationship with his or her chosen PRO,” Bandier concludes.
Sony/ATV Music Publishing and Pandora Sign Unprecedented Licensing Agreement
NEW YORK & OAKLAND, Calif.–(BUSINESS WIRE)–Pandora (NYSE:P), the world’s most powerful music discovery platform, and Sony/ATV Music Publishing, the world’s leading music publisher, today announced a multi-year licensing agreement for Sony/ATV’s catalog of musical works. The direct publishing deal creates business benefits for Pandora, while modernizing compensation for Sony/ATV and its songwriters in the U.S.
“We believe that this agreement with Pandora is a major step in the right direction to ensure that our songwriters are fairly compensated for the use of their music on streaming services,” said Martin Bandier, Sony/ATV Chairman and CEO. “We are pleased that our songwriters will begin to enjoy the benefit of better rates on one of the most important platforms for music consumption and discovery. It is part of our ongoing strategy to ensure that all digital music services recognize the indispensable value that the words and music of a song bring to their businesses.”
“This is a significant milestone in our long-standing effort to strengthen ties with the music maker community,” said Brian McAndrews, chief executive officer of Pandora. “Over 10 years, Pandora has built music’s most powerful marketing engine, which we put into action every day for Sony/ATV’s storied catalog. By partnering directly with Sony/ATV, we are proud to lock in our opportunity to connect an incredibly talented community of songwriters with streaming music’s largest and most passionate audience.”
While specific terms of the multi-year agreement are confidential, the companies worked together to build an innovative win-win approach to publisher economics. Sony/ATV achieved its goal of delivering improved performance royalties for its songwriters while Pandora will benefit from greater rate certainty and the ability to add new flexibility to the company’s product offering over time.
The public performance royalties Pandora also pays to rights holders of master recordings are not affected by this agreement.
Pandora is the world’s most powerful music discovery platform – a place where artists find their fans and listeners find music they love. We are driven by a single purpose: unleashing the infinite power of music by connecting artists and fans, whether through earbuds, car speakers, live on stage or anywhere fans want to experience it. Our team of highly trained musicologists analyze hundreds of attributes for each recording which powers our proprietary Music Genome Project®, delivering billions of hours of personalized music tailored to the tastes of each music listener, full of discovery, making artist/fan connections at unprecedented scale. Founded by musicians, Pandora empowers artists with valuable data and tools to help grow their careers and connect with their fans.
ABOUT SONY/ATV MUSIC PUBLISHING
Sony/ATV Music Publishing, established in 1995 as a joint venture between Sony and Michael Jackson, is the world’s leading music publisher. Together with EMI Music Publishing, Sony/ATV owns or administers around 3 million copyrights including those from such iconic music catalogs like Leiber & Stoller, Mijac Music, Motown and Famous Music. Sony/ATV also controls many of the best known songs ever written like “New York, New York”, “Hallelujah”, “All You Need Is Love”, “You’ve Got a Friend”, “Moon River”, “Jailhouse Rock”, “The Mission Impossible Theme”, “Ain’t No Mountain High Enough”, “Over the Rainbow”, “Stand By Me”, “I Heard It Through The Grapevine” and “Singin’ in the Rain”. In addition, Sony/ATV represents the copyrights of such legendary artists as The Beatles, Leonard Cohen, Bob Dylan, Marvin Gaye, Michael Jackson, Carole King, Kraftwerk, Joni Mitchell, Willie Nelson, Roy Orbison, Queen, The Rolling Stones, Richie Sambora, Sting, The Supremes, Wyclef Jean, Hank Williams and Stevie Wonder, among others. Its ever-growing list of chart-topping artists, writers and producers includes Akon, Avicii, Calvin Harris, Jessie J, Alicia Keys, Lady Gaga, P!nk, RedOne, Shakira, Ed Sheeran, Sam Smith, Stargate, Taylor Swift, Kanye West and Pharrell Williams.
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Oct 27, 2015 @ 09:10 AM 588 views
For Michael Jackson And Sony/ATV, A Billion-Dollar Thriller Looms
Zack O’Malley Greenburg ,
Thirty years ago, Marty Bandier was preparing to offer an eccentric Australian billionaire $50 million for ATV, the music publishing catalogue home to the Beatles and others. He probably would have succeeded in purchasing it–had it not been for Michael Jackson.
Bandier learned this for himself when he arrived in London and met the aforementioned mogul, Robert Holmes a Court, who informed him the catalogue was off the market. Bandier immediately upped his offer by $500,000, but was told another bidder had included something unique: a charity performance at Holmes a Court’s home in Perth. The well-connected Bandier pressed on, saying he could bring just about any big act to Australia.
“No, no, you don’t understand,” said Holmes a Court. “I’m selling this to Michael Jackson.”
Full Coverage: The 13 Top-Earning Dead Celebrities
Bandier, who told me this anecdote while I was reporting my book Michael Jackson, Inc., eventually linked up with his desired catalogue: today, he’s the chief of Sony /ATV, a joint venture between the electronics giant and Jackson’s estate. The entity, created in the mid-1990s as part of a deal that earned Jackson over $100 million, is now estimated to be worth about $2 billion–and earlier this month, Sony decided to initiate a sale process.
