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UNITED STATES TAX COURT TRIAL

ESTATE (OF MICHAEL J. JACKSON DECEASED)

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EXECUTORS: JOHN G. BRANCA AND JOHN MCCLAIN

VS

COMMISSIONER OF INTERNAL REVENUE (IRS)

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February 17th / 22nd / 23rd / 24th 2017

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Presiding Judge Mark V. Holmes

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Jacksons estate is represented by Avram Salkin, Charles Paul Rettig, Steven Richard Toscher, Robert
S. Horwitz, Edward M. Robbins Jr., Sharyn M. Fisk and Lacey E. Strachan of Hochman Salkin Rettig
Toscher & Perez PC, Paul Gordon Hoffman, Jeryll S. Cohen and Loretta Siciliano of Hoffman Sabban
& Watenmaker and Howard L. Weitzman of Kinsella Weitzman Iser Kump & Aldisert LLP.
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The IRS is represented by its attorneys Donna F. Herbert, Malone Camp, Sebastian Voth, Jordan
Musen and Laura Mullin.

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WITNESS: WESTON ANSON


(IRS ASSETS VALUATION EXPERT WITNESS)
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February 17th 2017

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Court Clerk: Court is in session.

Judge Holmes: Please be seated. If I remember correctly the floor is yours, Ms. Herbert. Do we have

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housekeeping first?

Ms. Herbert: Yes, just one housekeeping matter, Your Honor. I was... we were thinking about how to
approach the rebuttal cases, and we anticipate that that would be done next Friday unless respondent is

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finished with his case sooner. And we thought that maybe some ground rules should be set for rebuttal,
and one idea that we had was to limit it to perhaps 20 minutes per witness per subject matter.

Judge Holmes: Is that okay with you?

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Mr. Voth: Your Honor, I... we really haven't... you're talking about expert, or what are you talking
about? ae
Ms. Herbert: Just expert rebuttal.

Mr. Voth: You know, I'll take that under advisement, but I really haven't thought about it. You didn't
talk to me about it beforehand so let's see how much time we have.
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Judge Holmes: Yeah. That works. See what you can do. I'm happy to accommodate any agreement that
you reach, otherwise who knows which subject matter might want more than 20 minutes or less than 20
minutes or maybe not at all.
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Mr. Weitzman: But we're dealing with three days next week aren't we? We do have Wednesday,
Thursday, and Friday?

Judge Holmes: Absolutely.

Ms. Herbert: Okay. Thank you, Your Honor.


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Mr. Voth: Can I inquire as to when the government expects to complete its case?
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Ms. Herbert: Thursday, at the close of business Thursday.

Mr. Voth: Close... you're going to go through Thursday.


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Mr. Toscher: Wait, may I have the ??.

Judge Holmes: Oh, are there fact witnesses besides... in addition to Mr. Anson?
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Mr. Voth: Possibly. We're not sure.


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Ms. Herbert: We are not sure. We haven't...

Judge Holmes: Are they likely to be short though, once we get through Mr. Branca?

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Ms. Herbert: Yes. They're likely to be short, Your Honor.

Judge Holmes: Okay.

Mr. Voth: Yeah, I would, you know, depending on the time, let's just sort of see where it is because I

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was hoping maybe the government would be completed by Wednesday, or Thursday morning. But you
guys have your time. Let's see where it is. You guys...

Judge Holmes: They have their time to, yeah.

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Mr. Voth: You guys have ?? you guys don't know. Let's decide. Okay. Because I...

Judge Holmes: And a lot depends on the length and concision of your cross-examination of Mr.

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Anson.

Mr. Voth: Agreed. ae


Judge Holmes: Very well.

Ms. Herbert: Okay.


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Judge Holmes: So the floor is yours again, Ms. Herbert. Go ahead.

Ms. Herbert: Mr. Voth.

Mr. Voth: Respondent calls Mr. Anson to be its witness.


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(Weston Anson called to the stand)

Court Clerk: Good morning.

Mr. Anson: Good morning.


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Court Clerk: You may be seated. If you will, please state your name and address for the record.
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Mr. Anson: Excuse me. Weston Anson, --------------------------.

Court Clerk: Thank you.


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Mr. Voth: May I have a moment, Your Honor, as I get situated?

Judge Holmes: Of course.


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Mr. Voth: Your Honor, may I approach the Clerk to have some documents marked for identification?
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Judge Holmes: Certainly.

Court Clerk: Exhibit 682-R is marked for identification, it is the original expert report of Mr. Anson.
Exhibit 683-R is marked for identification, it is the rebuttal report of Mr. Anson, and Exhibit 684-R is

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marked for identification, it is the supplemental report of Mr. Anson.

Mr. Salkin: May I... just to clarify the record all these relate to Mijac. Is that correct?

Judge Holmes: The...

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Mr. Salkin: For the first two.

Judge Holmes: The first two.

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Court Clerk: The first two say, "The fair market value of New Horizon Trust III."

Judge Holmes: That's Mijac. Okay. I have each of those.

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Mr. Voth: I'll explain.

Male: The first one is a foundational.


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Mr. Voth: Okay. when you get to the third one I'll sum it up. And this will be... before we proceed,
Your Honor, with respect to the supplemental report, it does... so that would be Exhibit 684-R, marked
for identification, it's a combination of Mijac, name and likeness, and Sony/ATV so it's one I thought it
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would be best to just proceed and mark it at this time.

Judge Holmes: Okay.

Mr. Toscher: We mark, Your Honor, 684-R is the one that was subject to the petitioner's motion to
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strike portions of it and the Court's granting of that motion.

Judge Holmes: The Nimmer, yeah.

Mr. Toscher: So keep... please, keep that in mind.

Mr. Voth: Oh, absolutely, no. Yeah.


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Mr. Toscher: For the record. Okay.


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Mr. Voth: And we will not be delving into that.

Judge Holmes: Or if he does, he'll object and I'll grant it. Go ahead, Mr. Voth.
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DIRECT EXAMINATION BY MR. VOTH:

Mr. Voth: All right, Mr. Anson.


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Judge Holmes: Those are all admitted, by the way. Go ahead.


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Mr. Voth: Did you just say that they were all...

Judge Holmes: Yeah. They're all admitted.

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Mr. Voth: Okay. All right. So no need to...

Judge Holmes: Except again, for the one that... the portion of...

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Mr. Voth: We'll skip that step.

Judge Holmes: ...the last one that I struck. So with that, go ahead.

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Mr. Voth: Mr. Anson, please give us a brief overview of your educational background.

A. Yes, sir. Northwestern University undergraduate, a degree in economics and political science. I then
went on to Harvard University and received an MBA with honors. I majored in international finance.

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Beyond that, I have a CLP accreditation, certified licensing professional, from the international
licensing executives society. I also have a CLS licensing certification, and I am a certified instructor for
the chartered evaluation analyst group. Beyond that, I also... I actually am an adjunct professor of
intellectual property law at Thomas Jefferson Law School. I teach intellectual property valuation, and
also I teach IP licensing.
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Q. Now, at a high level, please describe your professional experience.
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A. All right. I've devoted my career primarily to intellectual property. After leaving Harvard, I spent
about eight years or more in the management and development of licensing programs, first for three
and a half years with Playboy Enterprises, doing the international licensing of the magazine in foreign
languages, in places like Japan and Brazil, where I was involved in licensing their trademarks, their
copyrights and name and likeness and right of publicity. I then spent almost four years, first as head of
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domestic licensing and then global licensing for a company called Hang Ten. When I left as senior vice
president and chief operating officer we had over 100 licensees in 29 countries. I started my first firm
close to 30 years ago... 28, 29 years ago. We are a licensing agent, some of our clients... and consultants
of course. Some of our clients include companies as diverse as Ford Motor Company, McDonald's,
CTW, Children's Television Workshop, Sesame Street, and we acted as both licensing agent and
licensing consultants. For the last 25, 26 years, the focus of my firm and myself has been in valuation
and licensing consulting, Mr. Voth, for transactions primarily, although nowadays I do find myself
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more often sitting and working on litigations. I think that's a result of... well, I'll not speculate on why
that is. But valuation has been the focus of my professional career because of that, I've begun to publish
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over the last 12 years or so a number of books on valuation, including five books for the American Bar
Association, one book that was published in China, and another book published by Simon & Schuster.

Q. Now, do you have any experience valuing music assets?


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A. Yes.

Q. What experience?
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A. Well, over the last 10 or 15 years we've worked with a number of entertainment clients, and so
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music is often part of our valuation assignment, specifically music in these last five or 10 years. We
have valued the music catalogs for Jennifer Nettles and Sugarland Express, Mannheim Steamroller,
which keeps rolling along I might tell you all very successfully, Don Felder and the Eagles, that music
catalog, the Allman Brothers, although that's more than a decade now, I believe, as well as some of the

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music assets of Tupak Shakur. I'm sure there are a couple of others that I don't recall right now.

Mr. Voth: Mr. Camp, can you please pull up Exhibit 1, Mr. Anson's original expert report.

Q. Does the exhibit on the screen represent the conclusion you reached with respect to the value of

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Mijac?

A. Yes, sir.

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Q. Has your conclusion of value changed in any way since the submission of your expert report?

A. No.

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Q. Is Mijac Music the primary asset held within New Horizon Trust III?

