Yesterday, Today, & FOREVER The King of Pop

The business of carrying a tune

By Joshua Chaffin in New York

Published: June 23 2008 03:00 | Last updated: June 23 2008 03:00

Martin Bandier agreed last year to sign on as chief executive of
Sony/ATV (Michael Jackson) Music Publishing, there was just one concern weighing on his
mind: Michael Jackson.

As half-owner of Sony/ATV, Mr Jackson
holds broad sway over a catalogue that boasts roughly
half a million songs, including more than 200 Beatles classics. But
while the King of Pop has proved an astute collector of music, his
legal troubles and reclusive lifestyle had sometimes paralysed
management at Sony/ATV.

“If I wanted to do a deal, I had to have
the flexibility to be able to close it quickly,” says Mr Bandier, one
of the creators of the modern music publishing industry, as he recalls
his concern.

The two men had done business before. In 1993, when
he was head of EMI Music Publishing, Mr Bandier paid Mr Jackson a
record $70m advance for the right to administer his ATV Music
catalogue. As part of the deal, Mr Bandier also agreed to sell three of
his favourite Elvis songs to the singer, who was then dating Lisa Marie
Presley. This was no small concession for a self-described “song

It is unclear whether that favour figured in Mr
‘s thinking. But, after a brief phone conversation last year, Mr
Bandier was put at ease.

“For me, it’s a piece of cake,” he says
of the relationship, still chuckling at Mr Jackson‘s insistence on
calling him “Mr Bandier”. “To his credit, Michael has given me a green

As Mr Bandier recounts it, the episode is of a piece with
his happy tenure at Sony/ATV. With two sizeable acquisitions, he has
begun to increase market share at the fourth-largest music publisher.
He enjoys the backing of a supportive boss, Sony chief executive Sir
Howard Stringer.

Just as importantly, Mr Bandier feels free from
the turmoil of his time at his former employer, EMI, where the
contribution of music publishing was often overshadowed by the chaos in
the rest of the company, and profit warnings and restructurings seemed
to lurk around the corner.

“It’s been spectacular. There’s no
other way to put it than to say that this has been the best
year-and-a-half imaginable,” says Mr Bandier, seated in a mogul-sized
office that includes his familiar wooden cigar box and the requisite
collection of autographed guitars.

In geological terms, music
publishing is one part of the music industry that is not sinking into
the ocean. In fact, it continues to grow. Publishers collect a small
royalty each time their songs are featured in films, advertisements,
concerts, wind-up toys and now video games, among other uses.

music-lover who trained as a lawyer, Mr Bandier got into publishing in
the 1970s when it was the decidedly un-sexy side of the business. His
big score came in 1986, when he and two partners acquired the CBS Songs
catalogue for $125m. Two years later, they sold to Thorn-EMI for $340m.
For the next 17 years, Mr Bandier worked to build EMI Music Publishing
into the industry leader, snapping up the Motown catalogue, among
others, and aggressively marketing their hit songs. “It’s not just
being a bank,” he says of his approach. “It’s about being proactive and
going out and getting commercials or film and TV opportunities.”

spite of EMI’s success, it came as little surprise in late 2006 when Mr
Bandier bowed out. The relationship had frayed over the years as Mr
Bandier took an increasingly dim view of senior management. “It was one
fiasco after another,” he says. For their part, EMI’s top brass tired
of the griping from an executive who was being paid more money than the
company’s then-chief executive, Eric Nicoli.

At 64, and wealthy,
Mr Bandier could easily have retired. But he was restless. At Sony/ATV,
he saw a publishing business with room to grow. Sony sweetened the
forthcoming deal by offering equity, making him a partner as opposed to
a salaried employee. “I’m at the stage of my life that I’m doing this
because I want to – not because I have to,” he says.

Once in the
job, Mr Bandier wasted little time fulfilling industry expectations
that he would become an aggressive bidder for any and all catalogues.
Last April, he paid $45m for the Leiber and Stoller catalogue, which
includes Elvis‘s “Hound Dog” and “Jailhouse Rock”.

A month later,
he won a $350m auction for Viacom’s Famous Music Publishing, which
boasts the soundtracks to Paramount films such as The Godfather .

are whispers in the industry that Mr Bandier has overpaid, but he is
unapologetic. “My philosophy has always been that I would rather spend
more on something that is climbing the charts and going to be
successful than spend half that on something where you just don’t
know,” he explains.

For all the happy talk, though, Mr Bandier
admits to suffering an emotional period following his EMI break-up and
the loss of a business he had spent his career building. It was
particularly wrenching when he would drive to his beach house and one
of his old EMI songs would come on the radio. “My wife said my face
would sort of change,” he recalls.

Six months ago, he went for
lunch with his old friend Berry Gordy, the legendary Motown Records
founder who sold his own catalogue of songs to Mr Bandier in 1997.

said, ‘Berry, let me ask you a question: Do you ever feel like you were
lost? Do you ever feel anger that you still don’t own Motown Records .
. . when you hear a song being played, and you know that you were there
when Smokey Robinson wrote it?'”

“He said, ‘yeah, all the time,'” Mr Bandier recalls. Then Mr Gordy offered a blunt bit of advice: “Get over it.”

Bandier says he finally has. The question now is, how will he take
Sony/ATV forward? Mr Stringer, he says, publicly pledged at a recent
gathering of Sony/ATV executives that he was prepared to bankroll
further acquisitions.

Mr Bandier would jump at the opportunity if
EMI were to unload all or part of its publishing group – either to
raise cash or to satisfy regulators as part of a future merger with
Warner Music.

At present, though, Sony seems more focused on
trying to buy out Bertelsmann’s share of their recorded music joint
venture, Sony BMG. The cost could exceed $1bn(£506m).

problem is that Mr Bandier’s success has encouraged a legion of
imitators. As the recorded music business collapses and the value of
publishing becomes clear, new competitors – including private equity
firms – have entered the fray and pushed up prices.

Mr Bandier is
convinced that many have overpaid, and – lacking experience – will be
forced to sell sooner or later. “At some point in time, we’re going to
be able to buy those things back at a much cheaper rate,” he predicts.

also foresees an eventual windfall from a host of new social networks,
such as MySpace, which are ramping up their music offerings and will
have to pay royalties.

In the meantime, he is focusing on
Sony/ATV’s most valuable asset – its trove of Beatles songs. “There’s
no bigger star than ‘All You Need is Love’,” he says, calling the
collection “unique”.

In 1985, he travelled to Perth to try to buy
the catalogue from Australian tycoon Robert Holmes à Court. But another
collector – Mr Jackson – bested him.

Although their offers were
comparable, Mr Jackson played a charity show in Australia. He also gave
the song “Penny Lane” to Mr Holmes à Court’s daughter, Penny.

Apple Corp, the company the Beatles created to manage their business affairs,
has balked at licensing deals over the years. Yet that seems to be
changing under Jeff Jones, the new chief executive. In the past year,
Apple and Sony/ATV have licensed Beatles compositions for use in American Idol, a Las Vegas show and a Hollywood film. They are closing in on a
multi-million dollar deal to create a Beatles-themed video game.

about making sure that the songs that we control are used in every
manner, shape and form possible,” Mr Bandier says, “and hopefully with
good taste.”

Financial Times

Sony/ATV News

What They Don’t Want You to Know About Michael Jackson

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