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Interview With Paul Maidment

Aired November 21, 2003 - 13:33   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MILES O'BRIEN, CNN ANCHOR: There was a time when the fawning title King of Pop actually was apt when speaking of singer Michael Jackson. At the pinnacle of his career, soon after "Thriller" hit the stores and went platinum, Jackson was worth about $750 million, estimated.
Today, his fortunes have fallen in so many respects. Here to talk about Michael Jackson's financial pinch, relatively speaking, is Paul Maidment, the editor of Forbes.com. Paul, good to have you with us.

PAUL MAIDMENT, EDITOR, FORBES.COM: Pleased to be here.

O'BRIEN: How much is Michael Jackson worth now?

MAIDMENT: He's certainly not broke. He's got a lot of assets, about half a billion dollars worth of assets between the properties he owns and the stake in music publishing business. He has a lot of debt, at least $200 million we know of. And word is that's growing quite considerably.

So he's probably worth somewhere in the range of $300 million to $350 million.

O'BRIEN: All right, that's not bad, pretty good change. Can pay for a fairly substantial defense. How much is liquid, though? Does he have to sell real estate?

MAIDMENT: That's really the problem. The two big chunks of assets are very ill-liquid. It's property, which would have to be sold off, and a stake in a music company, much of which has placed as collateral for the rather large debts he has to Sony.

His other problem of course is his income streams have just diminished as his musical career has faded. There also was a time 20 years ago he was earning $50 million a year. He has nothing like that coming in. He hasn't cut back the sequinned, superstar lifestyle to match it.

O'BRIEN: Give us a sense, the amount of money to maintain Michael Jackson and his entourage, we saw a glimpse of it yesterday, Gulfstream jets, 250-acre palatial estates with all kinds of bells and whistles. That's a big nut to stay on top of, isn't it?

MAIDMENT: It's a big chunk of change. We've seen estimates of upwards of a million dollars a month, just to run the properties and keep the staff going. O'BRIEN: A million dollars a month?

MAIDMENT: A million dollars a month, yes.

O'BRIEN: All right, tell us about this $200 million debt to Sony. Where does that all come from?

MAIDMENT: He borrowed it partly to finance the creation of the (UNINTELLIGIBLE) before the CD "Thriller." But he borrowed about $190 million from Sony.

What's so potentially threatening about that, we don't know what the covenants are if he defaults on that. My suspicion would be Sony would probably have the right to get his stake in Sony ATV, the music publishing company which owns the Beatles' catalogue. It's very valuable, a billion dollar company altogether.

That would really -- I mean, that is -- cash for him at the moment. If he lost that as well, he would be in an extremely serious position.

O'BRIEN: For people who got lost in all this, he owns quite a few Lennon/McCartney titles, which he bid on options -- paid some $40 million for, big figure that Yoko Ono and McCartney were very upset about it. But it's been a great investment hasn't it?

MAIDMENT: Very good, indeed. He merged that into a joint venture with Sony, this company Sony ATV. He had a separate music publishing business called My Jack. And together, those two businesses are worth $450 million for him.

O'BRIEN: Let me just ask you one question here. When he goes to produce an album he has to stake his own money to produce it? Sony doesn't foot the bill?

MAIDMENT: "Thriller" cost $30 million to produce. Sony put up $5 million which is the money that a company would normally put up. That what N*SYNC or Britney Spears would spend on producing.

Michael Jackson put in $25 million of his own money. The whole thing only sold it $15 million worth. He's $15 million out of pocket on that.

O'BRIEN: It's his decision to go above and beyond what Sony would pony up.

MAIDMENT: He says -- he blames Sony for not having promoted the album for lack of the success.

O'BRIEN: Interesting. Is it your sense that by the time all is said and done here, and once Mark Geragos starts sending those bills in, it's likely we'll see a for sale sign at the Neverland Ranch?

MAIDMENT: I think it's quietly been on the market for some months. The question is who wants to buy a theme park in the back of nowhere? O'BRIEN: Is it 260 acres in Santa Barbara County, that in and of itself has value?

MAIDMENT: Certainly a notoriety value. He brought it for $50 million. He's put millions in it, in just the amusement park rides. We hear it's been shopped around recently for $15, $20 million.

O'BRIEN: The cost to him to engage in this defense could be tremendous. I guess we could look to the O.J. trial for the legal bills there, to get a sense of it.

MAIDMENT: If you look back at the last round of similar charges against him ten years ago. That was an out of court settlement which was anywhere between $15 million to $40 million, depending on which reports you believe. Potentially, he is facing anything -- at best, he's facing an expensive legal case and potentially a ruinous legal case.

