Yesterday, Today, & FOREVER The King of Pop

Michael Jackson – Money, Myth and the Mainstream Media

By Larry Carter

News media accounts that Michael Jackson was
"debt-ridden", without providing further explanation, gave the
impression that the King of Pop‘s financial situation was something the
general public could identify with or readily understand.


But far from it. Jackson’s so-called "massive debt" was something
that hardly any of us will ever be fortunate enough to experience. I
dare say most in the general public have never heard of Jackson‘s
category of indebtedness, better known by some as "acquisition debt".


Acquisition debt involves multi-million dollar purchases of
ventures where a significant percentage of the purchase price is
financed through "leverage" borrowing. The assets of the acquired
company are used as collateral for the borrowed capital.


When Northern Songs – a music catalog holding thousand of songs,
including the Beatles’ back catalog – was put up for sale, Jackson took
immediate interest in the catalog. He was warned that he would face
strong competition. "I don’t care. I want those songs," Jackson said to
his entertainment attorney John G Branca. "Get me those songs, Branca."


Jackson eventually beat the rest of the competition in negotiations for the Northern Songs catalog, which lasted
10 months. He eventually purchased the catalog for $47.5 million.


Jackson used equity in his own catalog, Mijac, along with the
acquired assets from Northern Songs for loan qualification, with the
newly acquired assets structured for equity to flow towards servicing
the debt.


In 1995, Jackson merged his Northern Songs catalog with Sony’s
publishing division creating Sony/ATV Music Publishing. This deal gave
Jackson half ownership in Northern Songs as well as half ownership in
Sony/ATV.  It also included distribution rights to thousands of more
songs. With the merger, Sony/ATV became the third largest music
publishing venture in the world. Both Jackson and the Sony people were
equal partners and vowed to become the world’s largest catalog.


Late in 2001, Jackson and Sony acquired Tony Martin’s Baby Mae Music catalog of 600 songs.


In July 2002, they bought country music publisher Acuff-Rose for
$157 million. The venture included publishing rights to 55,000 songs.


And in November 2007, Jackson and Sony bought Famous Music LLC from
Viacom. This deal gave the King of Pop rights to songs by Eminem (a
C-rated entertainer who once made light of him), Shakira and Beck,
among others. The venture included the assumption of a $30 million
debt. They purchased the business for $370 million.


Bottom line. If Jackson was debt ridden, it makes more
sense to believe his indebtedness of "$500,000,000" resulted from
acquiring multi-million dollar ventures, and not, as media myth makers
would have it, "lavish spending."

Larry Carter is an Old School scholar, life-long follower and avid fan of Michael Jackson.

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