Bandier reportedly sent a memo to his employees earlier this month saying Sony had triggered a clause in its agreement with the Jackson estate that could lead to one side buying out the other, or to an outside buyer coming in and purchasing half or all of Sony/ATV sometime in the coming months.
When I contacted Sony/ATV last week and asked for a comment from Bandier regarding the state of the sale process, representatives referred me to a Sony; a spokesperson there declined to comment. Some have speculated that the Japanese conglomerate is looking to sell its stake for the same reason it sold its New York headquarters for $1.1 billion in 2013: to raise cash.
John Branca, the co-executor of Jackson’s estate, told me that it’s too early to know who all the bidders would be, but that the estate would be among them. Said Branca: “We intend to buy the company.”
That’s a remarkable statement, considering the state of Jackson’s finances in the years before he passed away. The singer had accumulated nearly half a billion dollars in debt, most of it high-interest and taken out against his half of Sony/ATV.
But since his death in 2009, the Jackson estate has pulled in over $1 billion in pretax earnings, enough to pay off his personal debts and more. He earned $115 million over the past year alone, easily garnering him the top spot on our Halloween-spooky list of Top-Earning Dead Celebrities.
“This major disaster gave him a chance to shine,” says Josh Rubenstein, National Chair of Trusts and Estates at Katten Muchin Rosenman LLP. “Jackson’s untimely and dramatic death, with all the drama surrounding it, also creates this allure.”
With that sort of earning power continuing in seeming perpetuity, Jackson’s estate could conceivably work out financing, perhaps with a partner, to acquire Sony’s stake of its joint venture. And if recent trends in the music business cause the price tag to drop a bit, the chances improve.
“There is certainly concern due to the low royalties music-steaming companies are paying to music publishers and songwriters,” says Dale Kawashima, a former president of ATV who now runs SongwriterUnvierse. “There’s great value in buying a great company like Sony/ATV, but there’s some uncertainty in terms of what the royalties will be moving forward.”
Another issue that could ding the catalogue’s value is the potential reversion of Lennon-McCartney copyrights. In the U.S., songs signed to publishers after 1972 revert to the creator after 35 years; for songs signed before then, the term is 56 years, which would put some of the Beatles’ songs in play in the not-so-distant future.
That said, it’s hard to know what sort of deals might have already been signed behind closed doors to extend Sony/ATV’s relationship with McCartney and/or the estate of Lennon. Either way, the aforementioned scenario would be for the U.S. only, and the Beatles certainly enjoy tremendous popularity around the world.
Sony/ATV’s roster is also stacked with other superstars from Taylor Swift to Eminem, with new ones being added nearly every day (most recently a cappella sensation Pentatonix). Potential bidders will likely use the 2011 sale of Warner Music Group, which valued the company at about $3 billion–roughly two-thirds of that coming from its publishing division–as a comparable deal.
Whatever happens to Sony/ATV, one thing seems certain: it will underscore Jackson’s little-known business savvy. He made his share of financial blunders, to be sure. But in death, it appears he’s either in line to make a billion-dollar purchase or earn a billion-dollar windfall. Watching this unfold should be nothing short of a thriller.
Sony/ATV sale expected to attract rivals, private equity
Sony/ATV Music Publishing has made a killing from famous songs like the Beatles’ “Yesterday,” but what tomorrow brings is far from certain for the company that controls some of the world’s biggest hits.
The music publisher manages 3 million copyrights and a roster of songwriters that includes the likes of Taylor Swift, Lady Gaga and Ed Sheeran. Since 1995 it has operated as a joint venture, split evenly between Tokyo-based tech giant Sony Corp. and the estate of Michael Jackson.
Ownership of the world’s largest music publisher is likely to change now that Sony has begun a process to potentially sell its half of the enterprise, which as a whole is said to be worth close to $2 billion. Sony’s bankers are trying to determine the joint venture’s current valuation, and music executives and financiers have held meetings in the last week to discuss the catalog’s future.
The Jackson estate appears to want to use this moment as an opportunity to find a new strategic partner, according to a person familiar with the talks who was not authorized to speak publicly. Potential candidates include rival music companies like Warner Music Group, as well as private equity firms such as Apollo Global Management, the person said.
A transaction could generate a big cash pile for Sony, which has struggled lately in other areas of its electronics business. Speculation about a sale has been in the wind for roughly a year, and even came up in emails exposed in last year’s cyberattack on Sony Pictures.
The impending changes come at an uncertain time for music publishers, which handle the songs and compositions behind the sound recordings heard on iTunes, radio and streaming services. Sony/ATV and rivals have been trying to get higher royalty rates from the growing industry of online streaming services such as Pandora, Spotify and Apple Music.
“When, at some point, the current debate around royalties and streaming gets worked out, this may prove to be a shortsighted trade,” said Joe Rapolla, a music professor at Monmouth University and former record label executive. “But since no one knows how long that will take. Sony may want the cash now.”
