Jacko Will Lose Beatles Catalog in 2008
Source: Fox News Updated: Mar.09,2007 14:00 Subscribe to stories like this
By Roger Friedman
Michael Jackson had better hold on to whatever money he pocketed in Japan this week during a promotional tour.
I can report today that Jackson will lose his hold on the Beatles catalog and Sony/ATV Music Publishing on May 31, 2008. That date, revealed here for the first time, is known as the "Liquidation Sale" among insiders.
And Jackson knows this. He even hired a famous law firm, White & Case, to evaluate the deal he made with Sony and Fortress Investments when he refinanced his shaky empire last year.
This doesn’t mean that Jackson won’t still owe Fortress $300 million after the liquidation sale is over. He will, but he can pay them back from the money Sony pays him to buy out their half of the music company.
Its value is somewhere between $1.1 and $1.6 billion, according to a Fortress exec who was deposed last year in preparation for a $48 million lawsuit brought against Jackson by Darien Dash, cousin of hip-hop entrepreneur Damon Dash, as Prescient Capital Group.
Recently, both Jackson and Prescient have asked the judge in New York to speed things along, and an answer is pending.
At question is whether or not Don Stabler, an accountant hired by Randy Jackson, Michael’s brother, had the authority to enter into agreements on Jackson’s behalf.
Stabler agreed to pay Prescient/Dash a nine percent fee for finding financing to replace Jackson’s $270 million at Bank of America.
Dash found Fortress, which offered over $500 million to help Jackson buy out Sony in his agreement. That much wasn’t needed, but Dash is asking for his fee on that amount.
The original Jackson-Prescient-Fortress deal went down in May 2005 while Jackson stood trial in Santa Maria, Calif., for child molestation. But, unbeknownst to anyone, the negotiations had actually begun in November 2004.
A year later, in the spring of 2006, Jackson — now bidden to Fortress — was out of money again and renegotiating his terms. Sony Music came to his rescue, but at a price: they would be able to trigger a purchase of Jackson’s entire stake, not just half of it, at the end of May 2008.
And Jackson agreed to more than just that: he also signed a promissory note with Fortress for $20 million. It comes due this October.
Selling his half of Sony-ATV back to Sony won’t be so easy for Jackson or so lucrative.
According to testimony in various Prescient depositions, Jackson could be charged as much as $250 million “off the top” by Sony for expenses they’ve incurred while running the partnership.
That would whittle down his potential $600 million windfall almost by half. A further subtraction of the $300 million loan to Fortress would leave him with little wiggle room.
Jackson, it’s also revealed in the depositions, once tried to sell his half of the company to billionaire Ron Burkle during the child molestation trial.
“I remember precisely at court in the bathroom stall with the cell phone in my hand, saying why don’t you just buy it? I want to sell it you,” Jackson said.
Burkle, Jackson said, declined, telling him he had to keep the music catalog for his children.
Jackson’s deposition in the Prescient case, which is now becoming public, is otherwise the usual symphony of “I don’t knows” and “I don’t remembers” that Jackson offers in these circumstances. It was conducted last June 12 at Jackson’s expense — possibly $100,000 — at a hotel in Versailles, France, at his request.
But Jackson is far from stupid. His answers and vagueness seem coached, but from the Marx Brothers and Abbott & Costello. At one point he starts calling the proceedings “ridiculous,” an adjective he invokes often. Asked what’s ridiculous about the case, Jackson answers: “Three Stooges.”
There is also a long debate about where he lives. He doesn’t know the address, can’t tell the difference between Bahrain, Dubai and Oman or the various palaces he’s been in. “The Muslim names are kind of confusing to me, so it’s hard,” he says.
Jackson is also fairly embittered by his experiences in the music business.
“It’s full of sharks,” he says to one of the lawyers, “charlatans and imposters. Because there’s a lot of money involved, there’s a bunch of schmucks in there.” Of course, it’s the wrong word: schmuck means, loosely, losers.
At another time, it’s implied that flashy Florida attorney Willie Gary made an offer to buy Jackson’s Neverland Ranch. Now shuttered, Neverland is leveraged by Jackson with a $25 million loan, also with Fortress.
There’s an upside to all this: Jackson, under the renegotiation, receives an annual advance from Sony of $6.5 million. He gets another $2 million under another clause. It’s not a lot for a celebrity who likes to travel, stay in expensive hotels and shut down toy stores for private shopping. But it’s nothing to sneeze at, either.
What’s interesting about all this now is that it’s no longer about Jackson. His career is finished. It’s now more about what a hot potato the Beatles catalog has become, and why its ever-increasing value has permitted Jackson to live outside the norm. It may be the wisest investment ever made by a celebrity.
Jackson should be sending thank you letters to John Branca and Frank DiLeo, his two former advisers, every day of the week.
two thoughts about this article...first. i'm not a hateful guy. i don't spite people for the heck of it. but why does this make me happy?
and second...if any one of us showed up in court, and claimed to forget where we lived, we'd get thrown in jail. the judge would see if a few days behind bars would jog our memory. if anyone of us were in court and claimed that the proceedings were "ridiculous" we'd get slapped with a fine, and maybe get thrown in the slammer for disrespecting the court. if one of us answered "the three stooges" to a competely unrelated question...guess what would happen?
this guy is a media whore. he had talent. but now he's a paris hilton, brittany spears, and anna nicole (oh my god...did anyone hear she died?) media freakshow. i can't wait till his name is out of the limelight.