Michael Jackson, Inc.

by Zack O'Malley Greenburg

* * *

  One night in 1981 at Paul McCartney’s estate just outside of London, the former Beatle handed Michael Jackson a binder. Inside was a list of all the songs whose publishing rights were owned by McCartney. After letting much of his own songwriting catalogue slip away as a youngster, he’d been buying up copyrights for years.

  “This is what I do. I bought the Buddy Holly catalogue, a Broadway catalogue,” McCartney told the young singer. “Here’s the computer printout of all the songs I own.”2 Jackson was fascinated. He wanted to start doing the same, and his entrepreneurial instincts quickly clicked into gear. “Paul and I had both learned the hard way about business and the importance of publishing and royalties and the dignity of songwriting,” Jackson wrote in his autobiography.3

  When he got back to California, he found himself with an enviable problem. He’d earned $9 million in 1980 and was sitting on a pile of money that needed to be invested. Inflation was rampant in the early 1980s, meaning that fallow cash would start to lose value quickly. In short, he needed to find some worthwhile places to park the reserves of Michael Jackson, Inc.

  His accountants brought him a number of real estate deals, but he wasn’t excited enough to buy anything. Branca even discovered that the Century City building that was home to CBS Records’ Los Angeles headquarters was on the block, and tried to persuade the singer to consider purchasing it. “You’d be Walter Yetnikoff’s landlord!” the lawyer enthused. Though Jackson got a chuckle out of the idea, he declined. He wanted to buy songs.

  So Branca started combing around, talking to people in the publishing business to find out what was for sale. He talked to songwriter Ernie Maresca, who had two big rock songs available: “Runaround Sue” and “The Wanderer.” When Branca told Jackson, the singer didn’t recognize them. The lawyer gave his client a tape and told him to have a listen. A few days later, Jackson called back. “You gotta get those songs!” he said. “I danced to them all weekend.”4

  Thus began a buying binge for Branca and Jackson. They picked up a small catalogue that included “1-2-3,” a 1960s soft-rock love song by Len Barry; “Expressway to Your Heart,” a Gamble and Huff composition released by the Soul Survivors in 1967; and “Cowboys to Girls,” a 1968 hit by the Intruders composed by the same duo. If Jackson didn’t know a song, Branca would send him a recording; if the singer fell in love with it, he’d give the go-ahead to acquire it.

  Longtime associate Karen Langford remembers sitting around with Jackson during this period and discussing which of the greatest songs of all time would be best to own (he often mentioned ones by the Beatles, Elvis, and Ray Charles, among others). Sometimes he’d quiz Langford, singing a snippet of a song and asking if she could give the title and performer. Even then, he had his eye on ownership at a scale few could have fathomed at his age.

  “He wanted to be the number one publisher in the world,” she says. “And . . . it would come up in lots of different ways, but [his goal] was always number one, getting to that number one spot. Being the biggest, being the best.”5

  One day, Branca was talking to radio station owner Kenny Roberts, who owned half of the Sly and the Family Stone catalogue. He’d been advancing Sly cash against his publishing royalties and wanted out. Jackson didn’t need to hear those songs played over the phone—they were right in his wheelhouse—and he bought Roberts’s half for $250,000. The rest was owned by Warner Music’s publishing arm, which administered Jackson’s own songs at the time. Branca sensed another opportunity and arranged a meeting with the company’s chairman, Les Bider.6

  “We want to buy the other half of the songs,” said Branca.7

  “Why would we sell them?”

  “Well, if you want to renew [Jackson’s] deal . . .”

  Bider agreed to sell the catalogue to Jackson for about $250,000 on the condition that he kept administration of his Mijac Music with Warner. So Jackson ended up paying half a million dollars for the entire Sly and the Family Stone catalogue—and made it all back shortly thereafter when a cover by Status Quo went to the top of the UK charts.

  Yet Jackson was selective. When offered a catalogue that included hits like “Help Me Make It Through the Night” by Kris Kristofferson, Jackson chose not to buy it—the songs just weren’t that meaningful to him. Ultimately, he decided to buy just three of the ten to fifteen catalogues presented to him from 1981 to 1984.

