Sony May Keep Jacko From Bankruptcy

Monday, December 19, 2005
By Roger Friedman
Fox News


As of tomorrow, Michael Jackson may have an unlikely ally in the fight for his financial life.

I am told that Sony Music, his partner in the $1 billion Sony/ATV Music Publishing Company, is offering to step in and help Jackson with his $270 million worth of loans.

The loans — $200 million of which are secured by Jackson's 50 percent share in Sony/ATV — were bought in April by Fortress Investments from Bank of America. Jackson is in default and could be foreclosed on as early as tomorrow.

But sources inside Sony say the company has been in talks with Fortress for some time about clearing up Jackson's financial woes and bringing him current at least on monthly payments.

"This would be in our best interests," said a Sony insider, who points out that if Fortress forecloses on Jackson, Sony would be farther away from owning his half of the company than they are now.

Sony insiders also stress that Fortress would be unable simply to foreclose and put Jackson's assets on auction to any buyer. According to the covenants of the Sony agreement with Jackson, whomever has the assets cannot sell them without first offering them to Sony.

The big question remains: How much does Jackson understand of all this and who exactly is advising him?

My Sony sources say that Jackson is now totally represented by Sheik Abdullah bin Hamad Al Khalifa, prince of Bahrain, and his associates.

According to stateside sources, Jackson has not been in touch with most of his family or with his trusted aide, Evvy Tavasci, in months. Recent visitors to the Bahrainian palace are said to have spoken with the prince but didn't see or speak to Jackson.

Even more interesting is that Jackson's brother Jermaine, who got the ball rolling for his brother in Bahrain, is back in Los Angeles for the foreseeable future, perhaps wondering where he and his own family will live if Jackson is forced to sell his parents' home in Encino.

That leaves Michael alone except for his children and their nanny, Grace Rwamba.

Jackson and the prince are still saying to friends that they hope to finance a record company that will be distributed in the U.S., and they also plan on releasing that much-discussed charity single sometime soon.

Hurricane Katrina, if you recall, did its damage nearly four months ago. But Dec. 26 is the first anniversary of last year's deadly tsunami in Indonesia. Maybe Jackson can tie it to that instead.

Reuter's story

By Steve Gorman Mon Dec 19, 7:28 PM ET

LOS ANGELES (Reuters) - Lawyers for
Michael Jackson and a key creditor are in talks to keep the pop star from defaulting on $200 million in loans secured by his prized stake in the Beatles' song catalog, an attorney for the singer said on Monday.

A default on the loans, which come due on Tuesday and are held by the Fortress Investment Group would allow the New York private equity fund to seize Jackson's 50-percent interest in Beatles publishing rights valued at some $500 million.

The catalog, containing more than 200 Beatles tunes that include such classics as "Yesterday," is jointly owned by Jackson and Sony Corp (NYSENE - news). through Sony/ATV Music Publishing.

Jackson bought publishing rights to the catalog for about $48 million two decades ago at the height of his career.

Brent Ayscough, a civil lawyer for Jackson, told Reuters that representatives for the 47-year-old entertainer and Fortress were working to renegotiate terms of the loans to give Jackson more time to avoid default.

And he suggested that the possibility of imminent foreclosure on Jackson's stake in Sony/ATV was unlikely.

"There no doomsday, or anything like that," Ayscough said. "Nothing's going to happen tomorrow. ... At the moment people are still talking." He said a deal could be reached as early as this week.

He said Sony, which music industry experts believe is eager to acquire Jackson's share of the catalog, also is a party to the talks.

Representatives of Fortress, which manages about $5 billion in private equity capital, could not immediately be reached for comment. A spokeswoman for Sony declined to discuss the matter.

According to prosecution testimony during his sex-abuse trial earlier this year, Jackson had borrowed heavily against his assets, including $200 million secured by his stake in Sony/ATV. Those loans, first provided by Bank of America Corp., were later sold to Fortress.

Jackson, who was acquitted of all charges by a California jury in June, is currently living in Bahrain in the Middle East.

Rights to the Beatles music passed to the conglomerate ATV through its purchase of the band's publishing company, Northern Songs, in 1969.

Jackson in turn acquired the 4,000-song catalog, including the Beatles titles, when he bought ATV from the late Australian tycoon Robert Holmes a Court in August 1985. Ten years later, Jackson cut his stake in the catalog to 50 percent after merging ATV with Sony's publishing. Jackson also kept a 50-percent stake in new songs added to the collection.

The Sony/ATV catalog also includes songs like
Bob Dylan's classic "Blowin' in the Wind" and the works of such artists as
Joni Mitchell and
Stevie Nicks. But the Beatles' rights account for an estimated two-thirds of the collection's value.

Industry experts say the catalog is one of the most treasured in the world, especially since the recent explosion in music licensing for media ranging from movies and television ads to cellphone ringtones and video games.

Basically, Sony steps in to keep the ownership of those songs from returning to McCartney and Starr? That's what it sounds like to me.

Jazon, it goes even deeper than that. One of the execs at Sony/ATV just joined ASCAP's board of directors. The Beatles music is BMI, not ASCAP.