Thriller

Pop singer Michael Jackson’s financial troubles have become a spectator sport the world over, as distressed investor Fortress moves towards foreclosing on the King of Pop’s outstanding debt – and his stake in the valuable Beatles’ catalogue. By Aaron Lovell.

Since his acquittal on child molestation and intoxication charges last spring, pop singer Michael Jackson has been keeping a relatively low profile in Bahrain, the special guest of Sheik Abdullah bin Hamad al Khalifa. But that doesn’t mean his financial problems in the US have gone away.

According to recent press reports, $200 million in loans owned by New York-based investment firm and distressed debt specialist Fortress Investment Group were due shortly before the Christmas holiday. Jackson reportedly did not make his monthly interest payment in October.  

Fortress, which is active in both private equity and hedge funds, has around $15 billion under management.


Jackson: Goodbye to bad debt?

Jackson’s representatives have been attempting to renegotiate the terms of the loans with Fortress and secure a six-month extension on repayment. A source close to the proceedings told the Los Angeles Times that the investment firm could demand a 9.5 percent interest rate on the loan, or more than $1.5 million a month, as a result of the renegotiations.

It is the latest episode in Jackson’s ongoing financial troubles, and comes after the King of Pop’s debts and lavish lifestyle came up in testimony during Jackson’s trial last spring. In May, Fortress purchased Jackson’s $270 million portfolio of non-performing loans at face value from the Bank of America.

But this is not a typical bad debt story. Jackson’s loans are guaranteed by one of his most prized, possessions in the music business – Sony/ATV Music, a 4,000-song publishing company that owns the rights to more than 200 Beatles songs, as well as songs by Bob Dylan and Joni Mitchell. The business is valued at more than $1 billion.

Jackson bought the Beatles catalogue in August 1985 for $47.5 million. 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 a reported $150 million.

In addition to the Sony/ATV Music catalogue and the rights to his own work, Jackson has other assets, including his 2,600-acre Neverland Ranch, the famed Southern California compound featuring an amusement park and zoo, worth around $100 million. But even the singer’s home has not been free from controversy. Workers reportedly had to wait until 23 December for a month’s worth of back wages.

Meanwhile, despite the turmoil surrounding the singer’s finances, Jackson’s label continues to push his past product. In the UK, Jackson’s top 20 singles will be reissued, one per week starting later this month, in tandem with a special edition of Jackson’s classic “Thriller”. 

While sales of Jackson’s albums have diminished – the records sell around 1 million per year in the US – only time will tell if Fortress’ investment will be a platinum record, while details of the new arrangement could possibly surface within a few weeks.