EMI Music Publishing said Tuesday that it had paid $132 million to Berry Gordy Jr. for a half stake in the publishing company that owns the rights to classic Motown songs.
The publishing catalog, which includes hit songs from such performers as the Temptations and Diana Ross and the Supremes, was owned by Jobete Music Co. and its sister company, Stone Diamond Music Corp., collectively known as Jobete companies. Both companies are owned by Gordy and his sister Esther Edwards.Executives said that EMI Music expected the Motown song catalog to contribute $9 million in profit in its first year. The Motown catalog generated $25 million in gross revenue for Jobete in 1996.
"I'm surprised that the catalog was available," said Harold Vogel, an analyst for Cowen & Co. "But it sounds like a really good idea. It makes sense because of EMI's large resources."
Unlike a record label, which manufactures albums, a record catalog company owns only the copyright of songs. It sells one-time rights to play its songs in advertisements, on television and in motion pictures.
Gordy said he decided to sell the stake in the publishing catalog in part because he has become disenchanted with the industry. Under terms of the deal, EMI will assume administration of the company's day-to-day operations.
"Today's business climate is not for me," Gordy said in a telephone interview. "I'm a songwriter, that's what I love. That's the real reason why I'm giving over the songs."
Jobete owns the copyright to more than 15,000 songs from the classic Motown era of the 1960s and 1970s, including "My Girl" by the Temptations and "I Heard it Through the Grapevine," by Marvin Gaye.
EMI Music Publishing, a unit of EMI Group PLC of Britain, had handled the distribution rights for the Motown catalog internationally, and it will now handle the domestic distribution as well. EMI owns the largest song catalog in the world, with more than 1 million songs.
"This is a significant step in rounding out our catalog," said Martin Bandier, chairman and chief executive of EMI Music. "It is the highlight of my career."
Bandier and Gordy had discussed a partial acquisition for nearly a year. "It took us a while to figure out the specifics," Bandier said. "It gives Berry more time to devote to his creative efforts."
Gordy who formed Jobete Music as the music publishing affiliate to his Motown Records, has held on to the company since 1959. "I wanted Marty to have the songs because I trust him. He's part of the family," Gordy said.
Gordy sold Motown Records to MCA in 1988. MCA sold the Mo-town label to Polygram Records, a unit of Philips Electronics NV, in 1993.
Though analysts called the acquisition an important addition to EMI's catalog, "it won't make much of an impact on EMI as a whole," Vogel said. EMI officials said that they hoped to develop new ways to market Jobete music, especially in the new media market.
Now that Gordy is free from the constraints of running his business, he said he hoped to spend more time writing songs and working with the Motown Historical Museum in Detroit. "I've not been happy doing all the business stuff," Gordy said. "Now I can get back to the fun."