For “This Is It,” Michael Jackson’s planned 50-concert residency at London’s O2 Arena, the star’s sudden, tragic death really could have been it, with millions of dollars lost for producer/promoter AEG Live and the star’s vision never realized. n Instead, the movie and music divisions of Sony have a film and soundtrack to sell, and AEG will share in the proceeds. But neither would have happened if the companies hadn’t had fire-drill-paced meetings to turn a human tragedy into what is already being described as a creative and financial triumph.

On Oct. 26, Sony’s Epic label released the double-disc set “This Is It” to coincide with the release of the movie of the same name, which arrived in theaters Oct. 28 and will run for a limited two-week engagement. It opened Wednesday with a one-day gross of $7.4 million in the United States and $20.1 million worldwide.

“The film answers a lot of questions,” says Rob Stringer, chairman of Sony Music. “I can’t comment on a lot of issues that were going on with Michael, nor can anyone else, it’s very difficult. But you want to know that he was still a fantastic entertainer, that he still cared, that he was still musically amazing, and all those things are just obvious in this film.”

The saga began with the announcement last March of Jackson’s string of shows at the O2, the result of two years of talks between Jackson and AEG Live, spearheaded by AEG Live CEO Randy Phillips. The ideas discussed included a tour, a few shows and, finally, a residency. “It took a while for [Jackson] to get comfortable with this, but when he finally made the decision that he wanted to do something, we were in the unique position where London was obviously the perfect place to do it,” says AEG CEO Tim Leiweke.

Ticket sales for the initial 10 shows blew up at the box office, and the number of dates was raised to 50. Although all parties were taken aback by the demand, Leiweke says Jackson was fully committed to 50 shows, despite reports to the contrary. “We’ve heard all of the speculation and opinions out there, but the reality is this is something Michael wanted to do,” he says.

Conceptually, Leiweke says the production was “all Michael’s” vision—and that vision was expensive. “It was budgeted to be $12 million, but Michael had big dreams and big vision,” Leiweke says. “By the time we were ready to go to London we were at $35 million.”

In March Jackson reached out to Frank DiLeo, who managed him during a spectacular ’80s run that included the star’s most successful albums and tours. “Even though he fired me, Michael was still my friend. We never lost the friendship,” says DiLeo, who had “no hesitation” about coming back to work for Jackson. “I was extremely excited about being back with him, because we were a magical team in the ’80s. He missed it, I missed it.”

As rehearsals got under way, public skepticism turned into anticipation. Even the rehearsals two nights before Jackson’s death “were extraordinary,” Leiweke says. “Everyone came out of there talking about how incredible it was.”

The June 24 rehearsal didn’t run as long, Leiweke says, and Jackson spent much of that time reviewing video production elements. “He wasn’t taxing his voice that night because he was getting ready for London,” Leiweke says.

At 12:30 p.m. June 25, Leiweke received a call informing him Jackson had been taken to the hospital. “Like the rest of the world, we were on the outside,” he says. “Randy [Phillips] didn’t know specifics until he got to the hospital, and by then, unfortunately, it was our worst scenario. It was shocking because what we knew was he was healthy—of that we were certain.”

As word of Jackson’s death spread, AEG had no time to mourn. The company shifted from preproduction to damage control. “A lot of decisions were made between Tim Leiweke and myself on cell phone while I was standing outside the emergency room,” Phillips says. “The first thing we did was have our security close off Staples Center, shut down the production and put all of our intellectual property into the vault at Staples Center so nobody could get near it or leave with it.”

As Jackson’s death became a media circus, Leiweke ordered Staples Center GM Lee Zeidman to turn the arena into a fortress. “We locked the building down and said, ‘No one goes in and no one goes out,’ ” Leiweke says. The instructions were clear: No pictures of the set, no one in Jackson’s dressing room, no one touches anything. “We fired a couple of employees because they took pictures of the stage and we thought that was inappropriate.”

Jackson died on a Thursday, which meant AEG executives in London and the company’s Los Angeles headquarters had a marathon meeting. Amid their grief, AEG executives started trying to figure out what to do about their investment, even as the words “financial disaster” started to creep into news reports.