Sony executives told employees this month that the company has triggered a clause in its contract with the Jackson heirs that could lead to a change of ownership, allowing either Sony or the estate to buy out the other partner’s 50% stake. It’s one major step in a process that “will play out over the next several months,” according to an internal memo Chief Executive Martin Bandier, 74, sent to staff.
“I remain confident that for all of us it will be business as usual during this process and that our best years are still ahead of us,” Bandier wrote.
Indeed, Sony has continued to make deals with songwriters, announcing worldwide publishing agreements with singing group Pentatonix and Norwegian deejay Kygo in just the last month. It’s also preparing to move into new offices in New York and the Los Angeles area. The L.A. operations will relocate from Santa Monica to Sony Pictures’ Culver City lot.
When, at some point, the current debate around royalties and streaming gets worked out, this may prove to be a shortsighted trade.– Joe Rapolla
Theories abound over Sony/ATV’s future.
In one of the scenarios being discussed, Sony would sell its half and the Jackson estate would also cash out a portion of its share to a new co-owner. The estate may want to partner with a company already in the publishing business.
Warner Music Group, the third-biggest record label, is expected to take a look, and it already owns a major publisher in Warner/Chappell Music. Rights management company BMG, a subsidiary of German media firm Bertelsmann, could kick the tires with the help of outside investors. However, BMG Chief Executive Hartwig Masuch told the Financial Times this week that it would not be tempted to make a play.
Vivendi-owned industry titan Universal Music Group is not expected to be a buyer, due to antitrust hurdles.
Sony/ATV did not make Bandier available for interviews.
Representatives for Sony Corp. of America, the estate of Michael Jackson, Warner Music Group, Universal Music Group and Apollo Global Management declined to comment.
Jackson paid $47.5 million for ATV Music, the publishing company that owned the Beatles catalog, in 1985. That deal sent shock waves through the music industry at the time and would badly damage the relationship between Jackson and former Beatle Paul McCartney, who had collaborated on songs like “The Girl Is Mine” and “Say Say Say.”
In 1995, Jackson merged the business with Sony’s music publishing arm to form Sony/ATV. Jackson died in 2009.
Sony took in $591 million in revenue from music publishing in its most recent fiscal year, according to a public filing from the company, up about 6% from the previous year. By comparison, the Sony Music record label that represents the likes of Adele and Beyonce generated nearly $3.2 billion in sales during the same period.
Larry Miller, director of the music business program at NYU Steinhardt, said the publishing business could be particularly attractive to companies looking for long-term, stable bets rather than assets they can flip in a few years. Publishers make money when their songs are placed not only with recording artists for their albums, but also in TV shows, movies, video games and commercials.
“There are more uses for music every day,” Miller said. “Music publishing as an asset class is looking better and better.”
Though publishing remains a valuable business amid the industry’s shifts, analysts believe one stumbling block to a deal includes Sony/ATV’s high valuation. Many logical buyers would have to raise money to make a play. A bid from a major competitor, such as Warner Music, would also invite regulatory scrutiny.
Analysts do not expect the sale of Sony/ATV to be simple.
“The whole thing’s an animal,” said a music executive who asked not to be named as to not damage business relationships. “If you’re going to sell it, you have to clean it up.”
As Sony/ATV Mulls Over Sale, Questions Arise Over Martin Bandier’s Succession
By Ed Christman | October 15, 2015 10:00 AM EDT
When Sony Entertainment CEO Michael Lynton announced on Oct. 8 the company had initiated a buy/sell process for Sony/ATV Music Publishing — in which one of Sony/ATV’s two joint owners, Sony Corp. and the Michael Jackson estate, is obligated to buy out the other or open up the bidding to additional parties — all eyes turned to veteran chairman/CEO Martin Bandier. Would the 74-year-old head of the country’s top music publisher survive a changing of the ownership guard?
While both Lynton and Bandier sent reassuring memos to their staffs — with Bandier’s boasting “our best years are still ahead of us” — the buy/sell takes place against a backdrop that includes a new contract negotiation for Bandier (sources say his deal is up at the end of March 2016 and he’s pushing for an extension) and Lynton’s weariness with what insiders describe as a prima-donna attitude displayed by Sony Music executives in general and Bandier in particular. (Bandier declined comment for this article.)
In fact, sources say one reason Sony would want to sell its lucrative publishing business, which has an estimated value of $2 billion (its songwriters include Taylor Swift, Lady Gaga, Ed Sheeran, Lennon & McCartney and Leiber & Stoller) and has ranked as Billboard’s top publisher for more than three years, is because there is no succession plan in place for Bandier, who has spent his 40-year career in publishing.
Prior to taking the top job at Sony/ATV in 2007, Bandier spent 18 years at the helm of EMI Music Publishing and, in 2012, helped engineer the acquisition of his former employer. (Sony’s share of EMI is not a part of the buy/sell.)
