Sony Music Acquires Major Stake in Michael Jackson Catalog, Valued at $1.2 Billion-Plus
In what is apparently the conclusion of a deal that Variety tipped a year ago, Sony Music Group has completed a transaction to acquire half of Michael Jackson’s publishing and recorded masters in a transaction that values the total catalog at around $1.2 billion, and possibly more, sources confirm to Variety. Billboard reports that Sony will pay at least $600 million for the stake.
If accurate, the deal is the biggest for a single music artist’s assets to date.
Sources confirm to Variety that the complex deal also includes assets from Jackson’s legendary Mijac publishing catalog, which includes multiple titles by Sly & the Family Stone as well as hits written or performed by Jerry Lee Lewis, Jackie Wilson, Curtis Mayfield, Ray Charles, Percy Sledge, Dion and others. However, it does not include royalties from the “MJ” Broadway musical and other theatrical productions featuring the musician’s music.
Primary Wave Music continues to hold a 10% stake in Jackson’s publishing assets, sources confirm to Variety.
Reps for Sony, the Jackson estate and Primary Wave either declined or did not respond to Variety’s requests for comment. Sony similarly did not comment on its widely reported deal to acquire Bruce Springsteen’s publishing and recorded-music catalog several years ago for around $600 million.
When Variety first reported on the negotiations last February, the estate was said to be seeking $800-$900 million, although it is possible that a different set of assets was included in the final deal, as the value of Jackson’s catalog has only risen in the past year.
The co-executors of Jackson estate’s — the singer’s longtime lawyer John Branca and executive John McClain — are expected to remain in their roles.
Sony and its predecessor CBS were the sole home for Jackson’s recorded-music catalog for his entire solo career and the latter years of his career with the Jackson 5. The singer died in 2009 at the age of 50; the formidable entertainment interests of his estate have been handled with a firm hand by Branca, his longtime attorney, and co-executor John McClain.
Jackson’s recorded-music catalog is one of most lucrative in history — his 1982 “Thriller” album alone is one of the two biggest sellers of all time and was the first album to be certified 30-times platinum, although such figures have become muddled in the streaming age.
In 2016 Sony Corp. reached a $750 million agreement with the estate to acquire the Jackson estate’s 50% stake in their joint venture, Sony/ATV Music Publishing, which they had formed in 1995. In 2018 Sony revealed in an earnings report that as part of its $2.3 billion acquisition of EMI Music Publishing, it had acquired the Jackson estate’s 25.1% stake in that company for $287.5 million.
At the end of that years-long process, which had begun six years earlier but was not cleared by the European Union until 2018, EMI and Sony/ATV were fully owned by Sony, making it sole owner of the world’s largest music publishing company.
Closing Stock Market Summary
The S&P 500 closed above 5,000 for the first time in a fairly broad advance. The Nasdaq Composite climbed 1.3% and the Russell 2000 logged a 1.5% gain. The Dow Jones Industrial Average, though, settled slightly lower than yesterday.
There still has not been any concerted selling interest despite reports that the market is overbought in the short-term, which has acted as its own upside catalyst. The market also drew support from gains in the semiconductor and mega cap spaces. The Vanguard Mega Cap Growth ETF (MGK) registered a 1.2% gain and the PHLX Semiconductor Index jumped 2.0%.
Many stocks participated in upside moves by the close, though. The A-D line favored advancers by a roughly 2-to-1 margin at both the NYSE and the Nasdaq. Also, the equal-weighted S&P 500 eked out a 0.1% gain.
Eight of the 11 S&P 500 sectors closed higher, led by the information technology (+1.5%), consumer discretionary (+1.0%), and communication services (+0.7%) sectors, which benefitted from gains in their largest components.
Meanwhile, the energy sector (-1.6%) saw the largest decline by a decent margin, likely due to some geopolitical worries after The Wall Street Journal reported that Venezuela deployed its military to Guyana's border a day after indicating that a "forceful" response would be warranted if Exxon Mobil (XOM 101.77, -2.20, -2.1%) proceeds with plans to drill in a disputed region offshore Guyana. It is worth noting, too, that natural gas prices ($1.85, -0.07, -3.7%) had another tough outing, leaving prices down 11% for the week.
The consumer staples sector was another laggard, dropping 0.9%. This was due in part to shares of PepsiCo (PEP 167.67, -6.18, -3.6%) falling 3.6% after reporting earnings.
There was no U.S. economic data of note today, but the annual CPI revisions were released at 8:30 ET, garnering added attention due to potential implications for the Fed's rate cut path. The revisions were relatively friendly since they did not alter the market's view on inflation much. Reactions from both the bond and equity markets were muted.
The 2-yr note yield, which is most sensitive to changes in the fed funds rate, was at 4.48% just before 8:30 ET and settled at 4.50%. The 10-yr note yield, at 4.17% before the revisions, settled at 4.19%, which is two basis points higher than yesterday's settlement.
Also, rate cut expectations were little changed by the revisions. The probability of a 25 basis points rate cut to 5.00-5.25% at the May FOMC meeting is 63.1% now, up from 59.9% yesterday, but down from 73.2% one week ago, according to the CME FedWatch Tool.
Looking ahead, Monday's economic calendar is limited to the January Treasury Budget (prior -$129.0 bln) at 2:00 ET.