A. Yes, other than cash, it's the only asset. ae


Q. Please tell us what are the primary sources of value included in Mijac Music.

A. All right. There are five or possibly six really. You have, of course, first the Michael Jackson
compositions. Then you have other compositions. They are divided into two groups, major... what I call
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major compositions and then minor... minor and other compositions. That was the first three, the fourth
one is the BMI receipts the... that are collected and paid out, and then Society rebates, which sort of go
together. Then finally, you have the unreleased recordings of Michael Jackson.

Q. Now, you mentioned major works and minor works. How did you differentiate between these two?
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A. Well, we looked at all of the other compositions held by Mijac, and we divided them up with those,
which are the primary revenue generators. There were 59 of those and the details are laid out in my
report. Those 59 generate far more than 90 percent of all the revenue from other compositions. So we
put those into one group and detailed that valuation. All of the others, well over 200 other
compositions, are grouped into the minor... the group we called minor or other compositions.
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Q. Now, in general, how did you go about valuing the different revenue streams attributable to Mijac
Music?
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A. Well, in this case the valuation methodology was fairly easy to discern from the beginning because
we have a history of revenue, and therefore we have a revenue base to begin with. And in the valuation
of an asset like this, your key components are, of course, to have a base revenue... a revenue base to
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begin with, to be able to establish future growth rates for that revenue base and then to be able to
accurately... to apply an accurate discount rate to those revenue streams. There is another element to
this because when a major talent like Michael Jackson or Selena, for example, dies, particularly
suddenly like this, you have what's... a bump in sales or what's known as a postmortem spike in sales
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that occurs in the first couple of years after death. And so it's important to establish what that spike in
sales was in this particular case.
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Q. And did you conduct a discounted cash flow analysis?

A. We did. So we have revenues. We have revenue growth. We established what the spike in sales was,

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and then we discounted those cash flows back to a net present value for each of the asset groups within
MIJACK.

Q. Let's move on to projections in general. Mr. Anson, how did you determine a base royalty revenue
stream?

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A. Well, we were provided with revenues for the years 2007, '08, and the first half of '09. We used to
those figures... we then extended '09, the first six months, by just doubling that number for the second
half of '09 to get a full year's revenue. We then had a three-year revenue base from which to begin and

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then extended it out from there. I'm not sure I'm answering... fully answering your question.

Q. You have.

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A. All right.

Q. Now, did you review actual royalty statements from Mijac Music?
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A. Yes, we did. We did.

Q. And were the historical royalty statements consistent with the data relied upon in your projections?
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A. Well, no actually. Interestingly, and this, I think, is an important point, the actual royalties received
were 2 percent higher than the revenue base that we're using, so we're actually understating... in our
valuations, we're understating the... some of our projections by 2 percent.

Q. Now, Petitioner's expert, Mr. Dahl, claims that you did not properly calculate the historical average
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royalties by annualizing data for 2009. Do you agree with Mr. Dahl's assertion?

A. No. And let me just pick up on my last answer. I've read what Mr. Dahl wrote, of course. There are
two parts to this answer really. The first is because actual royalties are at least 2 percent higher, I don't
believe we're understating projections for Mr. Jackson. The second part of it though... it's important to
understand this... that by simply doubling the 2009 sales in the second half, we are actually
understating future revenue projections for major compositions by other artists and minor compositions
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by other artists.
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Q. Does that mean that two of the three revenue streams were lower?

A. Yes.
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Mr. Voth: Mr. Camp, please pull up Exhibit 3 from Mr. Anson's original report.

Q. All right. So let's delve into the postmortem spike for Michael Jackson songs. How did you
determine a postmortem spike?
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A. Well, we used good valuation practice, and we looked for comparable examples upon which to
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model the spike. We selected seven well-known artist, each in their genre and looked at their... excuse
me... looked at their sales... excuse me... looked at sales just before death and then the perecent change
in sales in the first year after death, as you can see on this chart, the second year, and third year, to
establish how much sales go up in the year immediately after death and then how quickly do they come

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decline. What you can see here is that the average of the seven was rounded as 462 percent. We used
that for a spike. But I do want to point something out. That is actually only one-third of the actual spike
that Michael Jackson experienced. His actual spike was 1351 percent, but we did use this spike number
of 461.6.

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Q. Are you familiar with the Zurich study?

A. Yes, I've read it.

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Q. Did you rely on the Zurich study?

A. It's totally unsuitable to be used here.

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Q. Why so?

A. Well, first of all... there are a number of reasons, but first of all it's considerably post death of
Michael Jackson. But that aside, it's a very Eurocentric, that's number one. Number two, the number of
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artist and the type of artist that it examines, many of which I've never heard of, but many of which are
not appropriate for comparison to a popular performing artist today. And number three, and in many
ways most important, it includes an analysis of what happens to the death of a band member. And I use
as an example the Pink Floyd lead, what's his name, Syd Barrett, right? Syd Barrett, I think, yes?
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Anybody remember? When he died, the Zurich study used him as an example to see what the effect
would be on Pink Floyd sales. Well that's a totally different environment when a member of a band dies
as opposed to when an individual entertainer like Michael Jackson or Selena dies. Clearly the impact of
a member of a band dying will not have nearly the impact that happens when a sole artist... when a sole
performing artist like a Michael Jackson dies. I have... enough said.
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Q. Now, Mr. Dahl claims that your postmortem spike is unreasonable. Obviously Mr. Jackson is no
longer alive and able to promote his music. I mean, is that a valid concern?

Mr. Salkin: Leading, Your Honor. Object.

Judge Holmes: Sustained.


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Mr. Voth: Are you aware of what Mr. Dahl has stated regarding your postmortem spike?
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Mr. Anson: Well, he said many things, but one in particular was that our post death sales pattern
couldn't be sustained for a number of years. And obviously I disagree because here you have a vigorous
bundle of name and likeness assets that are going to help sustain the presence of the Michael Jackson
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persona in the marketplace. I mean, whether it's the Cirque du Soleil, post-death performances, whether
it's the biopic and the follow up to the biopic, whether it's the active social media program that's going
on, whether it's the continuous release of additional albums, whether it's interactive games, whether it's
other themed attractions, all of those are going to keep Michael Jackson in front of his audience today
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and tomorrow. So I disagree with Mr. Dahl.


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Q. Now, when you mention these different categories are you referring to the estate in particular or to a
hypothetical buyer who owns these assets?

A. To the hypothetical buyer who owns these assets, that's the purpose of my work here.

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Q. And given what you just explained, do you consider the longer duration of your spike reasonable?

A. I do. And Mr. Dahl, I think, overestimates the number of years to get back to a normal sales pattern.
But regardless of the number of years, I believe that the way we plotted out post death sales is

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reasonable.

Mr. Voth: All right. Let's move on to the unreleased songs.


Mr. Camp, can you please pull up Exhibit 37?

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Q. Is this a list of unreleased songs you identified?

A. Yes.

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Q. How did you go about identifying the number of unreleased songs?

A. Well, we threw as wide a net as we could, over as many resources as possible, and left no... I think
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we left no stone unturned. For example, we looked at Michael Jackson's own deposition in the 1990s,
he identified 54 songs there.

Mr. Salkin: That's hearsay, Your Honor, I object.


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Judge Holmes: Overruled.

Mr. Voth: We were provided a list from Shot Tower consultants of 15 songs, and et cetera, but more
importantly, if you look on Exhibit 37, for example, go down to Buffalo Bill. It's about the 12th one
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down, 13th down. We just identified on this exhibit, if you can read the small type, where each of these
has been identified. You know, you take Blue Gangsta, for example, if you read that one, the song was
written in about 1989. It was originally considered for the Dangerous album, but it didn't make the final
track.

Q. Now, did you assume these unreleased songs were written exclusively by Michael Jackson?
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A. No. What we did in identifying the songs, at the same time, we made every effort to identify
whether there were co-writers, and if so, who they were and how many there were. And looking again,
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at the fine print on Exhibit 37, I think this is an important exhibit to look at, you'll see that where we
can identify others we have done so. If there were... typically if there were three writers, then we
allocated one-third to Mr. Jackson and two-thirds to the other writers. If there were two authors, then
we allocated 50 percent to each.
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Q. Did you identify an initial range of songs?

A. Yes. We were able to identify with great surety 105 songs... 133 songs altogether, 105 with great
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surety and a total of up to 133.


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Q. Okay. After the allocation you just described, how many songs with Michael Jackson having 100
percent of the writer's share would that be equivalent to?

A. Okay. I think you're asking... after we did the allocation... instead of 105 to 133, after allocation

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what would be left, after allocation there were between 88 and 110 songs attributable to Mr. Jackson.

Q. All right. So let's talk about some of the sources of income that would stem from a Michael Jackson
unreleased song. What would those revenue streams include?

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A. There would be... excuse me. There would be three. There would, of course, be the mechanical
royalty that is due to the composer of the song, after allocations we've just discussed. There would be
the artist royalty.

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Mr. Salkin: Objection, Your Honor. He's referring to revenue that has nothing to do with Mijac. It's
irrelevant.

Judge Holmes: Overruled. But establish that these are separate streams, but I think he's about to.

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Mr. Salkin: May I have continuing objection on this line of questioning?

