Sony poised to sell stake in Sony/ATV?

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Sony Music Entertainment appears to be getting ready to sell its 50% stake in giant publisher Sony/ATV.

Sony has apparently triggered a buy-sell clause in a deal with the estate of Michael Jackson – which co-owns Sony/ATV.

The decision means that the Jackson estate now has the option to buy out Sony from the company.

[Update: It also means that Sony can swoop for the Jackson estate’s half of the firm – although that’s not what the WSJ’s sources are suggesting.]

According to the Wall Street Journal, Sony/ATV is worth around $2bn, although it doesn’t necessarily stand that Sony would offload its 50% stake for $1bn.

Sony and Michael Jackson had jointly owned the company since 1995 before Jackson’s death in 2009.

According to MBW analysis, Sony/ATV controls around 4m copyrights, including those it administers for EMI Music Publishing.

[Update: The EMI relationship is a little complicated. MBW is told that Sony/ATV’s owners control around 40% of EMI Music Publishing, with 30% owned by Sony and 10% by the Jackson estate. Due to this complexity, the new Sony/ATV buy-sell clause activation is thought to omit EMI.]

“The music publishing business has a rather complex structure… and is impacted by the market shift to streaming.”

Ken Yoshida, Sony corp (November 2014)

It manages and/or owns songs performed by artists including The Beatles, Michael Jackson, Taylor Swift, Ed Sheeran, James Brown, Elvis Presley, Lauryn Hill, Oasis, Eminem and many more.

If Sony did sell its stake to the Jacksons, the biggest single music rights-holder in the world would effectively become an independent.

Sony/ATV is hugely dominant in its field: amongst the major publishers alone, the firm’s global market share by value exceeds 50%.

The rumours of Sony’s sell-off come nine months after leaked emails were published showing that Sony Corp in Japan first considered hawking Sony/ATV last year.

Sony Corp.’s Chief Financial Officer Kenichiro Yoshida wrote in an email on November 21: “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.”

Sony/ATV has clearly been challenged by two aspects of the streaming era in particular: (i) Obtaining a much smaller slice of royalties from Spotify etc. than record companies; (ii) US statutory royalty rates from online radio companies such as Pandora, which is obligated to pay Sony/ATV and all other BMI members just 2.5% of its annual revenues.

It emerged this week that Sony/ATV had signed a deal with Rightscorp.

The latter will act as an agent to detect and pressurize internet users infringing on Sony/ATV’s copyrights on piracy sites in the US.Music Business Worldwide

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  • Brian Quinn

    I hope the Jackson Estate does not take control of SONY Music. It would be a tragedy for the other artists involved.

    • BP

      It would be one of the best things that could happen to them, you can see how the administrators of the Mj Estate are running the estate, its more successful than ever before, from huge debts to billion profits…

      Why would Sony/ATV sell the biggest music publishing company if they have spent more than $3bn on buying various music catalogs???

      Michael Jackson IS THE ONLY ONE ARTIST AND MUSIC BIZ MAN who completely owned/owns his whole music catalogs – from the very beginning (1968) to the very end (2009) of his career, all the songs he ever sang, composed or produced through Motown, Epic/Sony and MJJ Production.

      The MJ Estate released a statement that clearly stated – they do not sell it.

      Anyway, this is the exact proof that MICHAEL JACKSON was the real, and probably the biggest music mogul, the businessman.

      NOW his estate co-owns the publishing rights to the whole music biz including The beatles, Elvis Presley, Bob Dylan, Gaga, Beyonce, Taylor Swift, Eminem….

      The Estate has at least the $2bn share….

      MICHAEL JACKSON HAS NEVER BEEN BROKE (that was just tabloid BS), but cash poor at the end of his years…, but was mega rich in having assets like those at Sony/ATV.

  • dslaw19

    i believe at the end of the day, if the Jackson estate has the means to acquire Sony’s shares in the library, they should absolutely do it, and not just to bolster the money making abilities of the estate. There is plenty of pros for such a move. The acquisition would further eliminate the complexity of the structure of the company, make things more structured and simple, for one. The earning power, obviously, and the leverage of having a bigger share of the catalogs as well. Amongst other pros.