  What the singer really wanted was Gordy’s Jobete catalogue, home to most of Motown’s greatest hits, including those of the Jackson 5. Gordy says Jackson offered him a “competitive” price for it at one point, but the Motown chief wasn’t ready to sell—and didn’t, until EMI paid him $132 million for half of the catalogue in 1997.8 But watching Gordy manage his publishing interests had set something ablaze inside Jackson.

  “He got the bug,” says Gordy. “And that gave him the [urge] to want to do something even greater.”9

  * * *

  “Michael,” began Branca, coyly, at a meeting in September 1984, “I think I heard of a catalogue for sale.”

  “What’s that?”

  “It’s ATV.”

  “Yeah, so what’s that?”

  “I don’t know, they own a few copyrights, I’m trying to remember,” said Branca, pausing for effect. Then he offered a few names: “Yesterday,” “Come Together,” “Penny Lane,” and “Hey Jude.”

  “The Beatles?!” Jackson exclaimed.10

  The only problem: the catalogue belonged to billionaire Robert Holmes à Court, an Australian corporate raider known for a steely patience, a penchant for backing out of deals at the last minute, and a stubbornness that rivaled that of any rock star. He also had plenty of other suitors for ATV, including billionaire real estate developer Samuel LeFrak, Virgin Records founder Richard Branson, and the duo of Marty Bandier and fellow publishing executive Charles Koppelman.

  For Holmes à Court, there were few pleasures greater than a grueling business negotiation. He took particular glee in toying with overzealous Americans (“They are just looking for me to play according to their rules and make it a big game,” he once said of his stateside counterparts. “The Viet Cong didn’t play by the rules, and look what happened.”11)

  None of that mattered to Jackson. His instructions to Branca: “You gotta get me that catalogue.”

  The lawyer remembers the frenzied days that followed. His first task: to check in with Paul McCartney and Yoko Ono, both friends of Jackson. As John Lennon’s widow, Ono was in charge of his estate and was rumored to have had some interest in making a joint offer for ATV with McCartney. Jackson was hoping to avoid a showdown.

  “I got Yoko on the phone,” recalls Branca. “And then I said, ‘Michael asked me to call you and find out if you’re bidding [on] ATV Music that owns all the Beatles songs.’ ”

  “No, we’re not bidding on it.”

  “No?”

  “No, no, if we had bought it, then we’d have to deal with Paul,” replied Ono. “It’d have been a whole thing. Why?”

  “Because Michael’s interested.”

  “Oh, that would be wonderful in the hands of Michael rather than some big corporation.” (When I asked Ono about the conversation some thirty years later—in the midst of a brief interview prior to an anti-fracking rally at New York’s ABC Carpet & Home, of all places—she said she didn’t have “a complex dialogue” with anyone on Jackson’s team, but wouldn’t elaborate.)12

  Branca says his next move was to check in with John Eastman, Paul McCartney’s lawyer and brother-in-law (he represented the singer along with his father, Lee Eastman, who started working with McCartney before the Beatles broke up). According to Branca, Eastman said McCartney wasn’t interested because the catalogue was “much too pricey.”13

  This was one of many reasons that neither Branca nor Bandier believed McCartney would lay out such a large amount of cash. Though the Beatles’ songs made up roughly two-thirds of ATV’s value, the remaining third consisted of assets McCartney didn’t want: copyrights to thousand
s of other compositions, a sound effects library, even some real estate.

  “Paul’s demeanor was very, very much more financially structured,” says Bandier.14 Adds Joe Jackson: “The only reason Michael bought that catalogue was because it was for sale! [McCartney and Ono] could have bought the catalogue themselves. But they didn’t.”15

  There’s also an artistic explanation for McCartney’s unwillingness. “I never thought Paul McCartney would buy it because it’s very difficult for a creator of something [to buy] it,” says Bandier. “It would be like Picasso, who spent a day doing a painting, to buy it for $5 million like twenty years later. It wouldn’t be a thing that Paul would do.”16

  Branca opened with an offer of $30 million. But Holmes à Court wanted more, especially since Bandier, Koppelman, and a few other suitors were still interested in buying ATV. By November, Jackson had authorized Branca to raise his offer beyond $40 million. With the exception of John Johnson, Jackson’s advisors—even music executives like David Geffen and Walter Yetnikoff—thought the singer had lost his mind.