Judge Holmes: Of course. Go ahead, Mr. Voth.


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Mr. Voth: Can you continue this... so you mentioned...

Mr. Anson: Yeah, let me just...


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Q. ...mechanical royalties.

A. Let me start... let me just start...


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Q. Okay. So there are...

A. ...again if I can.

Q. You were saying there were three.

A. Right. There are three sources of revenue. The first is the revenue that flows to Mr. Jackson through
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Mijac, and that is the mechanical royalty for writing the song. The second is the artist's royalty, the
performance royalty. And then the third is the joint venture income.
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Q. Now, Mr. Anson, why did you include the artist royalties and joint venture income as part of your
Mijac report?
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Mr. Voth: I'm sorry, Your Honor. There's a lot of people talking...

Mr. Anson: Yeah.


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Mr. Voth: ...that's distracting.


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Judge Holmes: Let him answer. Go ahead, Mr. Anson.

Mr. Anson: Thank you, Your Honor.

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A. Well, as a valuation professional, it's our job to identify all assets that can be valued and do... to the
best of my knowledge these unpublished songs have not been included, and the streams of income flow
from them, by the way, having not been included in any other valuation. And it's one of the first
principles of valuation that you bundle like assets with like assets. Therefore, since these had not been
valued anywhere else, we bundled them with Mijac and included them in the Mijac valuation.

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Q. Are you familiar with the term sync income?

A. Yes. Sync royalties or sync income, yes.

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Q. Did you include any of that in your Mijac report?

A. No. We could have, but sync royalties are much harder to predict. And while they can add a

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substantial portion of revenue, to be conservative, we did not include any revenue from syncing.

Q. Let's move on to the discount rate. What did you use to determine an appropriate discount rate?
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A. We looked for an appropriate discount rate by finding a proxy company that we felt was reflective of
Mijac and might also be part of the rational buyer pool and selected Vivendi, which is a publicly traded
company based in Europe, as you probably know from my report, and used the... used a WAC based on
their weighted average cost of capital.
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Q. All right. Let's move on to taxes. Is your analysis conducted on a pretax basis, or post- tax basis?

A. As we always do... unless directed differently, as we always do, this is done on a pretax basis.
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Q. Why?

A. Two reasons... the first is that it represents the true value of an asset without the inclusion of some
artificial tax rate. Second, in a case like this where there's going to be a pool of rational investors that
will include both taxed and non-taxed entities, and where we cannot predict what the tax rate might be,
we will not artificially insert some random tax rate. And for both of those reasons a pretax basis is
really the only way to approach a valuation like this.
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Q. Are you familiar with the term level playing field?


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A. Yes.

Q. Did that come into play here, with respect to your decision?
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A. I just... with too many words I just said level playing field. I apologize for being so wordy.

Q. Let's talk about bundling. Can you elaborate on that concept a little bit?
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A. A minute ago when I talked about bundling these...


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Mr. Salkin: Objection, Your Honor. Bundling is something that hasn't been raised in the pleadings...

Judge Holmes: Establish what bundling means.

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Mr. Salkin: ...pretrial memorandum, except at the very last minute or even...

Judge Holmes: Okay.

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Mr. Voth: Just let me ask him...

Judge Holmes: Let me see what bundling means first. Go ahead, Mr. Voth. What does bundling mean?

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Mr. Voth: All right. So I'm asking the expert...

Judge Holmes: I'm asking it. What does bundling mean?

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Mr. Anson: Yes, Your Honor. A moment ago I talked about taking the value of the Mijac unpublished
songs and bundling them with the other Mijac assets. It simply means that in valuation, particularly
with intangibles and intellectual property, you bundle together those assets which are most similar and
then value them together in order to arrive at the highest and best value of the assets.
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Mr. Voth: I mean, is that a way of maximizing value?

Mr. Anson: It is. It's also a way of recognizing that value... that asset groups will achieve their...
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oftentimes, achieve their highest value achieve their highest value when used together. And I'll give you
an example in this case. Let's not walk around the topic. It is that when using the music assets and the
name and likeness assets of the Jackson Estate, a) that is the highest and best use, and b) that is how
you will achieve the greatest value out of these assets when selling them.
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Mr. Salkin: Objection. Moves to strike, Your Honor. This is beyond the Mijac asset. He's giving the
name and likeness.

Judge Holmes: Overruled.

Mr. Voth: Now, you just mentioned the estate. Are you referring to the Estate or a hypothetical buyer?
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Mr. Anson: Well, I'm referring to the hypothetical buyer who, in this case, would certainly strive to
acquire both sets of assets, Mijac Music and name and likeness, in my opinion.
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Q. Now, we had Felix Sebacious of Bravado testify here last week about a Michael Jackson slot
machine that had his music, name, and likeness. Is that an example of what you're referring to, Mr.
Anson?
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A. Those are... those are the synergy... that's a perfect example of the synergies you get when you own
both bundles of assets because there, you are able to license both the music that plays continuously on
the slot machine, and the name and likeness assets, the graphics that are on the outside, obviously the
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actual portrayal of Michael Jackson's image, as well as his signature and other name and likeness
assets. It's bundling, it's also synergies of the simplest but most graphic type.
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Q. Now, in doing your bundling, Mr. Anson, did you do any double counting of the economic benefits
in your reports?

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A. No. And since you and I are going to be sitting in these chairs again on Wednesday discussing this, I
think you'll see when we discuss the name and likeness valuation that we make a point of elaborating
on that, that we do not do any double counting of music income with the name and likeness or vice
versa.

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Mr. Voth: No further questions, Your Honor.

Judge Holmes: Okay. Mr. Salkin.

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Mr. Salkin: Yes. Thank you, Your Honor.

Your Honor, as I understand it, there was a discussion yesterday on the issue of valuing assets
separately and the fact that no experts had done that in this case and that it should be excluded. Did the

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Court make a ruling with that matter?

Judge Holmes: It's going to be the subject of post trial briefing. I want to hear his opinion on this and
the basis for his opinion on this and whether it is, in fact, reflected in his expert witness reports. Go
ahead Mr. Salkin.
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CROSS-EXAMINATION BY MR. SALKIN:
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Q. Mr. Anson, in the past several years the major portion of your engagements have involved the
computation of damages to plaintiffs. Is that right?

A. Good morning, Mr. Salkin.


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Q. Good morning.

A. I'm sorry. What was your question?

Q. The question is, in the past several years, the major portion of your engagements involved
computation of damages. Is that correct?
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A. No.
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Q. When you are retained for the purpose of computing damages on behalf of plaintiffs, do you try to
determine the greatest amount of damages that you can support?

A. No.
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Q. All right. Do you actively promote your business in any ways?

A. We never advertise, no.


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Q. All right. You don't write books that help promote the business?
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A. I write books, but they're not designed to promote the business. They're designed to promote good
practice.

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Q. And how about giving lectures?

A. I give a number of lectures.

Q. Do you send out emails to professionals for the purpose of explaining the virtues of your business?

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A. Yes, I send out emails, Mr. Salkin.

Mr. Salkin: Let me have the exhibit. May I approach, Your Honor?

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Judge Holmes: Oh, of course.

Mr. Salkin: I need one more. Thank you.

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Court Clerk: Exhibit 685-P is marked for identification.

Q. Could you look at this exhibit, please?

A. Yes, sir.
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Q. And it says CONSOR on top. Is that your company?
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A. Yes it is.

Q. And down at the end it gives an address of ----------------.


Is that your address in -----?
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A. Yes, sir.

Q. And is this an email that was sent out by CONSOR?

A. Yes, it was.
a

Q. Do you know who Dennis Perez is?


Te

A. I don't know Dennis Perez at... I don't know Dennis personally, no.

Q. All right. And was this email sent to many people?


w.

A. It probably was. I've been here these last two weeks. I don't know for sure. But I assume it was, yes.

Q. Possibly hundreds?
ww

A. Yes.
om
Q. And possibly even more?

A. I don't know that.

n.c
Q. And it describes Chairman Weston Anson as the expert of the century. Is that a fair description of
how you feel about yourself?

A. That's a really... well, no. I didn't write this. I would not call myself the expert of the century, no, sir.
No. I certainly wouldn't write that. And yes, you're right, it does say that. Well, that's pretty mortifying.

so
Q. And it also indicates that CONSOR, which is your company, valued the intellectual property assets
of the Michael Jackson Estate at a total of close to $1 billion. Is that correct?

ck
A. That's not correct.

Q. But that's what this says. Did I read that correctly? Could you look at the second paragraph?

lJa
A. Well, now you have totally embarrassed me, sir... completely embarrassed me.

Q. All right. We're just trying to get to the facts.


ae
A. Well, those are not facts, and you not only mortified me, you embarrassed me.

Q. But you're aware though, if there were $1 billion of unreported assets in this estate that would
generate an estate tax liability to someone at, I just believe at the 45 percent rate, it would be like $450
ich
million?

A. Yeah. That's... these are... that's an outrageous statement.

Q. And that would certainly demean the executors, the Jackson family, the professionals around them if
mM

the estate improperly avoided $450 million as determined by the expert of the century?

Mr. Voth: Objection. Argumentative.

Judge Holmes: Overruled.

