There's No Chance Sony/ATV Is Going For A Song

A half ownership of Sony/ATV, the world's largest music publishing firm, is on the block. The valuation is anyone's guess, but the uncertainty is troubling for the many who have assets tied to the song publisher.

Sony/ATV owns or manages as many as 3 million songs today, including 88 by Lennon-McCartney that were purchased for US$47.5 million by Michael Jackson in 1985 as part of ATV Music Publishing. Jackson then horse-traded the assets with Sony Music Publishing to create Sony/ATV Music Publishing a decade later.

In 2006, Sony Music gained operational control of the publishing arm, and obtained an option to buy half of Jackson's stake in the company at any time for a fixed price of $250 million as the American singer's financial difficulties started to spiral into near bankruptcy before his death in 2009. That option has not as yet been exercised.

In 2012 an investor consortium led by Sony/ATV Music Publishing acquired EMI Music Publishing for approximately $2.2 billion, giving the new entity estimated revenues of over $1.25 billion annually.

Now Sony Music is feeling the pinch financially and is said to be considering selling off as much as half of its publishing arm, leading to speculation that the Jackson estate is lining up potential partners to purchase the assets. One of those potential partners is Warner Music. The question on everyone's mind is just what the valuation of Sony/ATV's assets are in today's market. It's a question that is looming large in the minds of many who have their assets tied to the company in the form of copyrights. There are questions too about the legacy of the assets. The US Copyright Act of 1976 places a 56 year cap on music publisher ownership of songs recorded before 1978, after which control reverts back to the writer/composer(s). A number of big money songs, including those by Lennon-McCartney, will start reverting back to the writers in the coming years, costing potential suitors big money to exercise due diligence in examining the ancestry of the assets in the catalogue to find out expiration dates and pro-rate the income streams.

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