Bandier has mentored a generation of top publishing executives during his decades in the business, and his top proteges, Jody Gerson and Jon Platt, are now running two of his competitors — respectively, Universal Music Publishing Group (with revenue of about $1 billion) and Warner/Chappell Music (revenue of about $500 million). This, says an insider, leaves no obvious successor at Sony/ATV and reminds Sony upper management of the sting of Gerson’s departure in 2014 — an exit many viewed as a failing on Bandier’s part.
Insiders point to several possible heirs apparent. Guy Moot, who serves as Sony/ATV’s president of U.K. and European creative, is said to be Bandier’s favorite. Other front-runners include Sony/ATV U.S. co-presidents Rick Krim and Danny Strick, CFO Joe Puzio, executive vp business and legal affairs Peter Brodsky and executive vp advertising, film and TV Brian Monaco. Another contender is John Branca, a trustee of the Jackson estate with John McClain. “Branca really wants to take this over,” says a source. While Branca’s relationship with Bandier had been close, a source says it has become strained in recent months due to Bandier quashing the estate’s voice in the Sony/ATV dealings. (Reps for Sony Corp. of America, Sony/ATV and the Jackson estate declined comment.)
Although it’s no secret within Sony that Lynton is not a fan of Bandier, sources expect the latter’s contract to be at least partially extended for the sake of continuity. “If you are launching this process, there are already enough moving parts,” says one insider.
“Marty eventually pushes away, or out, anybody he perceives as a threat to his leadership,” says a former employee, noting that with the veteran publisher’s options being limited (he’s not likely to take over UMPG or Warner/Chappell), his bargaining power is only so strong. Another insider adds, “There is no succession plan, and that’s by Marty’s design.”
This article was first published in the Oct. 24 issue of Billboard.
Thursday, October 15, 2015
BRANCA SETS THE
Mega-Attorney Disputes Story About Sony/ATV’s Fate
The Bible has messed up again. In a story posted this morning about the possible sale of Sony/ATV (triggered by Sony’s activation of a buy/sell provision), Ed Christmandescribed John Branca, mega-attorney and executor of the Michael Jackson Estate, as a “contender” to succeed Marty Bandier as Chairman/CEO of the world’s biggest publishing company.
To support this claim, the reporter quoted an unnamed source as stating, “Branca really wants to take this over.” The source is then paraphrased as saying that Branca’s relationship with Bandier had been close but has become strained in recent months due to Bandier quashing the estate’s voice in the Sony/ATV dealings.
Our source is somewhat more reliable, and we can name him: Branca himself. “I did not talk to them,” he wrote in an email, “but Marty has been my dear friend for 30 years, and I completely support him. The story says we want to take the company over—true—but I do not want Marty’s job.”
Christman notes that “Reps for Sony Corp. of America, Sony/ATV and the Jackson estate declined comment”—thus, the veracity of the story hangs on one ill-informed anonymous source as well as “a former employee.” Wonder who those are? 
Wednesday, October 14, 2015
I.B. BAD BUYS & SELLS
UNCERTAINTY SHAKES #1 PUBCO: Last Thursday (10/7), The Wall Street Journal broke the news that Sony Corp. had recently triggered a clause in its contract with Sony/ATV co-owner the Michael Jackson Estate, which allows one party to buy out the other. The initiation of the buy/sell process was confirmed by Sony Entertainment chief Michael Lynton in an email to Sony/ATV employees disseminated as a result of the WSJ report and intended to calm troubled waters.
The initiation of the buy/sell clause by the Sony Corp. leadership in Tokyo reportedly blindsided Lynton, Estate executor John Branca and Sony/ATV ruler Marty Bandier, an odd move indeed given that Sony and the Estate are 50/50 partners in the pubco. In a typical scenario, the partners would meet behind closed doors and come to a joint decision. It’s clear that Sony’s move has been a major disruption for everyone involved and will continue to be a distraction until the situation is resolved.
Sony/ATV’s estimated value is around $2 billion, and is expected to appreciate in the coming years. The company has been throwing off sizable profits; according to Sony regulatory filings, the pubco generated $560m in revenue last year with $580 projected for 2015. Sony owns 29% and the estate owns 10% of EMI Music Publishing, which was acquired by a coalition of investors in 2012.
Sony will buy out the Jackson Estate or vice versa, depending on which party is more highly motivated and willing to write the bigger check. Branca is expected to aggressively pursue the acquisition, and most believe he’ll no trouble building a war chest through investment banks, sovereign funds or a combination of the two. Either way, it’s a win-win for the Estate, which will wind up with the world’s most valuable publishing company or a huge check. If struggling Sony takes full ownership of Sony/ATV, it could conceivably put the pubco on the block and initiate an auction, which would likely draw plenty of suitors in pursuit of much-needed cash to pay down debt. But this is pure speculation.
In any case, those close to the action expect Bandier and his executive team to continue running the company, no matter which of the two parties winds up owning it.