Mr. Anson: I think... what exactly is the question because I want to answer what your question is?
a

Mr. Salkin: The question is would it be possibly damaging to the reputation of Mr. Branca, Mr.
Te

McLean, his co-executor, and the professionals in the estate, the Jackson family? We have a public
distribution of this document that in effect says they've improperly avoided $450 million of taxes.

A. If it said that, it would be very damaging.


w.

Q. Yes. And you've done that with the hope that that might enhance your professional practice to the
detriment of these people.
ww

A. Certainly not.
om
Mr. Salkin: I'd like to move to... do you know what the exhibit number is?

Court Clerk: 685-P.

n.c
Mr. Salkin: I'd like to move to admit this 685-P into evidence.

Judge Holmes: It's admitted. Not for the truth of what it says though.

Mr. Salkin: All right, Your Honor. Now we have the expert of the century along with the entertainer of

so
the century.

Q. Now, actually, Mr. Anson, if the Court determines that the estate tax liability is significantly less
than $450 million, that could be a detriment to your reputation. Is that right?

ck
A. I'm... sir, you take my by surprise, again. I suppose it would, yes. I don't... you take me by surprise.

Q. And if there's a major government victory in this case, leading to a very sizable tax deficiency, that

lJa
would probably enhance your reputation, wouldn't it?

A. I never think of the work I do is either enhancing or detracting from my reputation. I think of the
work I do as to whether the reports are accurate and whether they stand up to scrutiny in the court.
That's what I do.
ae
Q. Well, that would certainly enable who ever sent out this email, to send out more emails because it
would be based not on speculation, but on actual results. Would that be the case?
ich

A. I haven't thought that far ahead, but yes, that would be the case.

Q. Okay. Let's go to another area. All right. You mentioned your base, which was the average of half of
2007, half of 2000... I'm sorry... all of 2007, all of 2008, half of 2009, and then you doubled 2009. Is
mM

that right?

A. For revenue base.

Q. For a revenue base.

A. Yes, that's correct.


a

Q. And are you aware that in the early part of 2008 the 25th anniversary of Thriller was released?
Te

A. Yes.

Q. For 2008, are you aware that Thriller had revenue of approximately $600,000 more than the level
w.

amount in the prior years?

A. Yes.
ww

Q. And for the first half of 2009, the Thriller revenue just from that half year was about $1 million
more than a normal half year's revenue for the Jackson material and for Thriller in particular. Is that
om
right?

A. It was higher. I'm not sure if it was a million dollars.

n.c
Q. So you used a weighted average. You selected the highest half year, you doubled it, and that got you
to an amount of something like $5.062 million.

A. That's... yes, that's correct.

so
Q. All right. There are other averages in this case of much lower numbers, but why don't we refer to
that as the Anson average, although there are other averages that are much lower. Let's turn to the first
year spike, and look at Exhibit 3 of your report, which is Exhibit...

ck
Mr. Salkin: Excuse me, can I have that number again.

Mr. Camp: Six eight two, Counsel.

lJa
Q. ...682-R. Can you look at that, please?

A. Mm-hmm. ae
Q. And you'll see that there are seven artists listed.

A. Yes.
ich
Q. And one that stands out as the highest amount, is Ray Charles.

A. Yes.

Q. At 1529 percent... that means his album sales were 15 times the album sales that he had prior to
mM

death. Is that correct?

A. Yes.

Q. Are you aware of anything that occurred after Mr. Charles' death that would tend to enhance album
sales over and above what would normally be expected for album sales after the death of an artist of
that quality?
a

A. He had a very successful album.


Te

Q. Is that what enhanced the album sales?

A. It certainly may have helped.


w.

Q. Did you refer to that in your report?

A. I don't recall if it's in the footnotes or not.


ww

Q. And I think in the deposition when you answered a similar question, you didn't mention the album
om
sale, but I followed up and I asked about a motion picture that was released three or four months after
Mr. Charles died. Do you recall that?

A. Yes.

n.c
Q. But you didn't volunteer it when I first asked the question, did you?

A. I don't recall.

so
Mr. Salkin: I have... could I have the deposition cite? Yes, I'm... .

Court Clerk: Exhibit 686-P is marked for identification.

ck
Mr. Anson: Thank you.

Mr. Salkin: Reference is made...

lJa
Mr. Toscher: Could we describe what 688... 686-P is? In order....

Mr. Salkin: Yes. ae


Mr. Toscher: A copy of that... yeah. I just want to make sure he gets it ??.

Mr. Salkin: Yes. Do you have planned your deposition being taken in our office... What's the date?
ich
Mr. Camp: January 18th, 2017.

Mr. Salkin: ...on January 18th of this year?

A. ---
mM

Q. The question was, do you recall your deposition being taken in my office on January 18th of this
year?

A. Yes, I do.

Q. And you recall that I examined you.


a

A. Yes, I do.
Te

Q. And you swore to tell the truth, the whole truth, and nothing but the truth.

A. Yes, of course.
w.

Q. And is this part of your deposition, and do you recall the questions and answers?

A. I see them here.


ww

Q. Did you have the opportunity to review this after the transcript was made up?
om
A. Yes.

Q. All right. Let me read from Page 55, Line 6, through Page 55, Line 9. "QUESTION: Are you aware

n.c
of anything unusual that would have caused that spike besides Ray Charles' death?" "ANSWER: I don't
recall at the moment." "QUESTION: Do you recall that there was a Ray Charles movie?" "ANSWER:
Of course, yes." "QUESTION: And this indicates he died June 10, 2004?" "ANSWER: Yes."
"QUESTION: Do you recall the movie being released prior to the end of 2004?" "ANSWER: It was
released later that summer as I recall." "QUESTION: And that might have had an impact on his album

so
sales." "ANSWER: Yes." "QUESTION: And also were you aware that there was an album released in
August of 2004 called Genius Loves Company?" "ANSWER: Yes." "QUESTION: And that featured
not only Ray Charles, but many other people like James Taylor, and BB King, and Willie Nelson, Sir
All Kinds Of ??, Elton John?" "ANSWER: Yes." "QUESTION: So all those would have contributed to

ck
the increase in album sales, correct?" "ANSWER: I imagine so." "QUESTION: Far more than just Ray
Charles' death. Is that correct?" "ANSWER: I think so." Directing your attention back to Exhibit 3 of
Exhibit 682-R, you computed 461 percent as an average of '07. Is that right?

lJa
A. Yes.

Q. And you used average rather than median? ae


A. Yes.

Q. Isn't it your opinion that median is most often used when analyzing a group of comparable
companies because it tends to prove a more usable number than an average?
ich

A. Yes.

Q. But in this particular case you didn't use the median. You used the average. Is that correct?
mM

A. Yes.

Q. And had you used in the median, you would have been down between 200 and 300 percent spike. Is
that correct?

A. The median would have been 338.


a

Q. For which artist?


Te

A. Well, just the median would have been 338.

Q. That would be eliminating the highest and the lowest.


w.

A. Yes.

Mr. Salkin: Do we have that exhibit? Somehow these got out of order. Exhibit 3, the one that has the...
ww

Mr. Anson: But the problem with using the median...


om
Judge Holmes: Hold on. There's a question coming. Go ahead, Mr. Salkin.

Mr. Salkin: Yes. You would eliminate 120, and you would eliminate 240, and you would eliminate...
I'm sorry, you wouldn't eliminate 240. You would eliminate 120. You would eliminate 168. You would

n.c
eliminate 184. Could you cut all those? Those would be the bottom three, and you would eliminate
1529. You would eliminate 650, and you would eliminate 338. Is that correct? Eliminate 338, and that
leaves 240.

Mr. Anson: But you can't do... oh, I'm sorry.

so
Mr. Salkin: And also if you eliminated Mr. Charles as an outlier, which you might often do when there
are unusual circumstances that surround a series of items like this, you would get an average wouldn't
you, that would be in the two to times times multiple rather than the 461 percent that you've arrived at.

ck
Mr. Anson: Is that a question?

Q. Yes. Is that so?

lJa
A. The problem with doing that, though...

Q. Just answer the question, please. If you took the average without Mr. Charles, it would be in the 200
to 300 percent range.
ae
A. Yes, but it would increase in the second year.
ich
Mr. Salkin: I move to strike everything beyond yes.

Judge Holmes: Granted.

Mr. Salkin: I direct your attention now to... What's the number of the Dahl? Seventeen? Page 17 of the
mM

Dahl report, Dahl rebuttal.

Mr. Camp: Exhibit 633.

Mr. Salkin: Exhibit 633, Your Honor, at Page 17. Do you have it? It's that chart with the five names on
it. All right. We can work off the screen.
a

Q. You may recall that when you had the schedule where you included Ray Charles that we talked
about a moment ago, you projected out for three years, and you also indicated in your report, did you
Te

not, that you only had selective albums of those artists? Is that correct?

A. Yes.
w.

Q. And at your deposition, you were presented with Page 17 of Mr. Dahl's report, which is on the
screen, in which he obtained the data for all albums of all seven artists for a period of five years. Is that
correct?
ww

A. I can't verify his data.


om
Q. All right. But you've had his report since December. Is that right?

A. Yes.

n.c
Q. And he testified that he obtained all his data from SoundScan, that's in his report.

A. That's what he said.

Q. And if he did that, that would be a reliable source, would it not?

so
A. If you've read my rebuttal report there's so many...

