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