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Sony Contract Signing
Date confirmed in “The New York Times” (archived) (“announced yesterday [March 20, 1991]...”)
Peter Guber, CEO of “Sony Pictures”, “The Official Michael Jackson Opus” (December 7, 2009) (archived)
I’d been asked—as Sony Pictures CEO—to visit with Michael to talk about his passion for film and his desire to get into movies...At this point in his career, Michael was a gigantic force in pop music.
“With a song,” I said, “it seems to me that the emphasis is on sound over story. In music videos, the story has to serve the sound. And in films, the sound has to serve the story. No?”
“You have to get your audience’s attention,” Michael said. “In both films and music. You have to know where the drama is and how to present it...Let me show you.” He took me upstairs, where we stopped in front of a glass terrarium. Inside it, a snake was camouflaged, coiled around a tree branch. Its head was tracking something in the opposite corner. Michael pointed at the object of his snake’s obsession. A little white mouse was trying to hide behind a pile of wood shavings.
I said hopefully, “Are they friends?”
“Do they look it?”
“No. The mouse is trembling.”
“We have to feed my pet snake live mice,” Michael said. “Dead ones don’t get his attention.”
“So why doesn’t he just go ahead and eat it?”
“Because he enjoys the game. First he uses fear to get the mouse’s attention, then he waits, building tension. And when the mouse is so terrified it can’t move, our snake will close in.”
That snake had the attention of that mouse, and that mouse had the attention of that snake—and Michael Jackson had my attention. “That’s drama,” he said.
“It sure is,” I said. “This story has everything—stakes, suspense, power, death, good and evil, innocence and danger. I can’t stand it. And I can’t stop watching.”
“Exactly,” he said. “What’s going to happen next? Even if you know what it is, you don’t know how or when.”
“The New York Times” (March 21, 1991) (archived)
In what may be the most lucrative arrangement ever for a recording artist, the Sony Corporation announced yesterday that Michael Jackson, the gyrating pop-music icon of the 1980's, had entered into an agreement to create feature films, theatrical shorts, television programming and a new record label for the Japanese conglomerate's American entertainment subsidiaries.
Mr. 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 Mr. 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 during the past several years. Entertainment industry executives and analysts said, in fact, that to keep the 32-year-old Mr. 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. Dealing With an Ego
"He doesn't need the money; this is the guy who owns the Beatles' music catalogue," 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 Mr. Jackson would comment on the negotiations, and a spokesman for Mr. 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 Mr. Jackson's varied talents.
"This is the first example where we have been able to combine interests in both film and records," said Mr. Schulhof, 48, who is directing Sony's efforts in multi-media packaging. "Because Michael Jackson is a multifaceted 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."
<> <> More Than Last Album
Mr. Schulhof said the contract with Mr. Jackson was the first involving a performer with Sony Software, rather than with Columbia Pictures Entertainment, Sony Music Entertainment or one of the company's other entertainment subsidiaries.
Industry executives who have followed the negotiations said the contract called for Mr. 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 Mr. 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.
Mr. 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. Star in First Feature Film
Under the terms of his deal with Sony Software, Mr. Jackson will star in his first full-length feature film, which will be produced by one such subsidiary, Columbia Pictures Entertainment. The company described the film as a "musical action adventure" based on an idea of Mr. Jackson's.
Many features of the new contract appear to be speculative. For example, while Sony executives publicly said they expect the forthcoming movie to be the first of many with Mr. Jackson, one executive who would speak only on condition that his name not be used, said the current agreement only called for one film. Executives also said that the script for his forthcoming movie was not yet completed and that a director had not yet been signed.
Mr. Jackson will also establish a new company, the Jackson Entertainment Complex, in a 50-50 joint venture with Sony Software. The new company is producing Mr. Jackson's new album, which Epic will release in June or July, said Mr. Mottola of Sony Music Entertainment, and will produce a series of short films for theatrical and music-video release based on songs from the album.