Q. No. Excuse me. Was that correct, if he relied on the SoundScan and accurately recorded the

ck
information he received, this would be an accurate schedule?

A. If he accurately recorded it, yes.

lJa
Q. All right. Again, if we look at Isaac Hayes, Isaac Hayes is showing here to have a sale of 40,597
albums pre-death, and 14,761, five years later. Is that right?

A. Yes.
ae
Q. All right. And let me round a little so we don't get bogged down into many numbers. If we look at
Jeff Buckley, he had 12,000 pre-death and 71,005 years later, so he has an escalation. Is that right?
ich
A. Yes.

Q. But he started with only one album. Is that correct, pre-death?

A. Yes.
mM

Q. Okay. And then he added... two more albums were added after death that he already completed prior
to death. Is that correct?

A. Yes, I believe that's so.

Q. And then the song Hallelujah was in that album which turned out to be something with a life of its
a

own, and it's still very popular. Is that right?


Te

A. Yes.

Q. So that Buckley's might not even be necessarily related to his death, but there are other factors that
might question Buckley as an outlier. Is that correct?
w.

A. It could be.

Q. All right. And then we look at John Denver, a very popular... sold 244 albums, or 244,000 albums in
ww

the year before death, but only 190,000, five years later. Ray Charles, your main sample, 121,000 the
year before death, dropped all the way down to 60,000 five years later. Is that correct?
om
A. Yes.

Q. All right. Rick James, 53,000 the year before death, 40,000 five years later, correct?

n.c
A. Yes.

Q. Selena, 265,000 pre-death, 103,000 or 104,000 five years later. Is that correct?

so
A. Yes.

Q. All right. And the only one that shows an increase is Notorious B.I.G., who had 102,000 albums
before death and 134,000, if I read that right, after death. That would be a rise of approximately 30

ck
percent over five years, and you can see his numbers are diminishing year-by-year. So within a few
more years it's likely that the Notorious B.I.G. will also be below his pre-death number within a few
years. Is that right?

lJa
Mr. Voth: Objection. Compound.

Judge Holmes: Overruled. ae


A. It could be.

Q. And these are the seven artists that are listed here that you felt were very comparable to Michael
Jackson. Is that right?
ich

A. Yes.

Q. So it... based on this schedule, you would expect that Michael Jackson would be pretty close to his
pre-death volume five years afterwards. Is that right?
mM

A. No.

Q. If you look at this chart...

A. Oh, if I look only at this chart.


a

Q. Yes. This chart shows...


Te

A. Oh. I see.

Q. It shows five of seven that have diminished album sales. It shows one that has about a 30 percent
rise, and it shows one that has some special circumstances that would contribute to the rise. Is that true?
w.

A. If I looked only at this chart...

Q. All right.
ww

A. ...then, yes, I would agree with you.


om
Q. All right. But your schedule, if you take a look at the volume by year five, you show $9.238 million
projected for Jackson. Is that right, after year five?

n.c
A. I'm sorry. What chart are we looking at now?

Q. I'm referring to Exhibit 4 of your initial report.

A. Yeah, let me turn to Exhibit 4.

so
Q. That's 682-R.

Mr. Salkin: I'm glad we can use the screen. Otherwise, my apologies to the Court for the small print,

ck
but that's the way we got it.

Mr. Anson: All right. And I'm sorry, sir, your question again, please?

lJa
Q. What's the projected revenue for the Michael Jackson works after year five in Exhibit 4 of your
initial report?

A. After year five, so year six calls for sales of 5.547.

Q. Isn't your year five number 9.235 million?


ae
A. I apologize. Yes, year six, 9.238, yes, you're absolutely right.
ich

Q. All right. Compared with the Anson average... what I'll call it... 5.062 million. So it's, what, 80
percent higher...

A. Yes.
mM

Q. ...in Year 5?

A. Yes.

Q. Okay. That's contrasted with what, Page 17 of the Dahl rebuttal report would show. Is that correct?
a

A. Yes. Contrasted to Dahl, yes.


Te

Q. Now, how about year 10? Would you expect that annual sales would gradually return to predeath
levels over a 10-year horizon?

A. I think if probably promoted, the Michael Jackson phenomenon will continue well beyond a decade.
w.

Q. All right. Could you take a look at Page 50 of your exhibit... 682-R?

A. Page 50.
ww

Q. Could you look at the fourth paragraph? In fact, let me read it. "After taking the postmortem of sales
om
spike into account, royalties are projected to decline toward the level of royalties generated in the 12
months prior to Michael Jackson's death. In the second year after death, comparable celebrities saw a
higher percentage decline in sales in the third year after death. I assumed annual sales would continue
this trend and gradually return to predeath levels over a 10-year horizon." Did I read that correctly?

n.c
A. Yes.

Q. And would you look at your Exhibit 4, at your projected income for year 10, and tell me what that
says.

so
A. That says that there's a typo on Page 50.

Q. Excuse me.

ck
A. And... I'm sorry.

Q. We're on Exhibit 4 now.

lJa
A. Right, and I'm answering your question.

Q. The question is would you look at year 10 and tell me what the projected revenue is for Michael
Jackson.
ae
A. Oh, right. In year 10, it's 7.310,500.
ich
Q. Okay. That's close enough. And that's about 50 percent above the Anson average, after Year 10?

A. Close.

Q. And how about year 20? What's the number for that? Twenty years out, Year 5 or 10.
mM

A. Five. I'm sorry, go ahead.

Q. Yeah. What is the... what's the amount for Year 20?

A. 5.639,703.
a

Q. All right. So after 20 years, your projection is still ahead of the Anson average. Is that correct?
Te

A. Yes, slightly.

Q. And it's not until year 25 when your projected revenues fall to 4.883 million. You fall below the
Anson average. So it took 25 years under your projection to get back to what we would view as an
w.

Anson average, which does not even take into effect adjustments for the Thriller mini-spike. Were you
trying to maximum the number in the spike by including Ray Charles and using an average rather than
a median?
ww

A. No.
om
Q. Were you trying to make the spike look as large as possible?

A. No.

n.c
Mr. Salkin: Can I have the deposition, Page 42, Line 5 through 15.

Court Clerk: Exhibit 687-P is marked for identification.

Q. Do you recognize this as part of the transcript of the deposition that we referred to a few minutes

so
ago? It was taken on January 18th in my office.

A. ----

ck
Q. All right. Do you recall that testimony, Mr. Anson?

A. Yeah. I need to see what comes before this because this makes no sense. Let me just read it on the
face.

lJa
Mr. Salkin: Can you put the prior page up?

Mr. Anson: Yeah, the page before, thank you. Thank you.
ae
Q. Do you recall that Page 42 was part of your testimony at that deposition?

A. I don't, but I'm reading it here, so I'm sure that it was.


ich

Q. All right. Let me read it for the record to make sure I read it correctly. And you can please check me,
and so if I make a mistake, you'll let me know. "QUESTION: Didn't you take all Mr. Jackson's work
that he sang and wrote as part of your spike instead of just the two or three most popular?" "ANSWER:
Yes. But in taking the most popular, we're painting a picture of what the maximum spike could be. Let
mM

me back up. This certainly is a valid way of looking at it." "QUESTION: You said the maximum?
Maximum of what? Maximum weight of the spike and make this look as big as possible, right?"
"ANSWER: Yes." Did anyone from the Internal Revenue Service instruct you to try to maximize the
spike?

A. No. No one from the IRS gave us instructions on how to do any element of our valuation.
a

Q. So then you took it on your own, I take it, to maximum the spike. Is that correct?
Te

A. No. We took this approach because we felt what...

Q. Excuse me, you've answered so, thank you.


w.

Judge Holmes: Let him answer. Okay. Go ahead.

A. Because of the best way to track sales. We... attracting sales from SoundScan is the only way we
could get consistent sales data was by looking at their biggest albums, and that's what we did.
ww

Q. Doesn't SoundScan keep track of all albums?


om
A. We can't afford that entire subscription. We subscribed to the data that's available to the average
subscriber, and so we get data on the biggest albums. For example, John Denver has something over
140 albums out there. We can't afford to subscribe to all that data.

n.c
Q. In the case of this size, you could't afford to do it even though it might create a greatly distorted
number?

A. I don't think tracking the albums that have the largest sales distorts the number at all. It accounts for

so
whatever... 80/90 percent of an artist sales.

Q. But you have the data available, and it turned out that the spike looks much greater than it actually
was. Is that right?

ck
A. I don't believe that's so, no.

Mr. Salkin: Can we have a break for a few minutes, Your Honor?

lJa
Judge Holmes: Oh, sure.

Court Clerk: All rise.

(Recess)
ae
Court Clerk: ...in session.
ich

Judge Holmes: Please. Back to you, Mr. Salkin.

Mr. Salkin: Thank you.


mM

Q. Mr. Anson, could you turn to Page 44 of Exhibit 682-R. That's your initial report. Do you see the
graph there, Figure 15?

A. Yes.

Q. All right. It reads, "Percentage used in Michael Jackson's album sales." Is that right?
a

A. Yes.
Te

Q. And somebody looking at this, if they hadn't read the prior page, would assume that there was a
spike of 1351 percent. Is that right?