O'BRIEN: All right, Paul Maidment, editor at Forbes.com, thank you for putting some numbers together.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com






Aired November 21, 2003 - 13:33   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: There was a time when the fawning title King of Pop actually was apt when speaking of singer Michael Jackson. At the pinnacle of his career, soon after "Thriller" hit the stores and went platinum, Jackson was worth about $750 million, estimated.
Today, his fortunes have fallen in so many respects. Here to talk about Michael Jackson's financial pinch, relatively speaking, is Paul Maidment, the editor of Forbes.com. Paul, good to have you with us.

PAUL MAIDMENT, EDITOR, FORBES.COM: Pleased to be here.

O'BRIEN: How much is Michael Jackson worth now?

MAIDMENT: He's certainly not broke. He's got a lot of assets, about half a billion dollars worth of assets between the properties he owns and the stake in music publishing business. He has a lot of debt, at least $200 million we know of. And word is that's growing quite considerably.

So he's probably worth somewhere in the range of $300 million to $350 million.

O'BRIEN: All right, that's not bad, pretty good change. Can pay for a fairly substantial defense. How much is liquid, though? Does he have to sell real estate?

MAIDMENT: That's really the problem. The two big chunks of assets are very ill-liquid. It's property, which would have to be sold off, and a stake in a music company, much of which has placed as collateral for the rather large debts he has to Sony.

His other problem of course is his income streams have just diminished as his musical career has faded. There also was a time 20 years ago he was earning $50 million a year. He has nothing like that coming in. He hasn't cut back the sequinned, superstar lifestyle to match it.

O'BRIEN: Give us a sense, the amount of money to maintain Michael Jackson and his entourage, we saw a glimpse of it yesterday, Gulfstream jets, 250-acre palatial estates with all kinds of bells and whistles. That's a big nut to stay on top of, isn't it?

MAIDMENT: It's a big chunk of change. We've seen estimates of upwards of a million dollars a month, just to run the properties and keep the staff going. O'BRIEN: A million dollars a month?

MAIDMENT: A million dollars a month, yes.

O'BRIEN: All right, tell us about this $200 million debt to Sony. Where does that all come from?

MAIDMENT: He borrowed it partly to finance the creation of the (UNINTELLIGIBLE) before the CD "Thriller." But he borrowed about $190 million from Sony.

What's so potentially threatening about that, we don't know what the covenants are if he defaults on that. My suspicion would be Sony would probably have the right to get his stake in Sony ATV, the music publishing company which owns the Beatles' catalogue. It's very valuable, a billion dollar company altogether.

That would really -- I mean, that is -- cash for him at the moment. If he lost that as well, he would be in an extremely serious position.

O'BRIEN: For people who got lost in all this, he owns quite a few Lennon/McCartney titles, which he bid on options -- paid some $40 million for, big figure that Yoko Ono and McCartney were very upset about it. But it's been a great investment hasn't it?

MAIDMENT: Very good, indeed. He merged that into a joint venture with Sony, this company Sony ATV. He had a separate music publishing business called My Jack. And together, those two businesses are worth $450 million for him.

O'BRIEN: Let me just ask you one question here. When he goes to produce an album he has to stake his own money to produce it? Sony doesn't foot the bill?

MAIDMENT: "Thriller" cost $30 million to produce. Sony put up $5 million which is the money that a company would normally put up. That what N*SYNC or Britney Spears would spend on producing.

Michael Jackson put in $25 million of his own money. The whole thing only sold it $15 million worth. He's $15 million out of pocket on that.

O'BRIEN: It's his decision to go above and beyond what Sony would pony up.

MAIDMENT: He says -- he blames Sony for not having promoted the album for lack of the success.

O'BRIEN: Interesting. Is it your sense that by the time all is said and done here, and once Mark Geragos starts sending those bills in, it's likely we'll see a for sale sign at the Neverland Ranch?

MAIDMENT: I think it's quietly been on the market for some months. The question is who wants to buy a theme park in the back of nowhere? O'BRIEN: Is it 260 acres in Santa Barbara County, that in and of itself has value?

MAIDMENT: Certainly a notoriety value. He brought it for $50 million. He's put millions in it, in just the amusement park rides. We hear it's been shopped around recently for $15, $20 million.

O'BRIEN: The cost to him to engage in this defense could be tremendous. I guess we could look to the O.J. trial for the legal bills there, to get a sense of it.

MAIDMENT: If you look back at the last round of similar charges against him ten years ago. That was an out of court settlement which was anywhere between $15 million to $40 million, depending on which reports you believe. Potentially, he is facing anything -- at best, he's facing an expensive legal case and potentially a ruinous legal case.

O'BRIEN: All right, Paul Maidment, editor at Forbes.com, thank you for putting some numbers together.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com