Mr. 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, Mr. Mottola said. He said other potential directors include David Lynch, the creator of "Twin Peaks," and Tim Burton, the director of "Batman." Creating New Record Label
The singer 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," Mr. Mottola said.
Some analysts suggested that Sony might be taking a large risk in assuming that Mr. Jackson's popularity will extend from records to other media. The only theatrical film in which Mr. Jackson appeared, "The Wiz," was a flop, as were a line of Michael Jackson shoes produced by L.A. Gear and a toy series called Michael Jackson's Pets.
"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.
“Los Angeles Times” (March 21, 1991)
In a thriller of a deal, pop icon Michael Jackson has signed a long-term contract with Sony Corp. that guarantees him an unprecedented share of the profits from his next six albums, his own record label, a role in developing video software products and a shot at movie stardom.
The contract, the biggest ever awarded an entertainer, is expected to return hundreds of millions of dollars to Jackson. It also cements Sony's relationship with its biggest star, who reportedly had threatened to move to another label in a contract dispute last year.
"We're married to him now," Sony Software President Michael P. Schulhof said Wednesday.
Sony, which inherited Jackson when it bought CBS Records for $2 billion in 1988, declined to discuss specific terms of the deal. But sources close to the talks said the agreement makes Jackson a significant partner in all business ventures with the Japanese electronics giant.
Jackson, 32, reportedly could receive more than $120 million per album if sales match the 40-million-plus level of his smash mid-'80s album "Thriller." Two sources close to the talks said the reclusive singer is guaranteed an advance payment of $5 million per record plus a 25% royalty from each album based on retail sales.
"If he continues to sell records like he has in the past, he will earn more money than any other person in the history of the record business," said one person familiar with the deal.
Sony said it expects to realize $1 billion in revenue from the partnership. But some financial analysts called the Jackson deal extravagant. "They (had) better hope he stays popular," said one analyst who asked not to be named. Another accused Sony of "grandstanding."
Industry analyst Harold Vogel of Merrill Lynch & Co. said the Jackson deal could change the record business. "It's off the scale, basically," Vogel said.
Entertainment attorney Jay Cooper said the deal could result in everything from higher overall payments to top performers to higher album prices. "What do you think is going to happen the minute Bruce Springsteen's contract comes up for renegotiation?" Cooper said.
The issue of Jackson's productivity was also raised by critics. The singer released only three solo albums since "Off the Wall" in 1979. If that trend continues, he will be approaching 60 when his final record under the Sony deal hits the stores. One source predicted that Jackson will step up the pace now. He also reportedly will augment his new material with a "greatest hits" collection. But Schulhof said he was not concerned.
"A great entertainer stays ahead of the public tastes and helps shape them," Schulhof said. "I am confident that, no matter what his age . . . he will stay ahead of the public."
Sony's reputation for unbridled spending stems from its $3.4-billion purchase of Columbia Pictures Entertainment two years ago. The company, which paid out unprecedented sums of money for upper management and movie deals, has been blamed for driving up costs in Hollywood.
Jackson's much-rumored deal is the result of months of difficult negotiations between Sony executives and Jackson's phalanx of managers and lawyers. People close to the talks said Jackson insisted on striking a bargain that bridged records, movies and video software.
Before the announcement of her brother's Sony contract, Janet Jackson's estimated $32-million deal last week was the largest in history. A & M Records President Al Cafaro, whose company lost the fierce bidding battle over Janet Jackson to Virgin Records, said record companies may be vesting too much importance in individual performers.
"These kinds of deals are great for the artists involved--a real bonanza," Cafaro said. "But a label runs the risk that these huge agreements will distract them from the real business of record companies, which is developing new and exciting talent and artistry. The future continues to be about that unknown artist waiting to wow the world."