A. Yes.
w.

Q. In fact, I think Respondent's counsel even referred to that during the examination of Mr. Dahl, who
stated it as the facts of this case. Is that right?
ww

A. Yes.
om
Q. Could you take a look at Exhibit 640-P, please.

Mr. Salkin: Could the Clerk, hand him a copy of that.

n.c
Court Clerk: 640-R?

Mr. Salkin: 640-P. That's one page, and it was just...

Court Clerk: I have another copy if it will help you.

so
Mr. Anson: Thank you.

Mr. Salkin: And you recall that while Mr. Dahl was testifying, we introduced this exhibit to show the

ck
actual Jackson works revenues up to date as far as it would go. This is up to 2015. Is that right?

A. I'm not sure what you're showing me. What is this, sir?

lJa
Q. You have a chart that's entitled Mijac Music, and underneath that in italics, "Jackson works by
royalty type." You have that?

A. I see it, yes.


ae
Q. All right. And then it has the categories and mechanical performance and synchronization and other
in total. You see that?
ich
A. Yes.

Q. All right. Do we see the year 2009? And I think you heard Mr. Dahl testify the piece reflect your
end. So the 2009 would be the year ending June 30, 2009. Do you recall that?
mM

A. Yes.

Q. All right. And that showed total revenues of 5.515 million. Is that correct?

A. Yes.

Q. And then he shows 2010, which is the actual revenue one year later, which is 14,068 million. Do
a

you see that?


Te

A. Yes.

Q. Okay. And that's approximately a little less than three times the 5.515 million. Is that correct?
w.

A. Yes.

Q. So a spike at least the first year. A little less than 3 to 1, correct?


ww

A. According to this chart.


om
Q. All right. And if you look at year 2011, the actual revenue was $23.1 million. Is that right?

A. Yes.

n.c
Q. And even if we put the two years together, we'd be up at 37 million compared with 5.5 million, and
that's less than seven to one. Is that right?

A. Yes.

so
Q. And you said this morning when you were being examined by Mr. Voth that nothing has happened
that would change your opinion.

A. Yes.

ck
Q. Does this change your opinion at all in the amount of the spike?

A. No.

lJa
Q. All right. And could you also look out at the year 2015? And you see 5 million... 5.205 million.

A. Yes.
ae
Q. And is that less than 5.5 million in 2009? Look at the bottom... the total line on 2009. What's that
number read?
ich
A. It reads 5.515.

Q. Right. And for 2015, it reads 5.205. Is that correct?

A. Yes.
mM

Q. And that's less than 5.515, so that by 2015, based on Exhibit 640, Mr. Jackson's revenues were down
below the last year of his life. Is that correct?

A. According to this chart.

Q. Thank you. Did you take any steps to try to verify this chart?
a

A. I have no idea where this chart comes from or how it got put together.
Te

Q. Well, you heard him testify where he said that he obtained the actual data from date of death up to
Year 2015. Is that right? He explained it. Maybe you weren't listening at the time. You were in court
when he testified?
w.

A. Yes, and if you'll read my rebuttal report, please.

Q. This came after your rebuttal report. So in any event though, you got a chart here on Page 44 that
ww

says 1351 percent based on partial data explained on a prior page. But if you look at this page without
the prior page, you start off reading "Album sales increased 1351.9 percent from the year before death."
om
That certainly could mislead someone, couldn't it?

Mr. Camp: You have a page number on that report?

n.c
Mr. Salkin: Yeah, Page 44.

Mr. Anson: Yeah. I don't know what you're reading from.

Mr. Salkin: I'm reading from Page 44 of your report, Exhibit 682-R, the one that has the graph which

so
shows 1351 percent.

Mr. Anson: All right. So I'm... here's what I'm reading from the top of 44. "Album sales increased
1351.9 percent from the year before death to the first year after death (450,085 album sales to

ck
6,534,768 album sales)."

Q. Did you put any backup in your report that shows how you got 450,000?

lJa
A. This is the data from SoundScan.

Q. For those nine albums, correct? ae


A. This is SoundScan data for the albums listed on the bottom of Page 43.

Q. Did you take the trouble to try to find out what all of the album sales were for the year prior to this?
ich
A. We tracked only these nine in terms of establishing the spike.

Q. Okay. So you've given the implication, have you not, that this is based on all albums, but it's really
only nine? Is that correct? It's partial data?
mM

A. I believe so.

Q. And if Exhibit 640-P is correct, it's very inaccurate. Is that correct?

A. It's not inaccurate. I'm not sure what question you're asking me now.

Q. The question is if somebody looked at this chart, wouldn't they have the impression that album sales
a

for Michael Jackson one year after death were 1351.9 percent greater than the year prior to death?
Te

A. Yes.

Q. All right. And if you had all the data, as shown in Exhibit 640-P, if that's correct data, that would
show that that's an erroneous statement. Is that correct?
w.

A. The data in 6, whatever the number is that you're referring to, comes from Mr. Dahl. And if you'll
read my rebuttal report, you'll...
ww

Q. Excuse me, your rebuttal report was written before Mr. Dahl testified, so it couldn't possibly deal
with that.
om
A. Well...

Q. Let's go to another subject.

n.c
A. Yes.

Q. Let's go to BMI. And if you could take a look at Schedule 10 on Page 73 of Mr. Dahl's report, which
is 632-P. Have you seen this data before?

so
A. What page?

Q. Page 73, there's a single page, Schedule 10. This is the BMI accountings from the first quarter of

ck
2005 through the end of 2007. I believe you refer to these in your report someplace. Is that right?

A. Yes.

lJa
Q. All right. And Mr. Dahl though added something to what you might have had which was the totals at
the bottom. He totaled it up by year, 2005, '06, '07, '08, '09, '10 and so on. So it'll be a little bit easier to
work with. Do you see that? ae
A. Yes.

Q. Okay. And you see the right column the total for five years is 7.306 million.
ich
A. Yes.

Q. All right. And if you divide that by five, if my arithmetic's correct, you would get about 1.461
million average for the five years. Does that look about right to you?
mM

A. Yes.

Q. All right. And you... I believe you valued the BMI royalty rights at about $29 million, which is,
what, roughly 20 times the average of the five years before death. Is that right?

A. Give me a moment.
a

Q. Well, you should remember that. It's one of the big numbers. What you... do you have any
recollection if you were around $29 million?
Te

A. Yes.

Q. All right.
w.

A. You asked me a compound question, however.

Q. Okay. I'm sorry. In determining the spike and the return to predeath levels for BMI... I think it would
ww

be helpful if you could hear the question so you don't get confused. If you want to read...
om
A. Yeah, I'm still...

Q. ...take a moment to read... you want to take a moment to check that?

n.c
A. I'm still... yeah...

Q. That's fine.

A. ...I'm still answering your BMI question.

so
Q. All right. Excuse me for jumping ahead. I sometimes tend to talk too fast.

A. All right. Your earlier question was, did we value BMI at 28.7 million. The answer to that question

ck
is yes. I think your other question was, was that 20 times 2.159 million. The answer to that question is
no.

Q. No. The question was we looked at the total, in the lower right corner... excuse me... 7.306 million.

lJa
Do you see that?

A. Yes. ae
Q. And if we divide that by five, you get a five-year average. Would we get 1.461 million? I think you
answered yes, but you want to check the arithmetic for a minute?

A. But why would I do that?


ich

Q. Well, you'd get a five-year average. That might be a starting point to leveling out because you elude
into that Thriller came out in 2008 that would possibly escalate these numbers for 2008 and 2009. So
maybe you might want to look at a five-year average.
mM

A. No. You wouldn't want to do that.

Q. Oh, you wouldn't want to look at a five... you'd just want to look at the last year, the 2.159 number
that's based on the mini-spike with Thriller. Is that the way you would do it?

A. I'm sorry. I think that was two... at least two questions that...
a

Q. All right. Do you prefer to value this by using 2.159 million as the base for your computation of the
spike?
Te

A. Well, you'd look at the trend line. If we're running the whole calculation for BMI now, we can do
that. But if just in general, you would not use a simple average. Certainly, you would look at the trend
line that goes from 9.97 to, you know, 1.38 to 1.71 to 2.16. So you don't use the simple average, Mr.
w.

Salkin.

Q. Well, when you computed what we call the Anson average, it wasn't so simple. I mean, you took one
year, plus another year, plus two times a half year, and you got an average. That was an average. That
ww

wasn't so simple, but you did it.


om
A. Mm-hmm. Yeah, we don't...

Q. You might be able to figure a simple average here, can't you?

n.c
A. I'm sorry.

Mr. Voth: The question is compound and argumentative.

Judge Holmes: Oh, sustained. Complaint taken, Mr. Salkin.

so
Mr. Salkin: All right. You used what you... you termed the three-year average on the Jackson works...
excuse me, I'm getting excited and losing my voice.

ck
Mr. Anson: We've got some Ice Breaker mints. I just borrowed a couple over here at the table myself.

Q. So anyway, what you've done to create the base, contrary to what you did with the other Jackson
works, you started with the last year's revenue to compute your spike. Is that correct?

lJa
A. I honestly am lost by that question.

