Once every few months during the mid-1980s, a handful of America’s savviest businessmen gathered to plot financial strategy for a billion-dollar entertainment conglomerate.
This informal investment committee included David Geffen, who’d launched multiple record labels and would go on to become one of Hollywood’s richest men after founding DreamWorks Studios; John Johnson, who started Ebony magazine and would become the first black man to appear in the Forbes 400 list of wealthiest Americans; John Branca, who has since handled finances for dozens of Rock and Roll Hall of Famers including the Beach Boys and the Rolling Stones; and Michael Jackson, the King of Pop and chairman of the board, inscrutable in his customary sunglasses.
Shares of the entertainment company in question were never traded on the New York Stock Exchange or the NASDAQ. Though few would even consider it to actually be a company, this multinational’s products have been consumed by billions of people over the past few decades. Had the organization been officially incorporated, it might have been called Michael Jackson, Inc.
In 1985, this conglomerate made its most substantial acquisition: ATV, the company that housed the prized music publishing catalogue of the Beatles. Included were copyrights to most of the band’s biggest hits, including “Yesterday,” “Come Together,” “Hey Jude,” and hundreds of others. The catalogue, later merged with Sony’s to form Sony/ATV, currently controls more than two million songs by artists ranging from Eminem to Taylor Swift, making it the world’s largest music publishing company.
At an investment committee meeting months before the deal was consummated, however, the acquisition was looking unlikely. Michael Jackson, Inc. was deep into negotiations with Australian billionaire Robert Holmes à Court, whose asking price for ATV had soared past $40 million—prompting disagreement among Jackson’s inner circle over how to proceed.
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Not wanting to upset anyone, Jackson remained silent—as he often did in meetings—but he’d already made his decision. He scrawled a note on the back of a financial statement and passed it to Branca beneath the table.
“John please let’s not bargain,” it read. “I don’t want to lose the deal . . . IT’S MY CATALOGUE.”
A few months later, Jackson bought ATV for a price of $47.5 million. Today, Sony/ATV is worth about $2 billion; through Jackson’s estate, his heirs still own his half of the joint venture. That wouldn’t be the case were it not for the shrewd maneuvering and unwavering resolve of Jackson and his team. The incredible story begins more than a quarter century ago, in the United Kingdom, during an encounter between a famous knight and a soon-to-be king.
One night in 1981 at Paul McCartney’s home just outside of London, the former Beatle handed Michael Jackson a binder. Inside was a list of all the songs whose publishing rights were owned by McCartney. After letting much of his own songwriting catalogue slip away as a youngster, he’d been buying up copyrights for years.
“This is what I do. I bought the Buddy Holly catalogue, a Broadway catalogue,” McCartney told the young singer. “Here’s the computer printout of all the songs I own.” Jackson was fascinated. He wanted to start doing the same, and his entrepreneurial instincts quickly clicked into gear. “Paul and I had both learned the hard way about business and the importance of publishing and royalties and the dignity of songwriting,” Jackson wrote in his autobiography.
When he got back to California, he found himself with an enviable problem. He’d earned $9 million in 1980 and was sitting on a pile of money that needed to be invested. Inflation was rampant in the early 1980s, meaning that fallow cash would start to lose value quickly. In short, he needed to find some worthwhile places to park the reserves of Michael Jackson, Inc.
His accountants brought him a number of real estate deals, but he wasn’t excited enough to buy anything. He wanted to buy songs. So his attorney, John Branca (now co-executor of Jackson’s estate), started talking to people in the publishing business to find out what was for sale. One of his first conversations was with songwriter Ernie Maresca, who had two big rock songs available: “Runaround Sue” and “The Wanderer.” When Branca told Jackson, the singer didn’t recognize them. The lawyer gave his client a tape and told him to have a listen. A few days later, Jackson called back. “You gotta get those songs!” he said. “I danced to them all weekend.”
Thus began a buying binge for Branca and Jackson. They picked up a small catalogue that included “1-2-3,” a 1960s soft-rock love song by Len Barry; “Expressway to Your Heart,” a Gamble and Huff composition released by the Soul Survivors in 1967; and “Cowboys to Girls,” a 1968 hit by the Intruders composed by the same duo. If Jackson didn’t know a song, Branca would send him a recording; if the singer fell in love with it, he’d give the go-ahead to acquire it.
Longtime associate Karen Langford remembers sitting around with Jackson during this period and discussing which of the greatest songs of all time would be best to own (he often mentioned ones by the Beatles, Elvis, and Ray Charles, among others). Sometimes he’d quiz Langford, singing a snippet of a song and asking if she could give the title and performer. Even then, he had his eye on ownership at a scale few could have fathomed at his age.
“He wanted to be the number one publisher in the world,” she says. “And . . . it would come up in lots of different ways, but [his goal] was always number one, getting to that number one spot. Being the biggest, being the best.”
In Pictures: Michael Jackson’s Career Earnings, Listed Year-By-Year
What the singer really wanted was Gordy’s Jobete catalogue, home to most of Motown’s greatest hits, including those of the Jackson 5. Gordy says Jackson offered him a “competitive” price for it at one point, but the Motown chief wasn’t ready to sell—and didn’t, until EMI paid him $132 million for half of the catalogue in 1997.
