Sony had to keep Michael Jackson happy

March 21, 1991|By New York Times

IN WHAT MAY BE the most lucrative arrangement ever for a recording artist, Sony Corp. announced yesterday that Michael Jackson, the pop-music icon of the 1980s, had agreed to create feature films, theatrical shorts, television programming and a new record label for the Japanese conglomerate's American entertainment subsidiaries.

Jackson, whose albums "Thriller" and "Bad" were the two biggest-selling records of the past decade, also agreed to extend by six albums his existing contract with Epic Records, a Sony subsidiary.

Neither Sony executives nor representatives of Jackson would say how much the singer will receive under the agreement, which had been in negotiations for six months.

However, Sony officials said the company could realize $1 billion from retail sales of the various Jackson products.

The deal could be a prototype of the multi-media arrangements star performers can now demand and receive from the giant information-and-entertainment conglomerates that have been created through mergers and acquisitions in recent years.

Entertainment industry executives and analysts said, in fact, that to keep the 32-year-old Jackson, who had reportedly made rumblings about leaving for another label, Sony had no choice but to allow him to produce his own records and films.

"He doesn't need the money; this is the guy who owns the Beatles' music catalog," said Emanuel Gerard, a communications analyst with Gerard Klauer Mattison in New York.

"What we're dealing with largely is his ego. And from Sony's standpoint, no matter what, they could not afford to have Michael Jackson signed away from them."

A senior executive of a rival entertainment company, who spoke only on condition that he not be identified, said:

"My reading is that they were close to losing Michael Jackson. So you start by saying, 'What do you have to do to keep him?' He doesn't need the money. So you say we have this fantastic company that has all these avenues for you. Give us your albums and you can do movies, TV shows."

Neither Sony executives nor representatives of Jackson would comment on the negotiations, and a spokesman for Jackson said the singer would not talk.

But Michael P. Schulhof, the president of Sony Software, the Sony division that includes its entertainment subsidiaries, said the deal was viable simply because of Jackson's varied talents.

"This is the first example where we have been able to combine interests in both film and records," said Schulhof, 48, who is directing Sony's efforts in multi-media packaging. "Because Michael Jackson is a multi-faceted entertainer, we felt this was the first time we could attempt it. If this transaction works as we anticipate, it might very well be the forerunner of a new kind of entertainment deal."

Industry executives who have followed the negotiations said the contract called for Jackson, who is already the highest-paid performer in the record business, to receive an advance higher than the $18 million he was reported to have received for the final record of his current contract.

That would mean that Jackson would be paid more than $108 million for the six new albums alone, on top of whatever he might receive for the movies, television shows and records he might produce, write or star in.

Tommy Mottola, the president of Sony Music Entertainment, said the company based the estimate of $1 billion in retail revenues on the 40 million copies of "Thriller" and 25 million copies of "Bad" that have been sold, at an average of $10 per record, or $650 million.

Jackson's entire family seems to have a strong hold on the public imagination and the entertainment industry's wallets. Just last week, his 24-year-old sister Janet signed a contract with Virgin Records that the entertainment trade press said would pay her between $30 million and $50 million for three to five records.

Under the terms of his deal with Sony Software, Jackson will star in his first full-length feature film, which will be produced by Columbia Pictures Entertainment. The company described the film as a "musical action adventure" based on an idea of Jackson's.

Jackson is currently negotiating with Sir Richard Attenborough, who made "Gandhi," and Chris Columbus, the director of "Home Alone," to direct two of the short films, Mottola said. He said other potential directors include David Lynch, the creator of "Twin Peaks," and Tim Burton, the director of "Batman."

Jackson is also creating a new record label, called Nation Records, under the auspices of the Jackson Entertainment Complex. With it, "he will be developing new, young and budding talent, and he will be the magnet to attract superstars to leave their current recording company to come to Sony," Mottola said.

Some analysts suggested that Sony might be taking a large risk in assuming that Jackson's popularity will extend from records to other media.

"Michael Jackson is yesterday's news," said Stanley Lanzet, an analyst with Arnhold & S. Bleichroder in New York who tracked sales of the Jackson shoe line. "He's not magic anymore."

But Sony's competitors in the entertainment industry were not so quick to criticize the deal. "I don't think you'd ever bet against Michael Jackson," said Joe Galante, the president of RCA Records.

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