Michael Jackson, who ruled the pop charts before struggling with mounting debts and legal troubles, began dismantling his empire Thursday by agreeing to sell a portion of his beloved music publishing catalog that features hits by the Beatles and dozens of other stars.
To avoid foreclosure on several loans, Jackson signed a $325-million refinancing agreement that would require him to sell half of his 50% stake in Sony/ATV Music Publishing to partner Sony Corp. within the next few years. Proceeds will pay off a large portion of the performer's debt, owed primarily to New York hedge fund Fortress Investment Group.
The deal is a coup for Sony, which has long hoped to acquire a larger interest in the thousands of copyrights owned by Sony/ATV, which include 251 Beatles songs and Bob Dylan's "Blowin' in the Wind." People familiar with the deal, who asked not to be named, said that Sony was likely to pay Jackson about $250 million.
The Sony/ATV catalog is valued at about $1 billion, but is expected to be worth more by the time Sony buys half of Jackson's stake because revenue has grown by more than 10% in the last two years.
Representatives for Jackson and Sony/ATV declined to comment on the deal.
A star since he was a child performing with his brothers in the Jackson 5, the singer's 1983 solo album "Thriller" remains one of the top sellers of all time. In 1990, Forbes estimated his net worth at $175 million.
But as his celebrity grew, so did Jackson's overhead. His lifestyle became more extravagant and he acquired lavish homes and a collection of exotic animals. At the same time, Jackson's music sales slowed because his public persona was hurt by a civil suit that alleged he had molested a child.
That suit was settled out of court in 1994. But in 2004, Jackson was indicted on criminal child-molestation charges involving another plaintiff. He was acquitted of those charges last year.
The seeds of Thursday's agreement took root last spring, when Bank of America representatives approached Jackson about a looming repayment deadline on a $270-million loan collateralized by the singer's interest in Sony/ATV.
Jackson, who was then awaiting trial on the criminal child-molestation charges, authorized his advisors to negotiate a solution that would have erased his debts and provided him with income of about $10 million a year, according to someone who participated in the negotiations. As part of the agreement, Sony Corp. would have purchased half the singer's interest in Sony/ATV for $200 million to $250 million.