Q. Well...
ae
A. First, I've asked you to repeat something when I'm lost.

Q. Okay. You mention a base of 2.159 million. Is that correct?


ich

A. Yes.

Q. Okay. Where did you derive that number?


mM

A. All right. If we count up... if we want to go through the whole BMI... but the essence...

Q. No. Let's stay with this one number. We start... let's get the base set, then maybe we can work with
the rest of it.

A. Right.
a

Q. What was your base, Mr. Anson?


Te

A. So we started from the BMI royalties attributable to the other writers and the BMI royalties to
Jackson.

Q. Right, and we're just talking about Jackson here.


w.

A. Right. And so we then attributed a spike in sales to Jackson.

Q. Well, let's start with the base, if we could, please.


ww

A. Okay.
om
Q. What's the starting point for 2009?

A. The starting point for 2009 is 63 percent of the base of the prior year's trend line, and it's projected

n.c
to grow. On Exhibit 8... I'm sorry to do this to you because I wasn't thinking about doing mechanical
computations on this end. And then the balance of Jackson's compositions are growing at a negative
growth rate of 2.8 percent.

Q. Okay. Where in your report? Exhibit 682- P, you explain where you calculate the base. We talked

so
about trend line and a few other things that I didn't quite understand, and I don't recall reading. Could
you take a look in your report and see if you can find it?

A. Right. Then the first year after death the...

ck
Q. I'm talking about the base. If you could... what page are you on?

A. I'm on Page 55.

lJa
Q. 55?

A. Mm-hmm.
ae
Q. Okay. Just a minute, please. Okay. And where are you reading?

A. In the second full paragraph in the middle of the... in the middle of that paragraph, in the first year
ich
following Jackson's death.

Q. Excuse me, I'm not...

A. It begins the... the sentence begins, "In the first year."


mM

Q. Mm-hmm.

A. "In the first year following Michael Jackson's death"...

Q. I'm having trouble finding where you are.


a

A. Okay. I'll hold on.


Te

Judge Holmes: Look in the middle of Page 55.

Mr. Salkin: I see. All right.


w.

Judge Holmes: Are you there, Mr. Salkin?

Mr. Salkin: Yes.


ww

Judge Holmes: Go ahead.


om
A. And just above...

Q. You're talking about the increase...

n.c
A. Right.

Q. ...on here? Is the spike you had before with respect to the other Jackson works? Is that correct?

A. Yes.

so
Mr. Voth: Your Honor, the witness was in the middle of answering the question...

Mr. Anson: Yeah.

ck
Mr. Voth: ...before the subsequent question.

Mr. Anson: Right. So let me just...

lJa
Judge Holmes: Overruled for now, but...

Mr. Voth: Okay.

Judge Holmes: Go ahead.


ae
Mr. Salkin: Were...
ich

Judge Holmes: Are you done... wait... are you done with your answer, Mr. Anson?

Mr. Anson: No sir, I'm not.


mM

Judge Holmes: Okay. Finish your answer first.

A. So in the first year following death, the 63.8 percent of BMI royalties attributable to Jackson are
projected to increase by the amount of the spike, the 461 percent. And then the second and third years
after that, they decline by 89 percent the second year, 47 percent in the third year. And then, they go
down by 10 percent, 10 percent, 5 percent. And that's spelled out in one of the exhibits. The other
artists, both major and minor, have a growth rate of minus 2.8 percent.
a

Q. Okay. When you... please go back to prior screen of 631 percent... 461... what number did you
Te

increase by 461 percent? That's my question.

A. Right.
w.

Q. It's a physical number.

A. Right. We took a three-year average, not a five-year average. We took a three-year average of
'07-'08. And...
ww

Q. What's exact numbers? Do you have that there someplace?


om
A. That I can't give you off the top of my head, I'm sorry.

Q. Can you take a look at your report and see if you can find it?

n.c
A. Now, let me see if I can find it, the right exhibit for you. The historical royalties for the Jackson
released songs are in Exhibit 5, and the historical royalties and the Jackson royalties for major works
are in Exhibit 6.

so
Q. Excuse me, we're looking... the BMI. This is just a piece of it in Exhibit 5? Excuse me, on Exhibit 5,
I see...

Mr. Voth: Your Honor,...

ck
Mr. Salkin: 5061, which is the average...

Judge Holmes: Hold on, hold on, hold on, Mr. Salkin.

lJa
Mr. Voth: If it's helpful, I may be able to identify the exhibit in terms...

Judge Holmes: Sure. Give us the number.

Mr. Voth: I think it's Exhibit 16, could be.


ae
Mr. Anson: Thank you, Mr. Voth. Let me get to...
ich

Mr. Salkin: Do you have 16, Mr. Voth?

Mr. Anson: Yes. It is...


mM

Mr. Voth: Correct, Mr. Salkin.

Mr. Anson: Thank you, Mr. Voth.

Judge Holmes: Okay. Back to you, Mr. Salkin.

Mr. Anson: Exhibit 16, Mr. Salkin.


a

Mr. Salkin: All right.


Te

Mr. Voth: B.

Mr. Salkin: Could somebody give me my magnifying glass? It's sitting over by Mr. Toscher. Sorry, my
w.

eyes aren't that good. ??. Can you blow it up on the screen so it can be... there it is.

Q. We have an average annual income of $1.2 million. Is that right?


ww

A. That's correct.
om
Q. Okay. Is that base that you worked with when you started to apply the spike?

A. Well, you have to add domestic and foreign together, so you have your domestic, and then your
historic... your international, excuse me... foreign plus domestic.

n.c
Q. Oh, so that'd be the 261,000 plus 1.2 million. Is that right?

A. Well, you take a three-year average. You have your...

so
Q. No, excuse me. I'm just looking at the screen to make sure...

A. No, I apologize. That simply is an indicator of what... all the quarters going back to 2004. But to get
at your average... to get at the historical take-off point, you add 2007, 2008, the first two quarters of

ck
2009. And that's the revenue base from which we do our take-off.

Q. And did you double the first half of 2009 on this one also?

lJa
A. Yes.

Q. And what number did you come up with when you took all of 2007, all of 2008, and two times 2009
for another Anson average?
ae
A. It doesn't have to be known forever as the Anson average. I can't give you that total. I'd have to have
a calculator to run that off for you. I can do that for you at the break.
ich
Q. All right. We might check back on that.

A. Thank you.

Q. But the Anson average on this would be much, much higher than just a pure average of the two and
mM

a half years, wouldn't it?

Mr. Voth: Your Honor, can we get a clarification as to what the Anson average Mr. Salkin is referring
to.

Mr. Salkin: Well, we just...


a

Judge Holmes:: What are you talking about specifically, Mr. Salkin.
Te

Mr. Salkin: Okay. If we just took the total of four... 2008-'07, which is 1.379 million, plus 2008, which
is 1.717 million, that number's in front of you, and we took 2,159,000 for half of 2009, except, if you
look at the schedule, this totals it by quarter, and it appears that the 2009 number would take care of
four quarters. Is that right?
w.

A. I'm not following your question.

Q. Okay. Would you take a look at the schedule? You have the total for 2009 of 2.159 million at the
ww

bottom.
om
A. Which...

Q. 632-P, BMI schedule.

n.c
Mr. Voth: So we're still at Exhibit 16, Mr. Salkin? What schedule are we referring to, for the record?

Mr. Salkin: Schedule 10, Exhibit 632-P, which is the schedule of revenue from BMI.

Mr. Voth: Okay. So we're back to Mr. Dahl. Okay. Thank you, Mr. Salkin.

so
Judge Holmes: Okay. I'm not there yet. Okay. Page 73, also known as Schedule 10 of the Dahl primary
report 632-P. Go ahead, Mr. Salkin.

ck
Q. All right. If you look up above the line totals, there's four items that talk about quarters of 2009. Is
that right?

A. Yes.

lJa
Q. And if you add those together, I believe you'll come to 2.159 million.

A. All right. I accept for a moment that that's correct.


ae
Q. All right. So then, what you said you've done, you've averaged the 1.379 and the 1.717 and the
2.159 to get your base. Is that right?
ich
A. I don't have a calculation in front of me. For a moment, I'll make that assumption with you.

Q. Okay. Because I add it in my head. I get about 5.1 million altogether. Does that look about right?

Mr. Voth: Your Honor, this line is unclear aso to specifically what Mr. Salkin is referring to.
mM

Mr. Salkin: All right.

Judge Holmes: Okay. Let's... okay. I can understand, Mr. Salkin, that you get the 2.15 number from the
sum of the four numbers in the right-hand column of Schedule 10, Page 73 of the Dahl report. It had a
summary of BMI accountings. That's the sum of the last four quarters of BMI payments to Mijac before
Mr. Jackson's death. What other number are you talking about?
a

Mr. Salkin: Okay. The other number I'm asking for is the base that he used to apply the spike to and
Te

apply the subsequent cash flow to.

Mr. Anson: And I don't have my work papers here, and I already told you that I can, at the break, add
these numbers up for. I'm not clear what you're asking or where we're going or what... in aide of what...
w.

Mr. Salkin: Okay, yeah. If I told you it was about $1.7 million, would you take a look at your Exhibit
15 of Exhibit 682-R.
ww

A. Is that my original report?


om
Q. Yes, that's your original report.

A. Exhibit 15.

n.c
Q. Could you look at year 10 on what you have as your projection for BMI.