But watching Gordy manage his publishing interests had set something ablaze inside Jackson. “He got the bug,” says Gordy. “And that gave him the [urge] to want to do something even greater.”
***
“Michael,” began Branca, coyly, at a meeting in September 1984, “I think I heard of a catalogue for sale.”
“What’s that?”
“It’s ATV.”
“Yeah, so what’s that?”
“I don’t know, they own a few copyrights, I’m trying to remember,” said Branca, pausing for effect. Then he offered a few names: “Yesterday,” “Come Together,” “Penny Lane,” and “Hey Jude.”
“The Beatles?!” Jackson exclaimed.
The only problem: the catalogue belonged to billionaire Robert Holmes à Court, an Australian corporate raider known for a steely patience, a penchant for backing out of deals at the last minute, and a stubbornness that rivaled that of any rock star. He also had plenty of other suitors for ATV, including billionaire real estate developer Samuel LeFrak, Virgin Records founder Richard Branson, and the duo of Marty Bandier and fellow publishing executive Charles Koppelman (Bandier was hired to run Sony/ATV in 2007 and remains the company’s chief executive).
For Holmes à Court, there were few pleasures greater than a grueling business negotiation. He took particular glee in toying with overzealous Americans (“They are just looking for me to play according to their rules and make it a big game,” he once said of his stateside counterparts. “The Viet Cong didn’t play by the rules, and look what happened.”) None of that mattered to Jackson. His instructions to Branca: “You gotta get me that catalogue.”
The lawyer remembers the frenzied days that followed. His first task: to check in with Paul McCartney and Yoko Ono, both friends of Jackson. As John Lennon’s widow, Ono was in charge of his estate and was rumored to have had some interest in making a joint offer for ATV with McCartney. Jackson was hoping to avoid a showdown.
“I got Yoko on the phone,” recalls Branca. “And then I said, ‘Michael asked me to call you and find out if you’re bidding [on] ATV Music that owns all the Beatles songs.’ ”
“No, we’re not bidding on it.”
“No?”
“No, no, if we had bought it, then we’d have to deal with Paul,” replied Ono. “It’d have been a whole thing. Why?”
“Because Michael’s interested.”
“Oh, that would be wonderful in the hands of Michael rather than some big corporation.” (When I asked Ono about the conversation some thirty years later—in the midst of a brief interview prior to an anti-fracking rally at New York’s ABC Carpet & Home, of all places—she said she didn’t have “a complex dialogue” with anyone on Jackson’s team, but wouldn’t elaborate.)
Branca says his next move was to check in with John Eastman, Paul McCartney’s lawyer and brother-in-law (he represented the singer along with his father, Lee Eastman, who started working with McCartney before the Beatles broke up). According to Branca, Eastman said McCartney wasn’t interested because the catalogue was “much too pricey.” This was one of many reasons that neither Branca nor Bandier believed McCartney would lay out such a large amount of cash.
Though the Beatles’ songs made up roughly two-thirds of ATV’s value, the remaining third consisted of assets McCartney didn’t want: copyrights to thousands of other compositions, a sound effects library, even some real estate. “Paul’s demeanor was very, very much more financially structured,” says Bandier. Adds Joe Jackson: “The only reason Michael bought that catalogue was because it was for sale! [McCartney and Ono] could have bought the catalogue themselves. But they didn’t.”
There’s also an artistic explanation for McCartney’s unwillingness. “I never thought Paul McCartney would buy it because it’s very difficult for a creator of something [to buy] it,” says Bandier. “It would be like Picasso, who spent a day doing a painting, to buy it for $5 million like twenty years later. It wouldn’t be a thing that Paul would do.”
In Pictures: Michael Jackson’s Career Earnings, Listed Year-By-Year
Branca opened with an offer of $30 million. But Holmes à Court wanted more, especially since Bandier, Koppelman, and a few other suitors were still interested in buying ATV. By November, Jackson had authorized Branca to raise his offer beyond $40 million. With the exception of John Johnson, Jackson’s advisors—even music executives like David Geffen and Walter Yetnikoff—thought the singer had lost his mind.
The latter told Jackson he was making a mistake and that he should stick to being an artist. “That was my advice,” says the former CBS chief. “And he disregarded it, luckily.” Jackson didn’t have a business school education, and multiples of cash flow meant little to him. But he had a tremendous sense of value—and in Branca, a lieutenant able to help him make the most of that.
“John was the financial concierge in executing Michael’s instincts,” says billionaire Tom Barrack, who’d go on to work with Jackson later in the singer’s life. “So Michael said, ‘Wow, I think there’s incredible value [in the Beatles’ songs] over time. Quite honestly, Michael didn’t know if they were worth $12 million or $18 million or $25 million. He just knew and anticipated correctly that over time the intellectual property was going to be worth a lot of money.”