Sony, however, already has a certified wower in Jackson. The former child star's "Thriller," released in 1982, is the biggest-selling album of all time. "Bad," the 1987 follow-up, claimed sales of 25 million.
Jackson, often the butt of jokes because of his reported facial reconstructions and his penchant for spangled wardrobes, is nobody's fool when it comes to business deals. He made a combined $70 million from separate endorsement contracts with Pepsico and L.A. Gear. Jackson also owns the publishing rights to the Beatles songs.
The Sony deal guarantees him a presence in practically every other facet of entertainment. It is the first significant example of the cross-pollination that was supposed to result from a spate of recent media company mergers--including Sony's deals for CBS and Columbia Pictures, Matsushita Electric Industrial Co.'s $6.6-billion purchase of MCA Inc. and the mega-merger that created Time Warner Inc.
Jackson's next record, for which he reportedly received an $18-million advance, is due this summer. In addition, Jackson will be paid a onetime $4-million fee, informed sources said, plus $1 million a year to run Nation Records, the record label created under the deal. Sources said Sony also agreed to put up $2.2 million a year in administration costs.
The agreement gives Jackson full authority to sign acts to the label. Sony executives predicted that "new and established artists" would become part of Nation Records. "Michael Jackson is not exactly a bad magnet for attracting these people," said Sony Music President Tommy Mottola.
Jackson is not the first star to get his own record label. Frank Sinatra started Reprise before selling it to Warner Bros. The Beatles had Apple Records, and more recently labels have been established by such performers as Elton John, the Rolling Stones, Jefferson Airplane, the Grateful Dead and M.C. Hammer. More often than not, the results have been disappointing.
Unlike those acts, Jackson will remain on Sony's Epic Records label. He will also remain a ubiquitous music video presence, since the Sony deal stipulates that such acclaimed directors as Sir Richard Attenborough, David Lynch and Tim Burton will make long-form videos based on songs from Jackson's next album. Jackson will also own 70% of the video rights.
The deal further assures that Jackson will star in his first feature since the 1978 flop "The Wiz." People close to the talks said he will be paid at least $5 million to appear in a musical action adventure based on his own idea.
The movie deal is largely the result of Jackson's friendship with Columbia Pictures Co-Chairman Jon Peters and his partner, Peter Guber. Company officials said further films may follow if the first, set for a 1992 release, is a success. Jackson is also supposed to be given offices on Columbia's Culver City lot.
"The intention is that we will all live happily ever after," said Columbia Executive Vice President Sid Ganis.
(Full transcript currently not available)
Tommy Mottola quote from article:
“Michael Jackson is a unique talent. We are proud and delighted that one of the greatest artists of our time will be associated with Sony Music and its related companies for many years to come.”
Washington Post (March 21, 1991)
Pop superstar Michael Jackson yesterday signed a long-term multimedia contract with Sony Corp.'s U.S. entertainment subsidiary that was described by Sony as the largest entertainment deal ever negotiated for a single act. It calls for Jackson's participation indefinitely in recording, film and television projects.
Sony estimated the deal could bring Jackson, 32, as much as $1 billion, but the company did not break down or otherwise explain its projection. According to an industry insider, the deal is what the movie business calls "all back-end." Jackson received no advance and no money was exchanged; in return, the source said, he was given the highest royalty rate ever -- significantly more than the previous record of 20 percent, granted to Jackson himself by CBS Records. The more successful Jackson is, the more money he will receive.
Jackson, as is his custom, declined to comment yesterday.
Jackson has had a business relationship with CBS Records (now Sony Music) since the mid-1970s. Under the deal he will establish his own label, Nation Records, and will sign both new and established artists to record on it. Jackson himself will continue to record for Epic, another division of Sony.
The Jackson-Sony deal underscores Japan's continuing accumulation of America's cultural software -- movies and recordings -- as it seeks to match its dominant position in the sales of hardware. Some analysts believe that owning such software is the most effective way of introducing new technologies (like CD-ROM and HDTV), since dual ownership permits companies to make movies and recordings available in those new formats, sometimes exclusively.
