Jackson: The Long View

The memorial service for Michael Jackson at the Staples Center in Los Angeles July 7 may provide “closure” for some, as Diana Ross wrote in her condolence statement, but mark’s only the beginning in terms of sorting out the industry fallout of Jackson’s untimely death.

All eyes have been on AEG Live and CEO Randy Phillips since word of Jackson’s cardiac arrest began flying out of California early afternoon June 25. Jackson’s subsequent death meant the planned 50-date London residency at the O2 was history.

Some wondered if promoter AEG Live would be, too. There was an estimated $85 million to $120 million in ticket refunds that would have to be paid. Numerous reports pegged Jackson’s advance, for shows he will never perform, at $20 million. Production costs for rehearsals and elaborate staging had also been reported to cost $30 million. If a toxicology report turned up a drug overdose, would insurance pay anything at all? And would Jackson’s estate be able, let alone willing, to reimburse his fees?

In the days following Jackson’s death, some answers began to come into something resembling focus amid an unprecedented media frenzy that lasted 10 days before appearing to ease its grip on a global public.

AEG Live announced tickets would be refunded in full, but specially designed tickets could be kept as souvenirs in lieu of a refund.
But until the Gordian knot of Jackson finances is cut and AEG is able to get a handle on what it can recoup, anything else is pure speculation.

“Until we sit down and lay out a strategic plan,” Phillips told the Wall Street Journal, “I don’t know if we’ll recoup, make money, lose a little money, or what.” The “or what” could take years to figure out.

Already, one event appears to have worked in AEG’s favor. The appointment of entertainment lawyer and longtime Jackson associate John Branca and record executive John McClain as co-executors of the estate, rather than Jackson’s mother, Katherine, is a positive development as they move to quickly take control of the estate as well as its business going forward.

Part of that business is to take advantage of renewed interest in MJ and his musical legacy, from rumors of a tribute concert by some or all of Jackson’s surviving siblings to the mining of a vast catalog and vault of released and unreleased audio and video recordings.

Comparisons of Jackson’s posthumous profit possible have already been made to that of Elvis Presley’s estate, which easily generates far more than the original King was worth at the time of his death in 1977.

“Michael was bigger than Michael, as we’re all learning,” Phillips told the WSJ during rehearsals for the memorial service, adding there should be limits to the exploitation of that legacy – despite Jackson’s reported $400 million debt at the time of his death.

Even that could be a misleading figure. With his share of the Sony/ATV and Mijac publishing catalogs, as well as his share of a joint venture with Colony Capital of the 2,700-acre Neverland Ranch near Santa Barbara, Jackson’s assets at the time of his death could be worth as much $500 million.

Estimating the worth of his Mijac company is especially tricky, considering the sale of Jackson’s music smashed records in the days after his death. In just three days, Jackson albums occupied nine of the Top 10 slots in the Nielsen SoundScan catalog chart. Fans downloaded 2.6 million songs, including Jackson 5 tunes, for another record.

And with an unusually generous contract structured by Branca with Sony, Jackson receives half the profits from U.S. sales in addition to an approximately 25 percent royalty rate, according to the Los Angeles Times, double the usual royalty for lesser mortals.

The Neverland property is another potential gold mine and is already being eyed as a potential “Graceland West.” However, there are many hurdles to jump before that idea can come to fruition, however badly financier Tom Barrack or Jermaine Jackson may wish it so.

Neighbors and residents of the nearby village of Los Olivos may make it difficult for the Jackson estate to obtain permits to do anything but sell the property. However, the prospect of substantial tax revenues from a huge influx of tourists, and especially their wallets, could be too tempting an offer for either cash-strapped Santa Barbara County or near-bankrupt California officials to refuse.

And despite the debt, clear-eyed observers and cynics are quick to point out that with Jackson’s notoriously extravagant spending habits no longer part of the equation, the estate should be able to rebound fairly quickly.

“His estate is in debt and they need to get out of debt,” Phillips told the WSJ. “They can do it easily given his enormous popularity.” But they need not do just anything. “Do I think his music should be licensed for suppository commercials? No, obviously,” he said.
Another possibility, floated by “This Is It” director Kenny Ortega, would be a tribute performance to the tour that might have been – staging a concert showcasing the band, singers, dancers, effects and production of the shows designed around Jackson.

The possibility of a Jackson Family tribute to take the place of the 50 now-canceled London shows looks less and less likely with tickets already being refunded and the O2 reportedly filling some of the dates.

It’s expected that Branca and McClain would move to establish authority for licensing – including enforcement – especially since would-be profiteers were coming out of the woodwork literally within hours of MJ’s death to hawk unlicensed T-shirts, bootlegged recordings and photographs.

AEG has already moved to begin selling its own T-shirts, belt buckles, hats and other merch from the aborted O2 concerts, now considered valuable memorabilia.

But more importantly, and certainly more lucratively, it also plans to make a documentary about preparations for Jackson’s comeback to the stage, using some of the more than 100 hours of multi-camera, high-definition footage from rehearsals. A snippet was released to news media by AEG showing an apparently healthy and energetic Jackson less than 48 hours before his heart stopped.

The cause of that heart stoppage will have some bearing on whether AEG Live is able to collect on insurance claim for the canceled London concerts. Phillips confirmed that the company had obtained $17 million in insurance that may be claimed in case of accidental, including drug-related, death. Apparently it does not pay in the case Jackson’s death was from natural causes.

Two autopsies were performed – the L.A. Coroner’s office deferred an announcement of the cause of death pending toxicololgy reports that could take several weeks to obtain. Jackson’s family ordered a private autopsy, the results of which were not announced.