Jackson’s constant refrain: “You can’t put a price on a Picasso . . .you can’t put a price on these songs, there’s no value on them. They’re the best songs that have ever been written.” During a finance committee meeting, Jackson wrote Branca the aforementioned note that still sits in the lawyer’s home: “IT’S MY CATALOGUE.”
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A bid of $45 million was good enough to earn Jackson and Branca a meeting in London that winter, but Holmes à Court refused to go himself. Since the deal was far from being completed, Branca did the same, sending his colleague Gary Stiffelman in his stead. The two sides agreed on a nonbinding statement of mutual interest, and Jackson’s team embarked upon a four-month due diligence review of the 4,000-song catalogue.
To verify ATV’s copyrights, a team of twenty spent some 900 hours examining close to one million pages of contracts. Branca met Holmes à Court in New York that April and agreed to a handshake deal. Within weeks, however, the mogul had backed out. So, with Jackson’s blessing, Branca sent another letter: accept the last offer of $47.5 million, or there would be no deal.
Around the same time, Branca learned that Holmes à Court had tentatively agreed to sell the catalogue to Koppelman and Bandier for $50 million. But he knew his rivals—and some of the places they were getting their money. As it happened, their company had picked up a hefty publishing advance from MCA Records, headed at the time by Irving Azoff, who’d served as a consultant for Jackson and his brothers’ most recent tour.
“I went to Irving and I said, ‘How can you fund Charles and Marty? They’re bidding against Michael and you’re the consultant,’ ” Branca recalls. “[Azoff] pulled the deal, and [their ATV agreement] fell through.”
Shortly thereafter, Branca received a call from one of Holmes à Court’s colleagues. Could he come to London and close the deal? They agreed on $47.5 million. Jackson granted Branca power of attorney, and the lawyer flew to New York and boarded a Concorde bound for Britain. Once inside the supersonic jet, however, he noticed two familiar faces also on their way to London: Bandier and Koppelman.
“What are you doing over there?” Bandier asked.
“Oh,” said Branca, “just some business.”
Bandier was ready to do some business of his own. Even after Branca had convinced Azoff to pull his funding, he and Koppelman thought they could scrounge up enough capital to make a $50 million bid for ATV—and that all they needed was to buy themselves a little time. Recalls Bandier: “We actually went to London to sort of finalize a more formal contract.”
He and Koppelman figured that Holmes à Court had no interest in music publishing and was simply looking to unload ATV as quickly as possible. They weren’t counting on his patience, or the glee he may have derived from a bit of corporate sport. They certainly weren’t expecting what Holmes à Court was about to tell them when they arrived: that he was set to unload ATV to another party for $2.5 million less than they had offered.
Face to face with Holmes à Court and on the verge of losing the deal, Bandier immediately upped his offer by another $500,000. The Australian wasn’t impressed.
“There’s one aspect of the deal that you guys can’t do,” he replied. “And that is do a concert in Perth for my favorite charity.”
“We can do a charity concert,” Bandier pressed, figuring he could easily leverage his connections, and perhaps his cash, to lure just about any big act.
“No, no, you don’t understand,” continued Holmes à Court. “I’m selling this to Michael Jackson.”
***
Fittingly, Jackson had sealed his biggest deal by throwing in a personal appearance as a sweetener. It wasn’t an easy favor, either—he would have to fly fifteen hours from Los Angeles to Sydney, change planes, and then fly another five hours to Perth. But not even a pack of dingoes could have stopped him from getting his catalogue.
Bandier later learned that Jackson had offered another perk. Holmes à Court’s daughter was named Penny, and they were willing to exclude the song “Penny Lane” from the deal so that the billionaire could give it to her as a present (Jackson’s company continued to administer the song for her). It was far from a minor concession.
“Any song that you own of the Beatles earns money,” says Bandier. “There’s only like two hundred fifty of them, and everybody has a favorite of the two hundred fifty. Believe me, ‘Penny Lane’ is a popular song.” But the kicker was the appearance in Perth. “We knew that we couldn’t do the moonwalk, so there was no question,” Bandier remembers. “It wasn’t going to happen.”
Jackson’s single-minded focus on buying the catalogue despite vociferous objections from the record industry’s brightest minds might strike some as impetuous. But in hindsight, it’s clear that he was correct to follow his instincts, even to those who doubted him at first—and that his sense of the value of copyrights was impeccable.
“I think if you were his advisor at that time you would have told him, ‘Don’t do it,’ ” says Yetnikoff. “Turns out that it was a very lucrative investment. . . . So I would have to say that his business acumen is better than mine.”
Jackson certainly never forgot that he’d been right. In 2007, on a conference call with Bandier, the executive recounted the story of ATV’s 1985 sale. Jackson was delighted to relive the experience.
“See,” he said. “I told you I knew the music publishing business.”
The above text is adapted
Michael Jackson, Inc, published by Simon & Schuster’s Atria imprint on June 3rd. Like the rest of the book, it is based almost entirely on original interviews; see
Michael Jackson, Inc.’s bibliography for a full list of sources. For more, follow Zack on
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has also been a staple on the 'catalog' chart, #6 last week and #3 the prior, has fallen off the top 10 this week. The popularity of Michael's new album
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