Michael Jackson's Estate Reaps $750 Million in Sony Venture Exit

Michael Jackson’s Estate Reaps $750 Million in Sony Venture Exit

On Monday, March 14, Sony Corp. agreed to purchase Michael Jackson’s stake in a jointly owned catalog of songs at an estimated $750 million, according to Bloomberg.

With the massive growth of music streaming and subscription services, offered by companies such as Tidal, Apple Inc., and Spotify Ltd., it comes as no surprise that Sony would take the deal, which will give the company control over the rights to almost 4 million songs, by various artists.

[Related: Jay Z Makes $56 Million Bid to Buy Music Streaming Company]

An analyst at Macquarie Group Ltd. in Tokyo, Damian Thong, shared his thoughts on the deal, stating, “The value of music assets is increasing with the growth of streaming. Sony is actually paying less than the stake is worth.”

Sony has said the growth of streaming services will help boost sales in the music business to as much as $5.2 billion in fiscal 2017. Talks of a deal began in September 2015, when Sony exercised its right under their joint venture to buy out Jackson’s estate.

According to a statement, the terms of the deal include Sony making a lump sum payment of $733 million to the Jackson estate–for a 50% stake in Sony/ATV Music Publishing, including future distributions. Jackson purchased the ATV catalog in 1985 for $41.5 million, which was the initial layout that later became the joint venture with Sony.

When Jackson passed away in 2009, at 50, he remained the owner of the rights to his master recordings with a stake in EMI Music Publishing.

In money terms, Sony is expecting paid subscribers to account for 60% of the market in 2017, outpacing downloads with 22% and digital radio with 5%. Its shares closed 0.2% lower at 2,794 yen in Tokyo, while the Nikkei 225 Stock Average declined 0.7%. The stock is down 6.9 percent this year.

Kazuo Hirai, Sony’s chief executive officer, said, “This agreement further demonstrates Sony’s commitment to the entertainment businesses and our firm belief that these businesses will continue to contribute to our success for years to come,” in a statement.

John Branca and John McClain, co-executors of the estate, stated, “This transaction further allows us to continue our efforts of maximizing the value of Michael’s estate for the benefit of his children.”

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