Sony buys Jack­son stake in mu­sic ven­ture for $750m

The Pak Banker - - COMPANIES/BOSS -

TOKYO: Sony Corp. is pay­ing $750 mil­lion to the es­tate of Michael Jack­son for the late pop star's stake in their joint mu­sic busi­ness to take con­trol of a cat­a­log that in­cludes artists Sting and Ali­cia Keys.

The terms call for Sony to make a lump sum pay­ment of $733 mil­lion for Jack­son's 50 per­cent stake in Sony/ATV Mu­sic Pub­lish­ing, as well as fu­ture dis­tri­bu­tions, ac­cord­ing to a state­ment. Talks on a deal be­gan in Septem­ber, when Sony ex­er­cised its right un­der their joint ven­ture to buy out Jack­son's es­tate.

The deal con­sol­i­dates Sony's con­trol over a cat­a­log of al­most 4 mil­lion songs as mu­sic in­dus­try rev­enues in­creas­ingly shift to sub­scrip­tion ser­vices of­fered by Ap­ple Inc., YouTube and Spo­tify Ltd. The Tokyo-based com­pany is sharp­en­ing its fo­cus on net­work ser­vices in­clud­ing game and movie stream­ing cen­tered on its PlayS­ta­tion con­sole.

"The value of mu­sic as­sets is in­creas­ing with the growth of stream­ing," said Damian Thong, an an­a­lyst at Mac­quarie Group Ltd. in Tokyo. "Sony is ac­tu­ally pay­ing less than the stake is worth."

Sony has said the growth of stream­ing ser­vices will help bol­ster rev­enues in the mu­sic busi­ness to as much as $5.2 bil­lion in fis­cal 2017. The com­pany ex­pects paid sub­scribers to ac­count for 60 per­cent of the mar­ket next year, out­pac­ing down­loads with 22 per­cent and dig­i­tal ra­dio with 5 per­cent.

Its shares closed 0.2 per­cent lower at 2,794 yen in Tokyo, while the Nikkei 225 Stock Av­er­age de­clined 0.7 per­cent. The stock is down 6.9 per­cent this year.

The es­tate of Jack­son, who died in June 2009 at age 50, will con­tinue to have in­ter­ests in the mu­sic in­dus­try. Those in­clude all of the pop star's mas­ter record­ings and the pub­lish­ing com­pany that owns all of the songs he wrote. The es­tate will also re­tain its in­ter­est in EMI Mu­sic Pub­lish­ing.

"This trans­ac­tion fur­ther al­lows us to con­tinue our ef­forts of max­i­miz­ing the value of Michael's Es­tate for the ben­e­fit of his chil­dren," said John Branca and John McClain, co-ex­ecu­tors of the es­tate. The cat­a­log was pur­chased in 1985 for $41.5 mil­lion, they said.

Doc­u­ments leaked by hack­ers who broke into Sony En­ter­tain­ment's com­put­ers in 2014 re­vealed that ex­ec­u­tives at the com­pany were weigh­ing the fu­ture of the joint ven­ture.

"The en­ter­tain­ment busi­nesses have long been a core part of Sony and are a key driver of our fu­ture growth," said Kazuo Hi­rai, Sony's chief ex­ec­u­tive of­fi­cer. "This agree­ment fur­ther demon­strates Sony's com­mit­ment to the en­ter­tain­ment busi­nesses and our firm be­lief that th­ese busi­nesses will con­tinue to con­trib­ute to our suc­cess for years to come."

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