SONY Sony Group Corporation

Seven years after his death, the King of Pop is ceding much of his publishing empire.

Sony Corp. has reached an agreement with the estate of pop star Michael Jackson under which the electronics and entertainment giant is to obtain ownership of Sony/ATV Music Publishing LLC—the world's biggest music-publishing company—by purchasing the estate's 50% stake.

A memorandum of understanding calls for payments of $750 million, including a lump-sum payment of about $733 million by Sony, according to an announcement.

The parties said they expect a definitive agreement by March 31.

Sony/ATV is co-owned by Sony and the estate. Sony and Mr. Jackson—and since his 2009 death, his estate—have jointly owned the company since 1995.

The Wall Street Journal reported in October that Sony and the estate were in talks on the future ownership of the venture, after Sony triggered a clause in their partnership agreement that allowed either party to buy out the other. That move came as a surprise to the estate, which had guessed that Sony wanted to sell its share, and lined up two partners to help it finance a buyout, according to a person familiar with the matter. A potential sale had been mentioned in emails among top Sony executives in November of 2014, which were among those posted online by hackers.

But in recent months Sony made it clear that it actually wanted to buy the other half of the music publisher, offering the estate a better deal than it had expected to receive, this person said. According to their deal, Sony had an option to buy half of Mr. Jackson's share of the joint venture at a steep discount. But Sony didn't exercise that option to the extent it could have, this person added.

The deal eliminates the estate's remaining $250 million in debt and allows the estate to diversify its assets beyond the music industry, which is in upheaval as CD and download sales decline, and streaming grows. The sale also gives each of Mr. Jackson's children more financial flexibility, preventing potential squabbles on what they might do with their shared asset, according the person familiar with the matter.

Sony/ATV's catalog includes the copyrights to most of the Beatles' songs, as well as songs by stars including Marvin Gaye, the Rolling Stones and Taylor Swift. 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.

Mr. Jackson's estate said the transaction won't affect its "substantial interests in other music assets," including all of Mr. Jackson's master recordings and Mijac Music, the publishing company that owns all of the songs he wrote and certain other songs he acquired. Those include "Great Balls of Fire," written by Otis Blackwell and Jack Hammer and most famously performed by Jerry Lee Lewis, and "After Midnight" by J.J. Cale and made popular by Eric Clapton.

The estate will also retain its interest in EMI Music Publishing. In 2012, Sony and the estate joined investors including Abu Dhabi's Mubadala Development Co. and music mogul David Geffen to buy EMI Music Publishing for $2.2 billion.

After a multiyear restructuring led by Chief Executive Kazuo Hirai, Sony has reduced its exposure to troubled consumer-electronics businesses such as television sets.

Write to Hannah Karp at hannah.karp@wsj.com

(END) Dow Jones Newswires

March 15, 2016 00:05 ET (04:05 GMT)

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