ATV finalizes its acquisition of Northern Songs

About

The music publishing company Northern Songs was created in February 1963  founded by music publisher Dick James and his partner Charles Silver to publish songs written by John Lennon and Paul McCartney.

The arrival of Allen Klein in the Beatles business decided Dick James and Charles Silver, in March 1969, to finally sell their shares in Northern Songs to ATV, giving John and Paul no notice or the chance to buy them out.

April and May saw a bitter fight for the control of Northern Songs, between ATV (owning 35% of the shares) and The Beatles (owning 29.7%). On May 19, 1969, it was announced that ATV had partnered with the Consortium, an alliance of some broker firms controlling 14% of the company, to gain control of the company.

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Negotiations continued throughout the summer and into the autumn of 1969, as ATV and The Beatles still wanted to gain a majority stake (above 50%) in the company.

Allen Klein approached members of the Consortium and made them some offers to buy their shares when their agreement with ATV would expire in May 1970, but nothing came out of those discussions.

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Allen Klein then turned his attention to ATV.

[Klein] came to see Sir Lew [Grade, chairman of ATV] with vague terms under which he would see to it that we got control of Northern by delivering the Beatles’ shares to us. At that time he was there to knock the Consortium. The main concession was that Apple would get sub-publishing rights for the Beatles’ songs throughout the United States and Canada.

We were willing to consider it but told Klein that we were not in a position to do so at that time, because of our agreement with the Consortium.

Jack Gill  – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)

ATV, in the meantime, was not satisfied with the situation and wanted to acquire a majority stake in Northern Songs, rather than relying on an agreement with the Consortium. But they were in a tough position, as their own share price during the summer was at a low point, and if they were to make an offer to buy shares from the Consortium, they would have to propose the same price to all shareholders, including The Beatles, a situation they wanted to avoid.

But in early September, the Consortium started to fall apart and some members decided to sell their shares. By the terms of the agreements signed in May, the other parties of the agreement had a right of pre-emption, and ATV took the opportunity to buy some more shares.

We thought we’d get their shares in the end. It was very difficult to deal with a Consortium of that nature – with so many different interests. Anyway, what right has a broker to pledge his client’s shares? If the client decided to sell that was that. The agreement meant nothing.

Jack Gill – ATV financial director – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)

On September 8, 1969, ATV announced it has increased its stake in Northern Songs, from 35% to 38%.

Peter Donald was the chairman of Howard and Wyndham and one of the largest members of the Consortium and went to negotiate with Sir Lew Grade and Jack Gill. On September 19, ATV bought shares from the Consortium and reached just under 50% ownership of Northern Songs. On September 25, ATV again increased its shareholding to 54%, effectively controlling Northern Songs.

One morning I called Peter Donald, who by that time had acquired control of the Howard and Wyndham Theatres, as well as some theatres in Scotland. Peter Donald’s company controlled 14 per cent of the Northern Songs shares. I had a strange feeling about Alan Klein because of all these unnecessary delays, so, when I called Peter Donald, I said, ‘I want to buy your 14 per cent of Northern Songs. How much do you want for it?’ We agreed a price and did the deal on the telephone. We now had well over 54 per cent of the company and therefore controlled Northern Songs. Alan Klein called me late that afternoon, and I must give him credit for what he said to me. ‘Well,’ he said, ‘I have to admit it. You beat me to the punch. We’re now ready to sell you the shares at the same price you paid Peter Donald.’ He said he’d been considering doing the deal with Donald himself, but had obviously left it too late.

And that, my friends, is how we acquired the Beatles catalogue and got into the music business.

Sir Lew Grade, head of ATV (Associated Television) – From “Still Dancing : my story” by Lew Grade

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Allen Klein went back to ATV and Sir Lew Grade, for another round of negotiations and an agreement was found but fell through due to obstruction by John and Lee Eastman:

The broad lines of the ATV-Beatle agreement negotiated by Klein were that: (1) ATV would buy all their Northern shares in exchange for loan stock and cash; (2) The Beatles would withdraw the outstanding writs lodged against Northern Songs by Maclen (Music); (3) John and Paul would re-sign as songwriters until 1976 – and George and Ringo would switch from Apple Publishing to Northern, also until 1976; (4) Lenmac would be sold back to John Lennon and Paul McCartney, and (5) Apple would get sub-publishing rights in the United States.

From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)

We all finally agreed. It was a very good deal for both sides. Heads of the agreement were drawn up with our respective lawyers. Then, Allen Klein couldn’t get the Eastmans and Paul to agree and so it fell through.

John and Lee Eastman had stopped the deal. They wouldn’t let Paul be a party to an agreement negotiated by Klein on behalf of all the Beatles. There was no way the two Beatle factions could agree.

Klein was very sorry and I was very sorry because part of the deal was that we’d have got Harrison and Ringo, who at the time really didn’t mean much. Of course, George Harrison has since been a great success as a songwriter.

Jack Gill – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)

I can’t understand it to this day. [The Eastmans and McCartney] were mad not to take ATV shares considering what they’d have been getting.

Sir Lew Grade, head of ATV (Associated Television) – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)

After this missed opportunity, The Beatles finally announced they were selling their Northern Songs shares to ATV, but ATV was not ready to acquire them, considering it was still in their interest to keep The Beatles as shareholders of the company to keep them motivated.

However, the City Takeover Panel (a regulatory body that ensures all shareholders are treated equally during takeover bids) asked ATV to propose to The Beatles and other minority stakeholders the same offer they’ve made to the Consortium some weeks ago.

If Jack Gill was ready to resist the pressure of the City Takeover Panel, the ATV board finally decided to acquire The Beatles’ shares. This was publicly announced on October 22, 1969.

The news, when it reached Apple – by a tip-off from the Financial Times – sounded very like defeat. Allen Klein, interviewed during his customary afternoon breakfast, claimed it as a victory. A threatened lawsuit against Northern for £5m in ‘unpaid’ Beatle royalties helped to persuade ATV to pay cash rather than stock for the Beatles’ holdings. Klein could thus congratulate himself on having enriched John and Paul by about a million and a half pounds each, and Ringo by £80,000.

From “Shout!: The True Story of the Beatles” by Philip Norman

Press Office Release to UPI, AP, Reuters, PA: On behalf of The Beatles and their company, Apple Corps, their business manager Allen Klein of ABKCO Industries after discussion with The Beatles announced in New York today that all negotiations between The Beatles, Associated Television, and Northern Songs have been terminated by The Beatles. All of The Beatles and their companies intend to sell all their shares in Northern Songs to Associated Television at a price in accordance with the terms laid down by the takeover panel. John Lennon and Paul McCartney have no intention of involving themselves in any further relationship with Northern Songs or Associated Television beyond the fulfillment of their songwriting contract to February 1973. The Beatles intend to keep all their rights within their own company, Apple, which has divisions in records, music publishing, motion pictures, and television. After discussions with The Beatles’ solicitors and after taking advice of counsel, the writ served upon Northern Songs by The Beatles’ own Maclen Company will not be withdrawn and a statement of claim will be served within the next few days.

From “The Longest Cocktail Party: An Insider Account of The Beatles & the Wild Rise and Fall of Their Multi-Million Dollar Apple Empire” by Richard DiLello

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ATV then continued to acquire the remaining shares from minority stakeholders. Mid-December 1969, it was announced they had acquired 96%. In January 1970, they reached 99% ownership, the 1% remaining shares being owned by Beatles fans difficult to locate.

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Last updated on February 26, 2022