Sony Corp has confirmed its acquisition of the stake in EMI Music Publishing held by the Estate of Michael Jackson.
The company’s Q1 financial results for the period ending June 30 reveal that Sony Corporation Of America paid $287.5 million (£218.4m) for the stake. The Jackson Estate owned 25.1% of Nile Acquisition, a holding company with an approximate 40% equity stake in EMI Music Publishing.
Sony Corp has already reached an agreement to acquire a controlling stake in EMI Music Publishing for $2.3 billion (£1.75bn) from the Abu Dhabi-based Mubadala Investment Company.
EMI owns or administers more than two million songs including classics by Queen, Carole King and the Motown catalogue, along with contemporary songs from Kanye West, Alicia Keys, Drake, Sam Smith, Pink, Pharrell Williams, Calvin Harris and Sia. EMI will become a consolidated subsidiary of Sony. However, the acquisition looks set to be examined by regulators amid concerns expressed by industry bodies about potential market dominance of the music publishing sector.
Sony has not reported any further sale of Spotify equity since it offloaded part of its 5.7% holding on April 3 valued at 82.6bn yen (£563m). That resulted in a realised gain of 53.8bn yen (£367m) after transaction costs and proceeds to artists and distributed labels. Sony revealed that its remaining shares have a gross value of 95.3bn yen (£650m) - 58.9bn yen (£401m) after costs and distribution of payments to artists and labels. Payments to artists will go out by the end of August.
In its financial statement, Sony Corp revealed that recorded music revenue dipped from 99.8 billion yen (£680.1m) a year earlier to 99.7bn yen (£679.4m) in Q1 2018. The result was partially impacted by US accounting changes.
Streaming soared ahead with year-on-year revenue growth of 36% to 52.2bn yen (£355.8m). Physical sales dropped by 32.8% to 22.56bn yen (£153.8m), while downloads fell 17.6% to 10.67bn yen (£72.7m).
Overall music segment sales were 181.5bn yen (£1.24bn) in Q1, up 7.6% on a year earlier. Operating income increased by 28.4% to 32.1bn yen (£218.8m).
Big sellers for the quarter included albums by Camila Cabello, Dave Matthews Band, George Ezra, Pink and Calvin Harris. The best performer in sales terms was Japanese girl group Nogizaka46’s Synchronicity. Sony highlighted major releases in the next three months including records by Barbra Streisand, Daughtry, Future, Meghan Trainor and Vanessa Mai.
Music publishing revenue increased by 27.3% from 16.86 billion yen (£114.9m) to 21.46 billion yen (£146.3m).
The 2018 full year forecast has been revised up with sales 10bn yen (£68.1m) higher at 760bn yen (£5.2bn). Operating income for the year of 115bn yen (£783.8m) is also slightly above the company's previous forecast, though expenses and management equity plans involving the EMI Publishing acquisition will have a negative impact.