Is Sony Really Trying to Sell Its Publishing Giant? Behind the Scenes of the Sony/ATV Deal
By Ed Christman | October 08, 2015 1:06 PM EDT
It appears that Sony Corp. has triggered a clause in its co-ownership agreement of publishing giant Sony/ATV, which it shares with the Michael Jackson estate, that allows for either party to initiate a buyout of the other, signaling that the beleaguered multinational is looking to either sell its half of the Sony/ATV joint-venture ownership to the Michael Jackson estate or buy Jackson out. The reasons for the trigger remain mysterious, though a problematic relationship between the partners is an oft-cited rumor. Whatever the outcome, the finish line on any deal remains far in the distance. The news was first reported by the Wall Street Journal‘s Hannah Karp.
Speculation is rampant that this process will end with Sony/ATV on the auction block, but the process could end more simply, with one partner buying out the other and the sole owner living happily ever after.
“The buy-sell process has been initiated, and it hasn’t been determined yet among the two as to who the buyer and who the seller is,” says one source with knowledge of the proceedings. “What happens after the process, when one of them owns the entire company, is unknown at this point.” Sony declined a request for comment.
Of the two partners, its more probable that Sony will buy out the Michael Jackson estate (the “ATV” in Sony/ATV) than the reverse. While administrators John Branca and John McClain have returned the Jackson estate to solid financial footing, it’s likely that Jackson’s heirs would prefer to sell their stake in the company.
Sony/ATV has an approximate valuation of $1.5 billion, and its 39 percent stake — 29 percent for Sony, 10 percent for the Jackson estate — in EMI Music Publishing was valued at $860 million at the time of its $2.2 billion acquisition in July 2012. The current process only impacts Sony/ATV proper, not its stake in EMI, according to sources. The EMI catalog has a separate group ownership, composed of Sony Corporation of America, the Estate of Michael Jackson, Mubadala Development Company PJSC, Jynwel Capital Limited, the Blackstone Group’s GSO Capital Partners LP and David Geffen.
Now for some hypotheticals. If Sony does buy out the Jackson heirs, what’s next? Would it put it up for sale or once it has ended a complicated ownership structure? Or does it embrace and nurture it?
In its most recent fiscal year ended March 31, 2015, Sony/ATV produced revenues of 70.96 billion yen, or about $593 million, up from $559 million on a constant currency basis.
The question of whether to sell Sony/ATV comes at a time when publishing assets, while still prized, no longer generate the lofty valuations of even three or four short years ago. Previously, publishing assets were selling for multiples of 12 to 13 times net of a publisher’s share (also known as gross profit). Now, publishing assets typically trade on 10-12 times NPS, usually nearer to the lower figure.
Selling the company would, at least, spare Sony senior management any headaches around CEO Martin Bandier’s succession — replacing the executive, a deeply rooted industry legend, would not be an easy headhunt. It would also help pay down the parent Corp.’s corporate debt, easing a skittish market’s concerns. But if Sony were to buy the Jackson estate out, it would give them complete control of an asset that might fetch a higher multiple a few years down the line, if streaming proves to be the savior of the music industry that many hope it will become.
If put on the block, the only strategic companies that could even afford to buy, and operate, the giant would be Warner Music Group, BMG, and Universal Music Group — though the latter could face antitrust concerns. When Imagem came up for sale, there was a scarcity of buyers who could afford its $650 million price tag, ending in a busted auction.
One other industry player could afford Sony/ATV — but would the EMI investors buy out the 38 percent stake that Sony/ATV owns, and then double down by buying Sony/ATV itself?
Other possibilities include a private equity firm snapping up the giant. Private firms have been known to value publishing assets due to the relative predictability of their revenue streams. Martin Bandier himself is also said to strongly desire owning Sony/ATV — but could he align the financial backing from private equity to pull off such an acquisition in light of his age (73), and with no obvious successors in sight?
Bandier’s two biggest proteges, Jody Gerson and Jon Platt, are now running, respectively, the Universal Music Publishing Group (with annual revenues of about $1 billion) and Warner/Chappell Music (with annual revenues of about $500 million), the latter having been appointed just this week. There are no executives at Sony/ATV who are thought ready to replace Bandier, although he has been grooming Guy Moot, who serves as Sony/ATV’s president of U.K. and European creative.
When Gerson walked out the door about a year ago, Sony’s upper management were upset that Bandier failed to retain the respected executive.
Bandier attempted to assuage his employees following the Dec. rumors of a sale — which bubbled up through the muck of the Sony hack — writing in a memo to staff: “I have been advised by Sony Corporation that Sony/ATV is not for sale and I can well understand that given we have just had our best year ever both creatively and financially and without a doubt we are the world’s leading and best music publisher with more great things set to come over the next 12 months. Who wouldn’t want to own a company like that, including Sony Corporation?” At that time, however, sources told Billboard that Sony Corp. senior management hadn’t reached a final decision on Sony/ATV.
“Its more likely that Sony buys [out the Jackson estate],” says one knowledgeable source. “They already own a record company, and they seem to like that. Music publishing is a stable business and a good fit with a record label. Logically, you would think Sony is the long-term owner of Sony/ATV at the end of the day.”
As one source put it: “Its very fluid situation at this point.”
