The Executors Of The MJJ Estate: Wolves In Sheep’s Clothing
STATEMENT FROM THE ESTATE OF MICHAEL JACKSON TO THE FANS:
“As you may recall, last October Sony triggered the “buy-sell” clause in the partnership agreement which provides for one partner to buy out the share of the other at the highest possible price. As has now been announced, the Estate and Sony have signed a memorandum of understanding for Sony to purchase the Estate’s interest in Sony/ATV. A copy of the official press release is also being sent to you. In the intervening months, we explored several options that would have positioned the Estate as the buyer, rather than Sony, and we had substantial interest from potential partners to work with us in doing so. Ultimately, however, Sony’s offer was in the best interest of Michael’s children and we made the difficult decision to accept that offer. The arrangements will further secure the financial future of Michael’s heirs. The amount that Sony is paying, $750 million, is a substantial premium on the Estate’s interest in the company after taking into account the debt of the company, the Purchase Option and other adjustments required under the partnership agreement. It is also a huge testament to Michael’s business acumen that his original investment appreciated so substantially over the last 30 years.
There are several reasons that led to our decision. We will use a portion of the proceeds to repay the loan balance on monies borrowed by Michael and secured by his interest in Sony/ATV which means that after starting with more than $500 million in debt seven years ago, the Estate is now completely debt free with substantial assets in cash and other property. The balance of the proceeds from this sale, after taxes, fees and expenses, will be held by the Estate and ultimately will be transferred to a trust for the benefit of Michael’s beneficiaries. Furthermore, the transaction allows the Estate to diversify assets which, to date, have been highly concentrated in music intellectual property.
We would like to underline that the sale has no effect whatsoever on the 100% ownership of the publishing on all of the songs that Michael wrote, which all remain part of Mijac Music, as well as those songs written by many of Michael’s favorite songwriters, that he acquired outside of Sony/ATV. These songs include “After Midnight”, “Love Train”, “I Got A Woman”, “When A Man Loves A Woman”, “People Get Ready”, “Great Balls of Fire”, “Runaround Sue”, the entire Sly and the Family Stone catalog and other songs. The Estate also continues to own its 100% interest in all of Michael’s solo master recordings and short films. There is no intention of selling any of these wholly-owned assets.
While the sale of Michael’s interest in Sony/ATV is bittersweet for all of us – especially for those of us involved in helping Michael create this company back in 1995, the fact that we are even in this position in the first place further validates Michael’s foresight and genius in investing in music publishing. As we noted in the official press release, Michael’s ATV catalogue, purchased in 1985 for a net acquisition cost of $41.5 million was the cornerstone in the 1995 formation of Sony/ATV and, as evidenced by the value of this transaction, is still considered one of the smartest investments in music history.
We are aware that some fans were hoping that the Estate would be the buyer of Sony’s share in Sony/ATV, rather than the reverse. That was our goal as well when we started on this path last year, but ultimately, Sony’s offer made more sense for the reasons outlined above. We are dedicated to protecting and growing Michael’s legacy, and maximizing the value of his Estate for the benefit of his children. This sale allows us to protect the assets most dear to Michael (his own songs and those he acquired and retained outside of Sony/ATV), close out his debts, and continue to grow his legacy for future generations.”
Honestly after reading this statement, I am at a loss for words. I am angry, upset, and understandably disturbed. Many people outside of the MJ community may or may not understand why I would feel so strongly about this BUYOUT, and that is okay. But if you care to know why, I will explain it to you.
Back in 1985, Michael bought the ATV catalog for $41.5 million dollars. This was around the time Thriller was out and he was working on his next BIG album, Bad. Michael outbid Paul McCartney for the ownership of this very important catalog. This purchase will always go down in history as “one of the smartest investments in music history“. It included 250 of the Beatles songs and it is safe to say, Michael and Paul’s relationship was far from salvageable at that point. Ten years later, Michael and Sony formed Sony/ATV, paying Michael $90 million dollars for 50% of the rights to the catalog. Now in 2002, when Michael was publicly battling with Sony for a number of issues that he suffered from dealing with this music giant, Forbes magazine estimated that Michael’s 50% stake in the company, with the additional of other music publishing endeavors, to be worth of $450 million dollars. And as of 2009, Ryan Schinman of Platinum Rye, estimated the value of the catalog to be around $1.5 Billion. Now if the Catalog was worth approximately 1.5 Billion dollars, the $750 million payout would be of fair. In fact, Michael could (and probably still was) earning around $80 Million dollars a year from this investment.