  The latter told Jackson he was making a mistake and that he should stick to being an artist. “That was my advice,” says the former CBS chief. “And he disregarded it, luckily.”17

  Jackson didn’t have a business school education, and multiples of cash flow meant little to him. But he had a tremendous sense of value—and in Branca, a lieutenant able to help him make the most of that.

  “John was the financial concierge in executing Michael’s instincts,” says billionaire Tom Barrack, who’d go on to work with Jackson later in the singer’s life. “So Michael said, ‘Wow, I think there’s incredible value [in the Beatles’ songs] over time. Quite honestly, Michael didn’t know if they were worth $12 million or $18 million or $25 million. He just knew and anticipated correctly that over time the intellectual property was going to be worth a lot of money.”18

  Jackson’s constant refrain: “You can’t put a price on a Picasso . . . you can’t put a price on these songs, there’s no value on them. They’re the best songs that have ever been written.”

  During a finance committee meeting, he wrote Branca the aforementioned note that still sits in the lawyer’s home: “John please let’s not bargain,” it says. “I don’t want to lose the deal . . . IT’S MY CATALOGUE.”19

  * * *

  A bid of $45 million was good enough to earn Jackson and Branca a meeting in London that winter, but Holmes à Court refused to go himself. Since the deal was far from being completed, Branca did the same, sending his colleague Gary Stiffelman in his stead.20

  The two sides agreed on a nonbinding statement of mutual interest, and Jackson’s team embarked upon a four-month due diligence review of the 4,000-song catalogue. To verify ATV’s copyrights, a team of twenty spent some 900 hours examining close to one million pages of contracts. Branca met Holmes à Court in New York that April and agreed to a handshake deal. Within weeks, however, the mogul had backed out. So, with Jackson’s blessing, Branca sent another letter: accept the last offer of $47.5 million, or there would be no deal.

  Around the same time, Branca learned that Holmes à Court had tentatively agreed to sell the catalogue to Koppelman and Bandier for $50 million. But he knew his rivals—and some of the places they were getting their money. As it happened, their company had picked up a hefty publishing advance from MCA Records, headed at the time by Irving Azoff, who’d served as a consultant for the Victory Tour.

  “I went to Irving and I said, ‘How can you fund Charles and Marty? They’re bidding against Michael and you’re the consultant,’ ” Branca recalls. “[Azoff] pulled the deal, and [their ATV agreement] fell through.”

  Shortly thereafter, Branca received a call from one of Holmes à Court’s colleagues. Could he come to London and close the deal?

  “If Holmes à Court wants to say something to me, he can say it to me personally,” Branca replied. “I’m not discussing it with you.”

  “Well, I’ll talk to him, this is highly unusual.”

  “I’m not coming to London [if he’s not]. Don’t call me again.”

  When Holmes à Court finally called, Branca played it tough, telling him they’d decided to buy another catalogue instead.

  “We’re happy not to buy your company, so go ahead and sell it to Charles or Marty or whoever the hell else you want to sell it to,” he said, knowing the duo had lost their funding. “We’re not buyers.”

  “Would you please think this over?”

  “Give me a call in a couple of days.”

  “I promise you I’ll pay your ticket over.”

  “I don’t need you to pay my ticket.”

  “I promise you, you come over here and within twenty-four hours, we’ll have a deal done.”

  “Yeah, at what price?”

  They agreed on $47.5 million. Jackson granted Branca power of attorney, and the lawyer flew to New York. While waiting in the Concorde lounge at John F. Kennedy airport before his flight to London, he heard his name echo across the loudspeaker and raced to the phone. It was Richard Branson, who’d been keeping his eye on the ATV negotiations himself. To further complicate matters, Branca had been doing some consulting work for the billionaire’s music company, Virgin Records.

  “Should I bid on the Beatles catalogue?” Branson asked.

  Branca, whose firm had spent about $1 million on due diligence for ATV, was caught in an awkward situation. But he wasn’t going to let Jackson’s prize slip away.

