Sony Exploring Sale of Music-Publishing Unit
October 07 2015 - 6:00PM
Dow Jones News
Sony Corp. appears to be moving forward with plans to sell off
its half of Sony/ATV Music Publishing, after recently triggering a
clause in its contract with its co-owner, the Michael Jackson
estate, that allows one party to buy out the other, according to
people familiar with the matter.
The world's biggest music-publishing company, Sony/ATV is
co-owned by Sony and the estate of the late pop star, who died in
2009. Mr. Jackson and Sony had jointly owned the company since
1995, with each partner holding a 50% stake.
Sony/ATV's catalog includes the copyrights to most of The
Beatles' songs, as well as songs by stars ranging from Marvin Gaye
and the Rolling Stones to pop's Taylor Swift and dance music's
Calvin Harris. Unlike record labels, which own and distribute sound
recordings, music publishers own rights to lyrics and melodies and
license them out for various uses—including recordings released by
record labels.'
People in the music industry estimate Sony/ATV's value around $2
billion. Sony hasn't put a price tag on its share yet, these people
said, adding that the process is not a public auction pending the
outcome of direct negotiations between Sony and the Jackson
estate.
Lenders were notified when Sony triggered the exit clause last
month, they added.
Sony/ATV's structure grants both partners the right to counter
any offer to buy out the other side, as well as to bid for the half
each doesn't own.
The potential sale of its stake of Sony/ATV could help Sony
raise cash following a multiyear restructuring aimed at shrinking
the Japanese company's dependence on its beleaguered
consumer-electronics businesses such as televisions and mobile
phones. Sony's net profit more than tripled during the quarter
ended June 30 to ¥ 82.44 billion ($685 million), thanks to strong
sales of videogames and smartphone image sensors. While the
music-publishing business is profitable, generating ¥ 66.9 billion
($556 million) in revenue for Sony last year and a projected ¥ 70.1
billion ($590 million) this year, according to Sony's filings, it
doesn't mesh with Sony's other businesses and operates separately
even from Sony's record label, Sony Music Entertainment.
Sony appears to have been considering the sale of its Sony/ATV
stake for a nearly a year if not longer. The potential sale was
mentioned in emails among top Sony executives in November of
2014—emails that were among the thousands of documents stolen by
hackers and posted online. In one email exchange following a
planning meeting last year, Sony Corp. of America Chief Financial
Officer Steve Kober wrote to Sony Entertainment Chief Executive
Michael Lynton that they were trying to keep the potential sale
"top secret."
Mr. Jackson, the late pop star, bought ATV Music Publishing for
$47.5 million in 1985, and sold Sony a 50% stake for more than $100
million in 1995. Mr. Jackson died in 2009 while preparing for a
comeback tour.
In 2012, Sony and Mr. Jackson's estate joined other investors,
including Abu Dhabi's Mubadala Development Co. and music mogul
David Geffen, to acquire EMI Music Publishing for $2.2 billion, and
Sony/ATV Music now generates revenue administering the EMI catalog
for the investor group. It isn't clear whether Sony would package
its share of EMI in the sale.
Write to Hannah Karp at hannah.karp@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 07, 2015 17:45 ET (21:45 GMT)
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