Sony Corp. Reportedly Moving Forward with Sale of Publishing Market Leader Sony/ATV
October 08, 2015 8:35 AM EDT
After emerging as a possibility in the wake of a massive hack last year, Sony Corp’s rumored ambition to sell its 50 percent stake in Sony/ATV is inching closer to a reality.
Sony/ATV is a 50/50 joint-venture between Sony Corp. and the Michael Jacksonestate. Sources have told the Wall Street Journal and Financial Times that Sony Corp. has pressed the button on a buy-sell clause, which means the late King of Pop’s estate now has the option to buy out its partner’s share. Billboard is seeking to independently confirm the news. If true, it is anticipated the sale could fetch more than $1 billion.
Sony Corp. and Jackson’s estate also own a combined 39.8 percent — 29.8 percentage points by the former and almost 10 percentage points by the latter — of EMI Music Publishing, thanks to a consortium put together by then-Sony Corp. of America CFO Rob Wiesenthal. That consortium — which also consists of Mubadala Development, Jynwel Capital Ltd., the Blackstone Group’s GSO Partners and David Geffen — paid $2.2 billion in June 2012 for EMI’s publishing catalog. EMI Music Publishing itself generates about $750 million in annual revenue.
A true music publishing giant, Sony/ATV and EMI’s assets include such crown jewels as the former’s Beatles catalog and the latter’s Motown catalog. Led by chairman/CEO Martin Bandier, Sony/ATV Music Publishing reported annual revenue grew to about $664 million for fiscal year ended March 31, 2014, up from $560 million in the prior year.
The rumor mill ground away last year thanks to a string of emails leaked in the Sony Pictures hacks. According to one of those leaked messages, Sony CFO Kenichro Yoshida raised concerns about the music publishing business, who understatedly remarked that the company “has a rather complex capital and governance structure and is impacted by the market shift to streaming.” In a recent group interview, Sony president Kazuo Hirai said his company’s turnaround is going well (not counting smartphones).
Bandier, who told Billboard earlier this year his company is “the greatest content holder in the music publishing era,” came in at No. 4 on the 2015 Billboard Power 100.
This is a developing story, more to come…
Sony Exploring Sale of Music-Publishing Unit
By Dow Jones Business News, October 07, 2015, 05:45:00 PM EDT
Sony Moves Toward Sale of Music-Publishing Unit
Sony Corp. is moving closer to selling off its half of Sony/ATV Music Publishing, after recently triggering a clause in its contract with its co-owner, the Michael Jackson estate, that allows one party to buy out the other, according to people familiar with the matter.
The world’s biggest music-publishing company, Sony/ATV is co-owned by Sony and the estate of the late pop star. Sony and Mr. Jackson—and after his 2009 death, his estate—have jointly owned the company since 1995, each with a 50% stake.
Sony/ATV’s catalog includes the copyrights to most of the Beatles’ songs, as well as songs by stars ranging from Marvin Gaye and the Rolling Stones to pop’s Taylor Swift and dance music’s Calvin Harris. Unlike record labels, which own and distribute sound recordings, music publishers own rights to lyrics and melodies and license them out for various uses—including recordings released by record labels.
Music industry veterans estimate Sony/ATV’s value at around $2 billion. Sony hasn’t put a price tag on its share yet, the people familiar with the matter said, adding the process isn’t a public auction pending the outcome of direct negotiations between Sony and the Jackson estate. Lenders were notified when Sony triggered the exit clause last month, these people added. There is no guarantee the process will result in Sony selling its half.
Sony/ATV’s structure grants both partners the right to counter any offer to buy out the other side, as well as to bid for the half each doesn’t own.
The potential sale of its stake in Sony/ATV could help Sony raise cash following a multiyear restructuring aimed at shrinking the Japanese company’s dependence on its beleaguered consumer-electronics businesses, such as televisions and mobile phones.
Sony’s net profit more than tripled during the quarter ended June 30 to ¥ 82.44 billion ($685 million), thanks to strong sales of videogames and smartphone image sensors. While the music-publishing business is profitable, generating ¥ 66.9 billion in revenue for Sony last year and a projected ¥ 70.1 billion this year, according to Sony regulatory filings, it doesn’t mesh with Sony’s other businesses. It operates separately from Sony’s record label, Sony Music Entertainment.
Sony appears to have been considering the sale of its Sony/ATV stake for a nearly a year, if not longer.
The potential sale was mentioned in emails among top Sony executives in November of 2014—emails that were among thousands of documents stolen by hackers and posted online. In one email exchange following a planning meeting last year, Sony Corp. of America Chief Financial Officer Steve Kober wrote to Sony Entertainment Chief Executive Michael Lynton that they were trying to keep the potential sale “top secret.”
Mr. Jackson bought ATV Music Publishing for $47.5 million in 1985, and sold Sony a 50% stake for more than $100 million in 1995. Mr. Jackson died in 2009 while preparing for a comeback tour.
In 2012, Sony and Mr. Jackson’s estate joined other investors, including Abu Dhabi’sMubadala Development Co. and music mogul David Geffen, to acquire EMI Music Publishing for $2.2 billion, and Sony/ATV Music now generates revenue administering the EMI catalog for the investor group.