“We weren’t thinking that way,” Leiweke says. “We knew we were in a bad spot and dealing with a crisis, but we believed eventually we’d work our way out of this. Needless to say, those were really difficult, long days—bad days—but I don’t think we ever panicked. We had faith that we would eventually find a way to come out of this and recoup the investment.”

The decision that saved “This Is It”—as both AEG’s investment and Jackson’s legacy—had been made weeks before. Rehearsals had been filmed, and it is that edited footage that became the Sony Pictures film.
“I said, ‘We’ve got to archive your comeback because this is going to be historical,’ and [Jackson] agreed,” Phillips says. “We never expected it to be a movie. This was really for his personal archives—and also to be B-roll and behind-the-scenes footage that probably would have been a DVD concert film.”

Within days of Jackson’s death, AEG started editing the rehearsal footage into a narrative at AEG’s L.A. Live facilities. “Under armed guards we had the editors working for three weeks collating 130 hours [of footage] and distilling it down to three-and-a-half hours in the first pass,” Phillips says. “And then we took 12 minutes of that and used it as a demo.”

Up until longtime Jackson associates John Branca and John McLain, who had been named executors in Jackson’s will, were officially named administrators July 6, AEG had been able to act unilaterally. There was some doubt about who would control Jackson’s estate, and “we didn’t event know there was a will for over a week,” Phillips says. As those details were resolved, however, AEG began negotiating with the executors—Branca and McLain, and attorneys Joel Katz and Howard Weitzman—to determine how to proceed.

Fortunately, AEG’s corporate cousins include Anschutz Film Group and its Walden Media division (“Ray,” “The Chronicles of Narnia”). So AEG Live had Anschutz Film Group negotiate with potential distribution partners.

Four studios bid on “This Is It”: Universal, Fox, Paramount and Sony, which submitted the winning bid of $65 million, including $5 million for AEG’s editing costs, according to Phillips.

The driving force behind the film negotiations with Sony was Jackson’s estate—represented by Branca and McLain—which had to grant permission; Branca’s firm, Ziffren Brittenham, negotiated the deal, in consultation with Phillips. Sony Music controls Jackson’s catalog, but AEG executives were also impressed by Sony Pictures co-chairman Amy Pascal, who was relentless in her pursuit of “This Is It.” “She had a great vision,” Phillips says. “She pursued it hard and she called everybody, all the time. She had to have this movie.”

One particular meeting stands out for Phillips. “The first marketing meeting I had at Sony Pictures, there were about 40 people in this conference room, and what blew my mind was the fact that this little movie, this HD footage of Michael Jackson, was getting the attention of a whole studio. They just absolutely stopped to focus on this project,” he says. “And I was thinking to myself just how much Michael would have loved this, because it was so over the top.”

On Aug. 10, Los Angeles Superior Court approved a deal that Jackson’s estate would get 90% of the film’s net revenue, with the remainder going to AEG. (AEG will also receive revenue from the soundtrack.) That’s a small percentage, considering that AEG put up the investment. “I’m sure some would argue that this is a small percentage to take for that much risk and that much work,” Leiweke says, “but we didn’t want there to be any doubt as to our priorities here, which is to try and protect the best interests of the estate.”

The “This Is It” film was created by the same team that had been working on the concerts, including manager DiLeo, director Kenny Ortega, choreographer Travis Payne, music director Michael Bearden and Concerts West co-producer/co-CEO Paul Gongaware.

“The fact that [Kenny Ortega] is also a movie director is a good thing in terms of understanding what footage they had,” Stringer says. “I’m not sure we’d have gotten this done if it would have been someone else coming in to work on it.”

The film represents “unrestricted access to an unguarded genius,” Phillips says. “There’s nothing in it other than the credits that wasn’t shot or recorded from March 5, when we did the press conference in London, to June 25, when he died. It’s completely authentic. Nothing has been doctored.”