  “You know, Richard, if you do, you’re going to have to deal with Yoko, and there’s all these things, and all this stuff . . .”

  Branson backed off. Content to have thrown another potential rival off the scent, Branca boarded his Concorde flight. Once inside the supersonic jet, however, he noticed two familiar faces also on their way to London: Bandier and Koppelman.

  “What are you doing over there?” Bandier asked.

  “Oh,” said Branca, “just some business.”21

  Bandier was ready to do some business of his own. Even after Branca had convinced Azoff to pull his funding, he and Koppelman thought they could scrounge up enough capital to make a $50 million bid for ATV—and that all they needed was to buy themselves a little time. Recalls Bandier: “We actually went to London to sort of finalize a more formal contract.”

  He and Koppelman figured that Holmes à Court had no interest in music publishing and was simply looking to unload ATV as quickly as possible. They weren’t counting on his patience, or the glee he may have derived from a bit of corporate sport. They certainly weren’t expecting what Holmes à Court was about to tell them when they arrived: that he was set to unload ATV to another party for $2.5 million less than they had offered.

  Face to face with Holmes à Court and on the verge of losing the deal, Bandier immediately upped his offer by another $500,000. The Australian wasn’t impressed.

  “There’s one aspect of the deal that you guys can’t do,” he replied. “And that is do a concert in Perth for my favorite charity.”

  “We can do a charity concert,” Bandier pressed, figuring he could easily leverage his connections, and perhaps his cash, to lure just about any big act.

  “No, no, you don’t understand,” continued Holmes à Court. “I’m selling this to Michael Jackson.”22

  * * *

  Fittingly, Jackson had sealed his biggest deal by throwing in a personal appearance as a sweetener. It wasn’t an easy favor, either—he would have to fly fifteen hours from Los Angeles to Sydney, change planes, and then fly another five hours to Perth. But not even a pack of dingoes could have stopped him from getting his catalogue.

  Bandier later learned that Jackson had offered another perk. Holmes à Court’s daughter was named Penny, and they were willing to exclude the song “Penny Lane” from the deal so that the billionaire could give it to her as a present (Jackson’s company continued to administer the song for her). It was far from a minor concession. “Any song that you own of the Beatles earns mon
ey,” says Bandier. “There’s only like two hundred fifty of them, and everybody has a favorite of the two hundred fifty. Believe me, ‘Penny Lane’ is a popular song.”

  But the kicker was the appearance in Perth.

  “We knew that we couldn’t do the moonwalk, so there was no question,” Bandier remembers. “It wasn’t going to happen.”

  When Branca boarded his Concorde flight to return home from London, he found one more surprise: sitting in the row behind him were Koppelman and Bandier. “Okay, you outmaneuvered us,” said Bandier. “If we’re ever in a position to buy a major company, we want to hire you.”23 24

  Other bidders for ATV didn’t react quite so kindly. “I think it’s dodgy to do things like that,” said McCartney. “To be someone’s friend and then buy the rug they’re standing on.”25 In some subsequent interviews, however, the former Beatle has admitted Jackson told him in advance of his intention to buy ATV—and that he thought the future King of Pop was joking.26

  Though Jackson and Ono continued to have a cordial relationship, the McCartneys never invited him to be their houseguest again. Richard Branson was also displeased. The normally mild-mannered Brit made that clear when he called Branca shortly after hearing the news of Jackson’s ATV acquisition. “So what’s the word for you?” Branson asked. “Prick?”27

  “I felt terrible,” Branca recalls. “Nowadays I would have said to him, ‘Richard, please, I’m about to sign.’ I might have handled it differently . . . but I was a young lawyer at the time. I couldn’t lose this deal.”

  Sure enough, Branca was well rewarded for his efforts. He earned a small fortune in legal fees, a 5 percent cut of the catalogue’s future earnings, and a gift from Jackson: a brand-new Rolls-Royce Corniche convertible.

  Six months later, he received a call from Bandier asking if he could come to New York the next day to close a big deal. He hung up the phone, thinking it was a prank. Moments later, Bandier’s associates called and asked him the question again. He declined. Then Yetnikoff rang.