After "Off the Wall" hit big in 1979, CBS increased Jackson's royalty rate from around $1.10 per album to about $1.50 per album, according to industry sources. The new "Thriller" contract pushed that rate even higher, it has been reported.
Once Branca had Jackson's go-ahead last fall on pursing the Beatles catalogue, he phoned Michael Stewart, the president of CBS Songs, one of the world's three leading publishing firms.
Stewart, a 30-year publishing veteran, coordinated CBS' purchase of the coveted MGM/UA song catalogue--a reported $65-million deal that included compositions from hundreds of movie musicals, including "Singin' in the Rain" and "That's Entertainment!"
In the '60s, Stewart was head of music for United Artists, a multifaceted position whose responsibilities included helping coordinate music for the company's films. While at UA, ironically, he was involved in UA's decision to take a chance on the Beatles, a then-unknown quantity in this country, and make a madcap movie called "A Hard Day's Night."
Stewart and UA also reportedly had the inside track on buying the rights to Lennon-McCartney songs in the '60s until the Beatles decided to form their own publishing company (Northern Songs) rather than sell their catalogue.
Branca called Stewart to discuss Jackson's interest in the ATV copyrights. Stewart thought it was a great idea and remained an informal adviser throughout the negotiations.
"ATV is probably one of the 10 most valuable catalogues in the world, but the fact that it is the Beatles songs adds a whole other dimension to it," Stewart said. "The Beatles catalogue was the beginning of a whole new world . . . socially, musically, theatrically.
"I thought it is very healthy for the music business for a star of Michael's stature to say, in effect, 'I believe in music and I want to invest my money in music, not real estate.' I think it was a wonderful statement about his love for the Beatles and for music."
One suspicion--not voiced by Branca--was that CBS was interested in the catalogue itself, but wouldn't want to risk alienating Jackson by bidding against its biggest star. CBS had no comment on the matter.
At any rate, Branca's first task was to determine the value of ATV's music catalogue. Earlier offers for ATV reportedly ranged from $39 million to $60 million. But after meetings with Stewart, accountant Marshall Gelfand and others, Branca suggested an amount to Jackson: $46 million.
"Based on the earnings of the catalogue, we felt that was a fair price," Branca explained. "Catalogues usually bring five to seven times the annual net publisher's share. We knew someone had bid $39 million and we wanted to be above the crowd, but not so high that we didn't have room to go up."
Jackson agreed to move forward.
On Nov. 20, he communicated the $46-million bid in a Telex to ATV's owner, Holmes a Court, requesting a meeting be held within 10 days in London.
Robert Holmes a Court was characterized in a recent Fortune magazine profile as "Australia's acquisitive recluse--a corporate hunter with a $1-billion war chest who has gobbled up companies at home and in Britain and is now stalking the U.S."
Holmes a Court, 48, was born in South Africa but moved to New Zealand in his teens and then on to Australia where he studied law. He then moved into the high-finance world of corporate takeovers.
He has been generally described as a cool, skillful and shrewd strategist. A recent New York Times report suggested his success has "largely been the result of skillful planning and audacity. He has also been grossly underestimated by the targets of his takeover bids.
"Because he has so often pulled out of a bid midway, nearly always taking a large capital gain, those on the receiving end never know whether he is serious or not," the article stated.
He was definitely serious in 1981 in his successful takeover of Lord Lew Grade's financially troubled entertainment conglomerate, which included London theaters, several movies (including "On Golden Pond")--and the Beatles songs.