It's the very success of Japanese audio and video hardware that allowed Sony to purchase CBS and Columbia Pictures (for $2 billion and $3.4 billion respectively), and last year allowed competitor Matsushita to purchase MCA for $7.5 billion. By controlling both the hardware and software, companies can maximize their influence over the entertainment industry -- and their profits -- in the same way that the major film studios did when they owned the theaters where their movies were shown, an arrangement ended by Justice Department consent degree in the '40s.
If the billion-dollar projection is even remotely realistic, the deal would by far eclipse the previous record, set by Jackson's sister Janet earlier this month when she signed a $35 million, three-album deal with Virgin Records.
Sony's estimate of the value of the Michael Jackson contract is apparently based on anticipated album sales (Jackson's three solo albums in the '80s sold 75 million copies, more than any other artist in that decade) and home video revenues ("The Making of Michael Jackson's 'Thriller' " and "Moonwalker" sold more than a million copies each), as well as potential box office receipts and revenues from Jackson projects to develop technology like CD-ROM, a system for recording videos on compact disc.
Irving Azoff, head of Giant Records and a longtime industry mogul, said he thought the deal would be fabulously lucrative for Jackson, even if it is entirely back-end.
"Michael is a genius," Azoff said. "Bet on him. I think he'll do fine in the long run. He's a major, major talent and he's got a chance to continue to be as big a superstar as there ever was."
Bob Jones, one of Jackson's agents at MJJ Productions in Los Angeles, said the contract is long-term but does not specify a time frame in years. It does establish a Jackson Entertainment Complex through which the entertainer will collaborate on "a vast range of endeavors" with Sony Music Entertainment, Columbia Pictures Entertainment and Sony Electronic Publishing.
"This is a great opportunity for us to both continue and expand our relationship with Michael Jackson," said Michael Schulhof, president of Sony Software, the division of the Japanese electronics giant that includes Columbia Pictures Entertainment and Sony Music.
The first project under the new deal will be Jackson's long-awaited follow-up to "Bad," Jackson's latest album. Still untitled, it will be released in midsummer. Quincy Jones, who produced the last three solo Jackson albums, is not aboard this time, but hot new producers Teddy Riley, Antonio "L.A." Reid and Kenny Edmonds (known as Baby Face) are said to be involved.
The new deal calls for five more Jackson records after that, all of which will be released on Epic.
Sony announced that a number of short films based on songs from the new album will be directed by Sir Richard Attenborough ("Gandhi"), David Lynch ("Twin Peaks"), Tim Burton ("Batman"), Chris Columbus ("The 'Burbs") and William Couturier.
The videos will be followed by a feature film for Columbia Pictures, described as a "musical action adventure" based on an original Jackson idea. The script is being written by Caroline Thompson ("Edward Scissorhands") and Larry Wilson (co-author of "Beetlejuice"), with sets by Anton Furst ("Batman").
Jackson, who started his career at Motown with the Jackson 5 in 1971 before switching to CBS Records in 1976, had the two best-selling albums of the 1980s -- 1982's "Thriller" is the best-selling album of all time at 41 million copies, and elevated Jackson from superstar status to cultural and entertainment icon. "Bad" sold more than 22 million copies and Jackson's World Tour in the late '80s was seen by more than 4.4 million people, grossing more than $125 million, the most successful concert tour of the decade.
Last year, Forbes Magazine ranked Michael Jackson as the world's second-highest-paid entertainer, based on its two-year tally of earnings by entertainment celebrities. Jackson earned a total of $100 million in 1989 and 1990, behind No. 1 Bill Cosby, who earned $115 million, Forbes calculated. In addition, Jackson's publishing companies -- which own the rights to all songs by Buddy Holly and most songs by the Beatles -- are worth an estimated $200 million more.