Now in the statement above, his executors John McClain and John Branca states that this payout will be used in order to wipe Michael clean of his debts. “We will use a portion of the proceeds to repay the loan balance on monies borrowed by Michael and secured by his interest in Sony/ATV which means that after starting with more than $500 million in debt seven years ago, the Estate is now completely debt free with substantial assets in cash and other property.” They state that Michael was in debt of $500 Million dollars at the time of his death. $1 Billion dollars in Assets and $500 Million dollars in debt. Most people could only imagine what it must felt like to be in such a huge amount of arrears. And of course, I question if he was in that deep in debt, we will not get all the answers that we are entitled to. Two years ago, however, it was estimated that Michael’s estate had made over $700 million dollars during the span of his death. In fact, $200 Million dollars of his earnings was from a deal that the Estate made with Sony to released 10 albums in the course of seven years. “Michael” and “Xscape“, which was released in 2010 and 2014, both respectively sold over a half a million copies each. “Michael” went platinum. It is hard for me to understand why selling this piece of history, that meant so much to Michael, was even in the mind frame of the Estate. If I understand correctly, Michael was making more money now that he had passed, than in the last few years of his life. Here’s where the confusion over how much Michael was worth, How much his Estate was worth at the time of his death and so on. In 2014, Michael’s Estate and the IRS was up in arms. Michael’s Executors John McClain and John Branca stated that Michael’s Estate was only worth just over $7 Million dollars. However,the IRS said that the Estate owed $505 million in taxes and an additional $197 million in penalties, for a total of more than $702 million dollars. In fact the IRS said that the return that the Estate gave was so inaccurate that it qualified for a gross valuation misstatement penalty, which would allow the government to double the usual 20% penalty for underpayment. In layman terms, the IRS accused the Estate of lying about how much Michael’s Estate was really worth. Most of that dispute was over the value of Michael’s likeness, including his stake of the Sony/ATV catalog. The estate only valued Michael’s likeness at $2,105. Only $2,105? A artist that earned over $700 Million dollars over the course of seven years and owned half of a billion dollar music catalog, with a likeness of only over $2,000? The IRS didn’t believe it either and actually valued Michael’s likeness to $434,264,000. Likeness such as T-Shirts, Memorabilia, and Commericals. Pretty much anything that had Michael’s face and or name attached to it. The Estate also put the value of Michael’s interest in the trust that owns the Beatles’ and Jackson’s songs at zero. ZERO! Remember Michael was earning at least $80 Million dollars a year from the catalog, his share was worth half of 1.5 Billion dollars. The IRS refuted this fact too, stating Michael’s share was worth at $469 million.
With all of these inaccuracies over the last seven years, It is hard to believe anything that the Estate says in the name of Michael. Back in 2013, Producer and long-time friend of Michael, Quincy Jones filed a $10 Million dollar lawsuit against the Estate for royalties he did not receive over music used in the “This Is It” film and soundtrack and the 25th Anniversary edition of Bad. This past February, after a Judge denied the defendants (MJ’s Estate) a judgement summary, the trial is set to go on. A judgement summary is pretty much a request asked by a party (mainly the defendant) involved in a lawsuit stating there is no factual (truth or proof behind the allegations) issues and “we don’t need a trial”. Luckily enough, the Judge did not agree and denied the motion. See John Branca is a Entertainment and Corporate Attorney and has been for over 40 years. He knows all of the legal termology needed to get out from doing what is right. Quincy Jones’ lawyer stated that music that is not controlled by the Estate were valued at fair market value, meaning a price that both the seller and buyer can agree too. Whereas, the songs that are controlled by the Estate were valued at only $50,000, in which both Quincy and his Attorney feels are worth so much more. Of course the Estate’s Attorney asked that Sony is removed from the lawsuit, stating that any money paid to Quincy will come straight from the MJJ Estate, and not Sony. The Judge denied that request too. In Conclusion, the Estate made an attempt (and failed) to prevent Quincy Jones’ case from proceeding to a Jury, almost as if they had something to hide.
Too many things have been said and clearly done that makes this whole situation hard to stomach. Michael held onto that catalog because he knew how much it was really worth. There are things that you can not put a price on, and that Sony/ATV catalog is that thing. It is no secret that Michael felt that his life was in danger over that one thing he held onto for so long. And for the record, I don’t necessarily believe that this payout was also in regards of Michael’s children. Like the putting Neverland on the market, what of their father’s legacy is left for them? What is the Estate saving for his children to take ownership of, if they are selling everything that Michael worked so hard for? Is it just me or has the Estate continued to milk Michael off his money, while desecrating his final wishes?