Prince Estate Administrator Asks Court to Rescind $30 Million Deal With Universal

Prince performs on Oct. 11, 2009 at the Grand Palais in Paris.

A May 31 hearing will determine whether the recorded-music rights will go back up for auction.

In a new court filing, Prince estate administrator Comerica Bank recommended that a judge rescind the estate’s $31 million deal with Universal Music Group for the licensing rights to the late icon's recorded-music catalog.

The filing notes that Warner Music Group's Warner Bros. Records claimed that the estate's special administrator, Bremer Trust, "sold rights to UMG that WBR already holds." Comerica says that it "cannot unequivocally assure UMG or the court that no overlap exists" with respect to those rights.

A hearing to determine the fate of the controversial deal is set for May 31, according to court documents obtained and reviewed by Billboard. The agreement, signed Jan. 31, 2017 and announced in a press release by UMG on Feb. 9, was approved by Bremer and negotiated by entertainment advisors L. Londell McMillan and Charles Koppelman. Comerica Bank was appointed the estate's personal representative in Bremer's place on Feb. 1, after the UMG deal was signed, and McMillan and Koppelman have since been replaced by Spotify's Troy Carter.

The deal gave Universal the exclusive licensing rights to Prince's post-1995 recorded-music catalog globally; unreleased material from Prince's legendary vault; and the U.S. rights to "certain renowned albums" from Prince's 1979-1995 peak, during which he was recording for Warner Bros. Records (though film soundtracks, such as Purple Rain and Graffiti Bridge, would remain with WBR.) The rights to those Warner albums, according to UMG's announcement, would begin to move to Universal at a later date, with some as soon as 2018, the announcement said.

If the judge voids Universal's deal after the May 31 hearing, Comerica will likely put the recorded-music rights up for auction again, allowing competitors such as Sony and Warner to bid on the catalog. Both companies had expressed interest but faced roadblocks in bidding on the deal the first time around, sources tell Billboard. McMillan, who led the negotiations, has said they had ample opportunity to bid.

But insiders say the recorded-music rights are no longer likely to fetch $31 million, especially if they aren't as extensive as previously thought. A significant devaluation of the recorded-music rights could open up Bremer, which signed off on the deal, to liability, a source said.

Bremer spokeswoman Marcia Jensen said that "Bremer Trust is confident that it acted at all times in the best interests of the Nelson Estate while we served in the role of Special Administrator. All agreements and entertainment contracts that were executed on behalf of the estate were properly reviewed, authorized and approved by the Court. We stand by our work and plan to explain that more fully in a responsive brief to the Court."    

The court filings include an Oct. 31 email from McMillan to Universal Music Group executives in which he writes, "I have great news...ownership of masters reverted already and U.S. license to WBR ends June 30, 2018. Afterwards, WBR shall only have a pressing and distribution license for 30 months for physicals thereafter ending Dec. 31, 2020."

McMillan, who earned a commission on the deal, tells Billboard he stands by his interpretation and knowledge of Warner's contracts with Prince and added that, while he was working as a business advisor rather than a legal expert, his views were informed by a team of lawyers, while the deal was approved by Bremer at its counsel, the heirs' lawyers and a judge. 

"In no way did I act alone," McMillan told Billboard.

Issues arose with the deal almost as soon as it was announced, with sources telling Billboard that Warner's rights to the catalog wouldn't expire until 2021. In court documents filed on behalf of Comerica and reviewed by Billboard earlier this month, a representative for the administrator wrote that Universal demanded the deal be rescinded and the $31 million returned to the label. McMillan has consistently denied any misrepresentation.

The latest filing from Comerica says that the bank has "concluded that it is in the best interest of the estate to rescind the UMG agreement."

In the latest documents, Comerica lays out a timeline for how the deal was negotiated and the resulting volleys from various sides. The filing states that in 2014, two years before his death, Prince entered into a new deal with Warner Bros. Records to license and distribute his masters for a set period of time, which sources tell Billboard runs until 2021. The filing then says that after the UMG agreement was announced this February, Warner wrote to Comerica expressing concern that Universal's rights would infringe on that 2014 contract and other rights it holds, and notified Universal as well.

Two weeks later, Universal wrote to Comerica demanding that the deal be rescinded and the money placed in escrow, and threatened to file a lawsuit for fraud and breach of contract, the filing says. Comerica began an investigation, and attempted to negotiate with UMG to find a resolution over the ensuing three months; on April 14, an offer from the bank was rejected by Universal as "unacceptable" and "not even a foundation for further discussions," adding, "Universal has been misled and defrauded in connection with the License Agreement and insists upon rescission of the agreement and the return of its money, full stop." A final offer April 26 was also rejected.

Comerica is thus requesting that the Court allow the agreement to be rescinded in order to avoid litigation, which it says would likely cost millions and exceed the cost of the rescission, and requests guidance as to whether it should pursue steps to recover the commission paid to McMillan and Koppelman, which Billboard reported totaled $3.1 million, according to court documents filed earlier this month on behalf of Comerica.

Reps for Warner, Universal and Carter declined to comment, and a rep for Bremer did not immediately respond to a request for comment. Steve Silton, an attorney at Cozen O’Connor who represents two of the heirs, declined to comment, as did Justin Bruntjen, another heir attorney. Randy Sayers, who represents the three heirs that count McMillan as advisor, did not immediately respond to a request for comment.


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