In the early ’80s, Michael Jackson and Paul McCartney shared a close musical collaboration and personal friendship; they worked together on many songs like The Girl Is Mine and Say Say Say.
While collaborating on Say Say Say, McCartney advised Jackson to invest in music publishing, advice that McCartney would regret later.
In the late ’60s, McCartney and John Lennon lost control of Northern Songs, the company that held their copyrights, after their publisher Dick James secretly sold his shares to Lew Grade’s Associated Television (ATV). Because of this, McCartney was no longer getting full pay for the Beatles songs he had co-written. And to compensate for the loss, he started buying the publishing rights to other artists’ music, which he later explained to Jackson.
Jackson took McCartney’s advice, and understood that the real money in the music business came from owning publishing rights, as every time a copyrighted song is played on the radio, used in a movie or in a commercial, the publishing rights holder receives a licensing fee.
In the mid ‘80s, the company ATV Music put its catalog up for sale. This catalog included the publishing rights to about 251 Beatles songs, such as Yesterday, Hey Jude, and Let It Be, along with thousands of other tracks by various artists.
McCartney didn’t bid, but Jackson and his team made an offer. On August 14, 1985, Jackson bought ATV Music for $47.5 million.
The deal was a genius business decision, but it ruined Jackson’s friendship with McCartney; he felt betrayed that Jackson bought the publishing rights to his life’s work and began using Beatles songs in commercials.
Then in 1995, Jackson merged ATV with Sony’s publishing unit to form Sony/ATV Music Publishing. He made $95 million while keeping a 50% stake.
Seven years after Jackson’s death, his estate sold its remaining 50% stake to Sony for roughly $750 million.
Over three decades, Jackson’s initial $47.5 million investment generated over $1 billion in total returns, making it one of the most successful business deals in music history.
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