- Nasdaq Composite: +6.5% YTD
- S&P 500: +5.4% YTD
- Dow Jones Industrial Average: +2.6% YTD
- S&P Midcap 400: +1.0% YTD
- Russell 2000: -0.8% YTD
Owners consider taking Soho House private after short seller report
Shares in the members’ clubs group plunged after GlassHouse alleged it had ‘terrible accounting’
Members club group Soho House said that its biggest shareholders are considering taking the New York-listed company private, in response to a short seller report that described its 2021 public listing as being “eerily similar” to that of bankrupt co-working company WeWork.
Soho House said on Friday that a special committee of the board had begun to evaluate “certain strategic transactions, some of which may result in the company becoming a private company” in the autumn. The group added that there were “no assurances” that the review would result in a transaction.
The announcement that Soho House — whose controlling shareholder is American retail billionaire Ron Burkle’s Yucaipa investment vehicle — has been considering a return to a private company comes just days after New York-based short seller GlassHouse published research criticising the group.
Soho House’s share price fell by 19 per cent in intraday trading on Wednesday, but after the announcement on Friday morning, the stock bounced back to approaching $6, close to its price before the short report was published.
Soho House — which operates 41 members clubs worldwide with more than 250,000 members, and whose brands also include the Ned — went public in 2021, floating 18 per cent of its stock on the New York Stock Exchange to much fanfare. But the share price has struggled since, tumbling around 60 per cent from its listing price of $14.
In a Securities and Exchange Commission filing, Soho House said that it “fundamentally rejects” the short report, which accused the members’ club group, founded by British hospitality veteran Nick Jones in 1995, of being “a company with a broken business model and terrible accounting”.
The GlassHouse report “contains factual inaccuracies, analytical errors, and false and misleading statements, all designed to adversely impact the company’s stock price for the benefit of the short seller”, Soho House added.
In its report published on Wednesday, GlassHouse criticised Soho House for having a growth strategy reliant on expanding into less affluent cities, such as São Paulo, for failing to turn a profit in its 28-year history and for overcrowding at its venues that hurt customer satisfaction.
The short seller also took issue with Soho House’s “mountain” of debt maturities, with $607mn coming due in 2027 and the company’s “questionable accounting practices”, including a decision to pull forward millions of dollars of revenues by introducing a credits programme for new members.
GlassHouse, which describes itself on its website as “a team of forensic accountants”, began analysing Soho House’s accounts around six months ago, according to a person close to the firm.
Soho House also announced on Friday that it would commence a $50mn share buyback programme. The board — which is led by Burkle and also includes Jones and former majority owner Richard Caring — owned 74 per cent of the stock, the members club group noted. Board members “had been active purchasing shares” at an average price of around $6 a share, the company added.
In response to the announcement, GlassHouse said on X, formerly Twitter, that “Soho House rejects our report, says it has inaccuracies/errors, but does not list anything.”
Research Calls
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Upgrades:
- Aurora Cannabis (ACB) upgraded to Buy from Hold at Canaccord Genuity
- Bunge (BG) upgraded to Buy from Hold at HSBC Securities; tgt lowered to $105
- Equity Lifestyle Properties (ELS) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $75
- FEMSA (FMX) upgraded to Buy from Hold at HSBC Securities; tgt raised to $152
- IGM Biosciences (IGMS) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $21
- Inotiv (NOTV) upgraded to Buy from Hold at Jefferies; tgt raised to $11.50
- Liberty Global (LBTYA) upgraded to Buy from Neutral at Citigroup; tgt raised to $24, opens 90-day positive catalyst watch
- United Airlines (UAL) upgraded to Outperform from In-line at Evercore ISI; tgt raised to $65
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Downgrades:
- Albemarle (ALB) downgraded to Neutral from Buy at Citigroup; tgt lowered to $120
- Banco Bradesco (BBD) downgraded to Hold from Buy at Jefferies
- CEMEX S.A. (CX) downgraded to Equal Weight from Overweight at Barclays; tgt $9
- Enersys (ENS) downgraded to Perform from Outperform at Oppenheimer
- Envista (NVST) downgraded to Hold from Buy at Jefferies; tgt lowered to $23
- Everest Group (EG) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $402
- Expedia Group (EXPE) downgraded to Neutral from Buy at BofA Securities; tgt $156
- lululemon athletica (LULU) downgraded to Underperform from Neutral at Exane BNP Paribas; tgt lowered to $415
- PayPal (PYPL) downgraded to Hold from Buy at DZ Bank; tgt $60
- Prudential (PRU) downgraded to Mkt Perform from Strong Buy at Raymond James
- Spectrum Brands (SPB) downgraded to Hold from Buy at Canaccord Genuity; tgt raised to $86
- Zurn Elkay Water Solutions (ZWS) downgraded to Neutral from Buy at Mizuho; tgt $34
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Others:
- Allurion Technologies (ALUR) initiated with a Buy at Jefferies; tgt $5
- Cleveland-Cliffs (CLF) resumed with an Overweight at JP Morgan; tgt $24
- Laboratory Corp (LH) initiated with an In-line at Evercore ISI; tgt $240
- Ocular Therapeutix (OCUL) initiated with a Buy at BofA Securities; tgt $15
- Pyxis Oncology (PYXS) initiated with a Buy at BTIG Research; tgt $8
- Tidewater (TDW) initiated with a Buy at Johnson Rice; tgt $88
- U.S. Steel (X) resumed with a Neutral at JP Morgan; tgt lowered to $47
- Citigroup opens 30-day positive catalyst watch on Zimmer Biomet (ZBH