When Michael Jackson acquired the publishing rights to more than 200 Beatles songs in 1985, he reportedly upset Paul McCartney, as the former Beatle was trying to purchase his band’s back catalogue. The two had been former friends and collaborated on “The Girl Is Mine,” a chart-topping single off Jackson’s best-selling Thriller album, but the friendship went south after Jackson bested McCartney at the auction block.
For Jackson, the investment has paid dividends and, last week, once again kept him from having to declare bankruptcy—despite a costly criminal trial and the unsustainable life of a faded pop star. This time it was Sony who came to the rescue of the reclusive pop star, who has been holed up in Bahrain since shortly after his acquittal on child molestation charges last summer.
The deal is apparently very similar to the one Jackson rejected last year. Sony, eager to keep Jackson from going bankrupt, has reportedly purchased an option to buy a portion of Jackson’s stake in Beatles songs—thus reportedly keeping the assets out of the hands of New York-based hedge fund Fortress Investment Group.
Fortress, which has $15 billion (€12 billion) under management in a number of hedge fund and private equity strategies, purchased $270 million in bad Jackson debt from Bank of America last year.
Though details have not been released, published reports say that Sony has the option to buy half of Jackson’s 50-percent stake in Sony/ATV Music, a 200,000-song publishing company that owns the rights to more than 200 Beatles songs, as well as popular songs by Bob Dylan, Neil Diamond, Bachman-Turner Overdrive and Joni Mitchell.
The songs are valued at more than $1 billion. He bought the Beatles catalog in August 1985 for $47.5 million dollars. It is not the first time Jackson has turned to the catalogue for money. In 1995, Jackson cut Sony in on the publishing company, apparently an effort to come up with some fast cash, selling the Japanese conglomerate 50 percent of the company for $150 million.
According to the New York Times, Fortress has refinanced Jackson’s loans by reducing the interest payments in the form of a new $300 million loan. If Jackson did not make a payment on this new loan, presumably the singer would be forced to relinquish remaining stake in the catalog to pay off the investment group.
On Friday, Fox News Channel’s showbiz gossip columnist Roger Friedman summed the transaction up after speaking with someone close to the proceedings: “Fortress essentially loaned him $300 million so he could pay them back $275 million in loans. That leaves him with $25 million, which he will squander on worthless souvenirs, shopping for trinkets, traveling first class and plastic surgery. A debt clock will run on interest owed, too, which I bet no one has explained to him.”
While Jackson has avoided insolvency, he is currently being sued by a New Jersey firm that says it is owed $48 million for helping Jackson find investors for his bad debt. Prescient Acquisitions Group put together the group, which includes Fortress and Transitional Investors, which bought the $270 million in bad loans.
Instead of buying the Neverland Ranch in California, perhaps Jackson should have looked into buying the publishing catalog of another successful pop act. Say, the Rolling Stones.