Michael Jackson estate and Sony reach deal

The Wall Street Journal is reporting that the estate of Michael Jackson and Sony have reached a record-setting deal worth $250 million. The terms guarantee the estate at least $200 million while giving Sony the rights to produce 10 albums of both new and previously material over the next seven years.

Since Mr. Jackson’s death on June 25, Sony has sold an estimated 31 million of his albums globally. By the first anniversary of his death, his estate expects to have earned $250 million from sales of music, merchandise and tickets to the posthumous concert film “This Is It.”

The advances being paid by Sony are to be offset by sales of albums as well as revenue generated by licensing Mr. Jackson’s music for uses like videogames, movies and theatrical performances. But unlike the megadeals struck in recent years by concert promoter Live Nation Entertainment Inc. with pop stars Jay-Z and Madonna, the Jackson deal doesn’t give Sony income from other parts of the late singer’s business, such as merchandise sales or fees for licensing his name and likeness.

With deals such as this between a business and an estate, the business certainly employs more of a long-term strategy to making a profit. Michael Jackson’s estate, however, had to act quickly since it had a massive debt to pay off the massive debt caused by the King of Pop’s spending in recent years. Sony simply realizes everlasting appeal of Michael Jackson’s music. With the cash to back it, I think it safe to safe the company will recoup its investment.

Photo from fOTOGLIF