A $47.5 Million Bargain: Inside Music Publishing's Best Deal Ever
Michael Jackson's purchase of the Beatles' catalog only looks better with time.
John Branca is best known for his work as an entertainment lawyer, most notably for his decades spent representing Michael Jackson. What few know is that he, like me, is an obsessive baseball fan and card collector. Unlike me, his uncle Ralph Branca pitched for the Brooklyn Dodgers (you may have seen his portrayal as Jackie Robinson’s best friend on the team in the 2013 film 42).
The younger Branca has always seen a parallel between America’s pastime and the music business.
“Artists or baseball players and other guys got totally ripped off in the early days … like my uncle, Ralph, who won 21 games and they threatened to cut his salary,” he explains. “He held out because he was smart. But they had all the leverage. As time has gone on, the leverage has shifted.”
In the 1970s, baseball star Curt Flood’s challenges to the sport’s unjust Reserve Clause—which effectively tied players to teams indefinitely—eventually ushered in the modern era of free agency in sports. It also served as part of an awakening across the entertainment spectrum after many decades of exploitation.
“In the early days, musicians were not businessmen, they were not sophisticated,” says Branca. “The people that owned the companies were businessmen. They were out to make a profit. Musicians … in some cases weren’t [even] high school grads, and they didn’t see it as a business, so they got taken advantage of.”
But there were some notable exceptions, especially as the landscape began to shift—perhaps, most famously, the King of Pop. And it went beyond retrieving the rights to his own work, a process detailed by Branca in my last installment of We Are All Musicians Now. Says Branca: “Michael, he was an artist and he was a businessman.”
In the bad old days, scores of swindlers convinced scores of artists to sign away their copyrights. “That’s the story of the music business,” John Oates of Hall & Oates once told me. “Give him a bottle of wine and take all his publishing for the rest of his life.”
But these unscrupulous businessmen didn’t totally comprehend the value of the copyrights they were filching. They just understood it better than the musicians they swindled, and the charlatans themselves weren’t quite as desperate.
Shady or not, most record label executives were focused on recorded music. That means master recordings, one of the two main copyright components of every track. The other (publishing) encompasses the musical composition, lyrics and, these days, production—in short, the song.
“The record company guys didn’t really realize the value of publishing,” says Branca. “They were record guys, so they wanted the record rights.”
It’s also worth noting that the midcentury music business itself was seen as somewhat seedy.
“The William Morris Agency, when they took on Elvis, the music business was a dirty business,” Branca adds. “It wasn’t really something they were proud of, like they were proud of Steve McQueen.”
The music publishing industry was, therefore, a backwater of a backwater. If selling records felt like selling used cars, then publishing was akin to manning the accounting office at the dealership.
Jackson didn’t care. He and spent the early 1980s investing in copyrights, from individual songs like “The Wanderer” and “Runaround Sue” to catalogs like that of Sly and the Family Stone. Branca would send Jackson ideas, Jackson would listen to songs and Branca would acquire them for his client.
To both of them, it felt like collecting—for Branca, baseball cards; for Jackson, fine art. And finally, in 1985, Jackson found his Guernica: the ATV catalog, which contained most of the greatest hits by the Beatles. Its price tag spooked other advisers, but he was adamant.
“You can’t put a value on a Picasso,” Branca remembers Jackson telling his advisers. “I don’t care what it costs. This is great art. I’m buying this.”
Adds Branca: “He recognized the value of publishing in his intuitive way, when the business guys overlooked it.”
The whole saga of Jackson’s catalog purchase is something I detailed extensively in my book Michael Jackson, Inc. But in short, he got his wish, settling on a $47.5 million purchase price for ATV (and edging out billionaire Richard Branson, who was also interested, in the process).
A decade later, Jackson merged the catalog with Sony’s to create Sony/ATV, receiving over $100 million and a 50% stake in the new entity. By the time my book came out in 2014, the combined catalog’s value had grown astronomically, with some estimates putting Jackson’s half at around $500 million. In 2016, his estate sold his stake for $750 million. It’s likely worth even more now.
Branca and Jackson were right: they were collecting. And as the value of everything from vintage cars to Pokémon cards has skyrocketed over the past couple of years, so have the sale prices on blue chip music catalogs. If we are all musicians now, we’ve all got catalogs of some sort—and the values are only going up, with actual musical assets leading the way.
“There are different economic forces that have driven up the value of publishing,” says Branca. “One is low interest rates, one is the incredible growth of streaming, and then there’s [individual buyers]. One guy can change the market.”
In the next installment of We Are All Musicians Now, we’ll meet one of those individuals.
You just read the latest serialized installment of my book We Are All Musicians Now— “Chapter 1: The Ownership of Genius (Part 3).” Want to get the rest? Sign up here to ensure weekly delivery of each new chapter.