It isn’t clear whether Sony would package its share of EMI in a sale.
Sony Weighs Selling Part of Music Catalog
By BEN SISARIO OCT. 8, 2015
Sony is considering selling part of its holdings in music publishing — the lucrative part of the music business that deals in songwriting — through a potential deal for Sony/ATV, the catalog of songs that it owns with the estate of Michael Jackson, according to three people with knowledge of the company’s plans.
Sony has set off a so-called buy-sell clause in its contract with the Jackson estate that would allow either partner to acquire the half it does not already own, according to these people, who spoke on condition of anonymity because the talks are private and said to still be at an early stage.
With a collection of about one million copyrights, including hits by Taylor Swift and Lady Gaga, nuggets like “Stand by Me” and its jewel, 251 songs by the Beatles, Sony/ATV is a prime catalog in the growing business of music publishing, and it is said to be worth at least $2 billion.
Sony’s intentions in setting off the sale process were not entirely clear. The troubled Japanese company has considered selling its music publishing assets before, perhaps as a way to raise cash, something that was revealed late last year in private emails among top Sony executives that were made available to the public by hackers. But a person briefed on Sony’s talks said that the company had not decided whether it ultimately wanted to sell its portion or buy the Jackson estate’s half. At this stage, according to another person, the potential sale is not an auction and does not include outside bidders.
Another complication in the process is that EMI, an even larger catalog that Sony/ATV administers, is not included in the deal. Sony, as a minority partner, helped buy EMI for $2.2 billion in an acquisition that closed in 2012. (The other partners in that deal were the sovereign wealth fund the Mubadala Development Company of Abu Dhabi, Jynwel Capital of Hong Kong, Blackstone’s GSO Capital Partners and the Hollywood mogul David Geffen.) The Sony/ATV and EMI catalogs are maintained as separate legal entities but are administered jointly by Sony/ATV; together, the catalogs contain about three million songs.
The history of the Sony/ATV catalog goes back to the British company Associated Publishing in the 1950s. Its music division acquired rights to most Beatles songs in 1968, and in 1985 Mr. Jackson bought the collection for $47.5 million. In 1995, Mr. Jackson sold a 50 percent share of the business to Sony for about $100 million, and the two parties control the catalog through a complex arrangement.
Mr. Jackson died in 2009, and the business of his estate has been administered by John Branca, a powerful music lawyer who had a long association with Mr. Jackson and helped negotiate his original purchase of the catalog.
News of the possible sale of the catalog was previously reported by The Wall Street Journal.
Thursday, October 8, 2015
LYNTON’S BUY/SELL CONFIRMATION MEMO
In an apparent effort to calm nerves frazzled by a 10/7 WSJ report on the possible sale of Sony/ATV, Sony Entertainment CEO Michael Lynton sent an email to the pubco’s staff just as the story was breaking confirming that Sony had initiated the buy/sell process with the Michael Jackson estate and explaining how it might proceed. We’ve obtained that memo; what follows is the complete text.
Dear Sony/ATV Colleagues,
Sony Corporation of America and the Estate of Michael Jackson have begun what is known as a buy/sell process, in which each will have the opportunity to buy the other’s half, or sell its half, of Sony/ATV Music Publishing.
As you know, Sony/ATV is a joint venture between Sony and the Estate of Michael Jackson and operates based on a joint venture agreement. The joint venture agreement lays out procedures for the buy/sell process. Sony considers that now is an appropriate time to review our ownership status and thus has decided to begin this process. We will decide our next steps, based on a number of factors, as this process advances.
The music publishing business has been a stable profit contributor for its partners, and we highly regard the company, its leadership and personnel, and its performance. I strongly believe that, whoever ultimately ends up owning the company, Sony/ATV will remain a great business and a leader in music publishing for many years to come.
This process has just now begun, and as noted our next steps will be based on a number of different factors. For now, I ask that you proceed with business as usual, stay focused on your work, and continue to build on Sony/ATV’s terrific legacy and success.
The Financial Times’ article
The Wall Street Journal’s article
Sony Has No Plans to Sell Music Publishing Business, Lynton Says
Lucas Shaw and Anousha Sakoui January 10, 2015 — 9:32 PM CET
Sony Corp. has no plans to sell the music publishing business that controls rights to songs from the Beatles and Taylor Swift, as was suggested by leaked e-mails, Sony Entertainment Chief Executive Officer Michael Lynton said.
Sony’s music-publishing business, the largest in the world, has a catalog of more than 2 million songs. Music publishers collect songwriting royalties from album sales, use on TV and other performances.
E-mails and documents released in the cyber-attack on Sony mentioned a “top secret” plan to sell the music publishing business because it had few growth prospects, Bloomberg News reported last month. Top management at Tokyo-based Sony was concerned about the complex ownership and governance of the business.
In an Jan. 8 interview, Lynton said a sale isn’t under consideration.
