8:06pm PT by Ashley Cullins
John Branca Takes the Stand in Michael Jackson Tax Trial
Prominent music attorney John Branca took the stand Monday on the first day of trial in a potentially billion-dollar tax fight between Michael Jackson's estate and the IRS.
Branca, who represented the King of Pop off and on for nearly three decades, took the stand after lunch and spent nearly four hours being examined by Jackson estate attorney Howard Weitzman.
The trial is expected to last three weeks, as attorneys for the estate and the government each work to convince a judge that their value of Jackson's likeness at the time of his death is the correct one. Jackson is widely considered one of the greatest musical talents who ever lived — but the court will have to decide whether accusations of child molestation, rumors of drug use and a lack of tours and album releases in the last few years of his life were enough to lower the value of his brand.
The mood in the courtroom was starkly different than that of others in the same downtown L.A. federal courthouse. U.S. Tax Court Judge Mark Holmes, the attorneys and the witness, Branca, routinely cracked jokes amid a very serious conversation about Jackson's financial woes.
Branca told the court Jackson was about $400 million in debt when he died, leaving estate attorneys scrambling to avoid foreclosures on his properties and music assets. (The parties also disagree about how much Jackson's beneficial interest in the Sony-ATV and MIJAC music catalogs were worth.)
The more relaxed atmosphere gave Branca license to be more expositional with his answers to Weitzman's questions, which would have likely been cut off by a judge in a standard civil law courtroom.
“I’m going to tear up," Branca said. "Michael was a genius. He was a great guy. When I tell these stories, I actually tell them with affection.”
Among countless deals for the singer, Branca helped renegotiate Jackson's recording deal to reflect his status as a solo artist and inked a sponsorship deal with Pepsi for his family's 1984 Victory tour. “Michael made me write into the contract that he would never be seen holding a Pepsi can and he would never be onscreen for more than three seconds,” said Branca.
A decade later, the work wasn't so easy. By the time Jackson was preparing for his international HIStory tour in the late '90s, the first sexual molestation allegations against him had surfaced and no sponsors were interested.
"Were there any offers for the use of Michael's name and likeness during that period?" asked Weitzman. "Nothing credible that I recall," said Branca.
Proving Jackson's reputation had been tarnished by allegations against him and tabloid fodder is key in the estate's efforts to support their valuation of his likeness rights at the time he died.
After several years of not working together, Branca met with Jackson a little more than a week before the singer's death and brought with him a list of potential ideas. That list included a "Thriller" film, play and haunted house attraction, as well as album and DVD re-releases — but none of his ideas involved licensing Jackson's name or likeness.
Weitzman asked if musicians make a lot of money in general merchandising, which he described as licensing an artist's name and image for mugs, T-shirts and other tchotchkes. "No," said Branca. "That income for most musicians is dwarfed compared to the money they make from recordings, their songs and especially the tours. Putting out a record is not a name and likeness right."
That's also important — because since Jackson's death, the estate used unreleased rehearsal footage to make This Is It, which is one of the biggest-grossing concert films ever, and launched a lucrative Las Vegas show in partnership with Cirque du Soleil. Branca said neither of those qualify as likeness deals.
After two failed clothing line licensing attempts during the course of his living career, the one likeness deal that shows potential after Jackson's death is with a teen clothing company called Supreme. Branca explained to Holmes that kids are "crazy" for the company's shirts, and the deal is an effort to re-brand Jackson's image with a younger audience.
"We make no money from it, but maybe someday we’ll get new fans," he said.
The IRS attorneys declined to cross-examine Branca in favor of calling him back to testify when they present their case.
Before letting Branca leave the stand, the judge took the opportunity to ask him to explain one of Jackson's lyrics. "You’re familiar with 'Thriller,' " said Holmes. "What exactly does 'the funk of 40,000 years' mean?"
"Karma," answered Branca.