DiLeo refutes a small but vocal group of fans who see the film as exploitative of Jackson, who they believe was in poor health at the end of his life. “It shows what kind of shape he was in, and he was in very good shape,” he says. “The reports of him dying and being 108 pounds are false. The autopsy came back and he was 136 pounds, and I can’t remember him being over 150 in all the years I worked with him. The film shows he had a clear head, that he was involved.”

Stringer says that “if I had watched a shock [or] tattle documentary, I don’t think we would have wanted to be associated. It’s really a behind-the-scenes look at Michael’s rehearsal for a huge comeback. He is wonderful in it.”

At press time “This Is It” was set for viewing on 18,000 screens worldwide, and it’s anticipated to become the top-grossing concert film of all time. It should handily beat “Hannah Montana/Miley Cyrus: Best of Both Worlds Concert Tour,” which earned $70.6 million worldwide, according to Box Office Mojo, on just 700 screens.

For now, at least, the film’s run has been limited to two weeks. This qualifies “This Is It” for Academy Award consideration and should generate buzz for the upcoming DVD, which is expected to arrive in first-quarter 2010.

The “This Is It” soundtrack was conceived alongside the film project “when we saw the early footage, pretty much a few days after he died,” Stringer says.

Sony Music dealt with the estate, primarily Branca and McLain, to develop the project under pressure—“It would be strange not to have an accompanying piece to the movie,” Stringer says—but quality wasn’t sacrificed. “The packaging is expensive and really nice,” he says, noting that the booklet could probably be sold on its own. “We got it right.”

There isn’t any exclusivity for “This Is It” at retail. “We’ve brokered deals with every single retailer in some way or the other, on a global basis,” Stringer says, which resulted in a complicated manufacturing schedule. The process of distributing the physical product reminds Stringer of earlier days. “I’ve done this a long time and I’ve worked on lots of Michael Jackson records, so in a way it’s how Michael’s records used to be distributed,” he says. “They were always delivered on short notice and there was always mass demand around the world.”

On the digital front, after much speculation about bundling “This Is It,” it will be sold on iTunes mostly, but not completely, a la carte. All the songs will be available as individual tracks except the single.

Limiting the a la carte option is a smart business decision. Jackson’s recorded work has flown off the shelves since his death, with his catalog of solo albums having sold 5.5 million copies in the United States since that time, according to Nielsen SoundScan. He has sold 9.2 million U.S. downloads since his death, compared with 1.3 million the year before that, and he will almost certainly be the best-selling artist of 2009.

Expectations run high for “This Is It,” though Stringer declined to offer a sales projection. “I’m pretty sure there will be a value-pack price; the package is a lavish booklet and a really nice cardboard packaging, so it’s a proper booklet, not just a jewel-case CD,” he says. “I think the retail pricing will be very interesting, because I imagine people will be very competitive.”

As AEG worked to put together the movie and its soundtrack, it took shots from Jackson family members and others that the company is more interested in profits than in promoting Jackson’s legacy. For his part, Phillips shrugs it off. “The problem with Michael is his death is as messy as his life was,” he says. “Everyone’s looking for a villain. Sometimes there isn’t a villain—there’s just bad circumstances and bad luck, and that is what this was. I personally got attacked a few times on national television, but my skin is thick and that’s part of my job.”
Stringer also feels strongly that Sony Music has taken the high road, saying the company’s actions have been “absolutely the opposite of exploitation. I’ve worked with [Jackson] for a long time—a lot of this people in this company have. We didn’t take adverts when he died. The catalog was made available but we didn’t do anything that we thought was remotely crass or overcommercial. We’ve been careful because we’ve been protective of that legacy and we’ve done things the right way.”

What Leiweke says he is most proud of is “under huge stress, huge media scrutiny, and a few people saying things about us that we were stunned people would think, we maintained the path. We did it with dignity. And when it’s all said and done, I believe more than the financial gains, people will look at the way we handled ourselves, and more importantly look at the way we gave back to the estate in doing the best we could for our partnership. Our reputation was at stake, and I believe from our darkest hour came our best moment.” ••••

Additional reporting by Reuters.