Music publishing accounts for 14 percent of Sony’s music revenue, with recorded music generating the larger part. The business includes Sony/ATV Music Publishing, a joint venture with the estate of Michael Jackson, and EMI Music Publishing, in which Sony has a 30 percent stake.
Sony/ATV CEO Martin Bandier said in a memo to staff on Jan. 9 that he’s been advised by Sony Corp. that the venture isn’t for sale, the New York Postreported.
Sony/ATV was established in 1995 in partnership with Jackson, who had acquired rights to the Beatles songs a decade earlier.
In 2012, Sony paid $2.2 billion for the larger EMI Music Publishing, along with investors including Jackson’s estate, Blackstone Group’s GSO Capital Partners LP, entertainment mogul David Geffen and Mubadala Development Co., owned by the Abu Dhabi government. Sony/ATV administers EMI on behalf of the investors.
The combined Sony publishing business represents stars from Bruce Springsteen to Lady Gaga and songs including “New York, New York,” “Jailhouse Rock” and “I Heard It Through the Grapevine.”
Sony and Jackson’s estate each own half of Sony/ATV, which contains more than 750,000 songs, according to a 2012 press release. EMI Music Publishing has 1.3 million songs in its catalog.
Sony Planned to Sell Music-Publishing Unit Owning Beatles
December 23, 2014 — 8:33 PM CETUpdated on December 24, 2014 — 7:43 AM CET
(Bloomberg) — Sony Corp. was considering the sale of its music-publishing business, including a partnership with Michael Jackson’s estate that owns the Beatles catalog, as recently as last month, e-mails released by hackers show.
The “top secret” plan was being handled in the U.S. by Sony Entertainment Chief Executive Officer Michael Lynton, Sony Corp. of America President Nicole Seligman and their U.S. Chief Financial Officer Steve Kober, according to a Nov. 21 e-mail from Kober. The company had concluded the business had few growth prospects.
Top management at Tokyo-based Sony was concerned about the complex ownership and governance of the business, whose owners also include billionaire David Geffen and Abu Dhabi investors. Details of the sale plan, including possible terms or suitors, couldn’t be determined. The documents were released as part of the cyber-attack on Sony over the movie “The Interview.”
Katie Schroeder, a spokeswoman for Sony at Rubenstein Communications, declined to comment.
Shares of Sony surged 4 percent to 2,568.5 yen in Tokyo, extending this year’s gain to 41 percent.
Publishing accounts for 14 percent of Sony’s music revenue, the main part being recorded music. Sony Corp.’s Chief Financial Officer Kenichiro Yoshida raised questions about the future of music publishing in an Oct. 3 e-mail to his boss, CEO Kazuo Hirai, and Lynton, in a prelude to a meeting of the three, according to messages released by the hackers.
“I’d like to hear your thoughts on the Music Publishing business, which has a rather complex capital and governance structure and is impacted by the market shift to streaming,” Yoshida wrote in the message.
Sony’s deliberations on the publishing business were included in a planning document sent to at least half a dozen Sony executives, according to the Nov. 21 e-mail. That included a presentation that outlined they were considering the sale.
“We are very surprised that the attached listing includes the comment about the sale of Sony/ATV,” Kober wrote. “As you know quite well, this is a top-secret project that is being handled by me working directly with Michael and Nicole.”
The publishing division includes Sony/ATV Music Publishing and EMI Music Publishing.
Sony/ATV was established in 1995 as a joint venture between Sony and Jackson, who had acquired ATV 10 years earlier. Former Beatle Paul McCartney had also tried to purchase the catalog.
In 2012, Sony paid $2.2 billion for the larger EMI Music Publishing, along with investors including Jackson’s estate, Blackstone Group’s GSO Capital Partners LP, Geffen and Mubadala Development Co. owned by the Abu Dhabi government. Sony/ATV administers EMI on behalf of the investors. Messages left for Geffen, Mubadala and Blackstone weren’t returned.
Music publishers collect royalties from album sales, use on TV and other performances. The combined Sony publishing business represents stars from Bruce Springsteen to Lady Gaga and more than 2 million songs, including “New York, New York,” “Jailhouse Rock” and “I Heard It Through the Grapevine.”
The Japanese company and Jackson’s estate each own half of Sony/ATV, which owns more than 750,000 songs, according to a press release from 2012. EMI Music Publishing, in which Sony holds a 30 percent stake, has 1.3 million songs in its catalog.
Together, Sony/ATV and EMI represent the world’s biggest music publishing business, with Sony estimating a global market share of more than 30 percent.
The music publishing business generates about $500 million in annual revenue and $100 million in operating profit, according to a mid-range plan of Sony’s music business in October that was released by the hackers.
Sony’s music-publishing business will probably see sales rise 13 percent over three years to $617 million by fiscal year 2018, according to the mid-range plan circulated internally. Operating profit may rise 23 percent to $123 million during that period.
The e-mails were released as part of a devastating hack on Sony that the FBI said was committed by North Korea over the Hollywood studio’s plan to release the satirical movie “The Interview,” about an assassination plot against the nation’s leader, Kim Jong Un.
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