A. Yes.

Q. And it's 2.272 million. Is that correct?

so
A. Mr. Salkin, again, to what are we referring?

Q. Your Exhibit 15.

ck
A. Yes.

Q. Year 10, estimated revenues. The draft. Let's move to something else.

lJa
A. That just doesn't make sense to me. I don't know what you're asking me.

Q. Let's talk a little bit about the posthumous releases. Just one other question on BMI. On calculating
ae
your estimated growth and return back, does that parallel what you did for the Jackson works that we
talked about earlier?

A. It follows the same basic pattern.


ich

Q. Okay. Thank you. Now, you valued unreleased compositions at $21.6 million. Is that right?

A. Yes.
mM

Q. And you assume that, at Michael Jackson's death, there were a minimum of 105 unreleased
completed recordings. Is that right?

A. Yes, sir.

Q. And then, you increased it in your report, Exhibit 682-R, at Page 27, up to 133 unreleased
compositions. Is that right?
a

A. Yes.
Te

Q. Every time you release that... increased that number that obviously increases the value, doesn't it?

A. Well, yes. Yes, in principal, that's true.


w.

Q. And you based that information, in large part, on information from Mr. Tohme. Is that right?

A. No.
ww

Q. Well, you do cite, as one of your references, an interview of Mr. Tohme of April 16, 2016. Is that
om
one of the things that you relied on?

A. No.

n.c
Q. You didn't rely on that at all?

A. No.

Q. All right. I must have misread your report. I'm sorry.

so
A. No. Mr. Tohme was... an interview, but he was not a primary or even a secondary source of
unpublished songs.

ck
Q. So he wasn't the source of your information.

A. Excuse me, Mr. Salkin, I was in the middle of an answer.

lJa
Judge Holmes: Let him finish, Mr. Salkin. Go ahead, Mr. Anson.

Mr. Anson: He was... thank you, Your Honor. He was neither a primary nor even a secondary source of
information on unpublished songs.
ae
Q. Well, did you make the statement at the deposition taken by Mr. Toscher concerning name and
likeness that you agreed that if Mr. Tohme was not telling the truth, you would have to change your
opinion? Do you recall that? Why don't we get these deposition pages in front of you so you can take a
ich
look.

A. Yes, let's do.

Mr. Voth: Objection, Your Honor. It's beyond the scope, especially to name and likeness, and not
mM

unreleased...

Judge Holmes: Maybe. Let's see where he goes with it because we do have the synergies point that
was appraised at the beginning there.

Mr. Voth: Fair enough, Your Honor.


a

Mr. Salkin: Yeah. Mark these next exhibit.


Te

Court Clerk: Exhibit 688-P is marked for identification.

Mr. Salkin: Referring to Page 161, Line 16, and 161 is the page in the lower right corner. Let me read
it to you, please. "Let me ask you the question again. If the information Mr. Tohme provided you was
w.

inadequate, you don't think that is important to your valuation?" "If he was lying, it would be
important." "Why is that?" "If he was lying, the facts would be untrue." "QUESTION: That could alter
your opinion." "ANSWER: He is one data point"... excuse me, I'm reading onto the next page also...
"that would have an impact." "An important data point?" "ANSWER: It would depend on what it is."
ww

"QUESTION: Depending on what he lied about?" "You asked if he lied." "And assuming that, would it
impact your conclusions if he had lied on a certain point regarding what was going on with the estate
om
before Michael died, impact your opinion as to whether these monetization opportunities were
reasonably foreseeable." I'll stop there. So...

Mr. Voth: All right. Respondent renews his objection. This was a deposition for his name and likeness

n.c
report and these are questions directly to the opportunities derived from the name and likeness.

Judge Holmes: Well, I also don't see any way that... are you saying this somehow impeaches the
witness?

so
Mr. Salkin: Well, his report relies in part, at least on Mr. Tohme, and it's like that in a footnote, is the
source of his information.

Judge Holmes: Indeed. And he also says in his deposition that Mr. Tohme's lying. That would be

ck
important. That's not impeaching this witness.

Mr. Salkin: That's...

lJa
Judge Holmes: All right? Am I missing something here?

Mr. Salkin: Well, he said he's relied on Mr. Tohme.


ae
Judge Holmes: Right.

Q. If you look at Page 58 of your original report, the 682-R.


ich
A. Is there a question pending on this deposition?

Q. No. I asked you to look at Page 58, if you would, please. And I'll have a question once I get there
and you get there. Could you take a look at the next to last paragraph. Let me read that to you, if I may.
You had: "April 12, 2016 interview with Michael Jackson's former manager, Dr. Tohme Tohme. He
mM

confirmed that Michael continued to create new music until the time of his death. Specifically, he noted
that Michael had developed lots of new music while living in Las Vegas and continued to do so after
moving back to Los Angeles in 2008." Did I read that correctly?

A. Yes, you did.

Q. Does that affect your statement that you did not rely on Mr. Tohme?
a

A. I stand by my statement. That quote right there is the sum total of his contributions of my research
Te

on unpublished songs of Mr. Jackson.

Q. Then you also said you rely on a press report that quoted someone named Tommy Rozzola.
w.

A. Mottola?

Q. Mottola. You never interviewed Mr. Mottola, did you?


ww

A. No.
om
Q. And you really didn't know what Mr. Mottola knew or did not know, did you?

A. He's strictly a secondary research resource.

n.c
Q. But you were aware that there was a very publically and highly publicized falling out between Mr.
Mottola and Mr. Jackson. Were you aware of that?

A. I was actually in New York when Michael rode up and down in his bus.

so
Q. And what happened then?

A. Well, it was a public feud. It made the papers, obviously. And I think that his demonstration in that
open-top bus had an impact on Sony, and they came to a resolution of the dispute.

ck
Q. And that might have created a great deal of hostility between Mr. Mottola and Mr. Jackson, right?

A. Yes, which makes Mr. Mottola's statement about unpublished songs, I think, even more believable.

lJa
Q. Okay. I'd like to move to strike any reference to Mr. Mottola's hearsay in his report.

Mr. Voth: Your Honor, he's asking him...


ae
Judge Holmes: Overruled. It's the basis on which he made the report. Go ahead.

Mr. Salkin: All right. And then another source was from the Wikipedia to locate 153 songs.
ich

A. Yes.

Q. And that was a very good source. And then a purported deposition from Michael Jackson in 1993.
mM

A. Yes, sir.

Q. That's what, 10, 20, 25 years ago?

A. Nearly.

Q. So there could have been lots of things in 1993 that could be very different now?
a

A. Yes.
Te

Q. Okay. And then you relied, in part, on the book Michael Jackson: For the Record, Randall Sullivan,
Untouchable.
w.

A. Yes.

Q. And that told the story about how Mr. Sullivan took a terrible loss as a result of a Jackson venture.
And then you said you relied on the May 15 Shot Tower report that identified 15 songs, right?
ww

A. Yes.
om
Q. Did you or your associates interview anyone besides Mr. Tohme with respect to the unreleased
songs?

n.c
A. Yes.

Q. Who.

A. Let's see, I know I discussed the topic with the editor at Forbes Magazine, who specializes in

so
celebrity... dead celebrity licensing.

Q. Okay. Did you cite that as one of the sources in your report?

ck
A. I'm not sure I bothered to, no.

Q. I guess it couldn't have been very important. Anybody else?

lJa
A. We read a... I read a number of other books.

Q. No. I'm talking about interviews. ae


A. Oh, I'm sorry. I apologize. I don't recall at the moment.

Q. Okay. And you recall if either... if Mr. Noble and Mr. Anderson here that have been assisting during
the trial, do you recall if they interviewed anybody besides Mr. Tohme?
ich

A. Yes, but I'd have to go back to my notes. I don't recall at the moment who.

Q. Are any of them referred to in your report?


mM

A. No. I don't believe we listed interviews.

Q. Okay. Now, you talk about this Mexican deposition. Have you seen it?

A. Yes.

Q. How did you obtain it?


a

A. I don't recall how we obtained the abstract from the deposition.


Te

Q. Oh, an abstract is what you saw?

A. Yes.
w.

Q. Not the deposition itself?

A. Excuse me. That's correct.


ww

Q. Do you know who prepared the abstract?


om
A. No.

Mr. Salkin: I need to strike any references to this 1993 deposition of what we saw as an abstract and he

n.c
had nothing prepared.

Judge Holmes: Overruled. He relied on it. We need to know how we got to where he got it? Go ahead,
Mr. Salkin.

so
Q. All right. Did you listen to the testimony of John Doelp from Sony the other day?

A. Yes.

ck
Q. And he testified what he did for Sony, and he was able to put together about 12 songs that could be
released. Do you recall hearing that?

A. Yes, sir.

lJa
Q. And then, the day before that, did you hear the testimony of Matt Forger, the sound engineer?

A. Yes.
ae
Q. Yes. And he testified that he was involved with many of Michael Jackson's recordings.

A. Yes.
ich

Q. Okay. And then you heard from Karen Langford about all the efforts she made to try to locate usable
material.

A. Yes, I did.
mM

Q. And John Branca had similar testimony. Is that correct.

A. Yes.

Q. And you relied on newspaper articles, almost no interviews for determining his over 100 releasable
songs and albums of Michael Jackson that exceeds what was released during his whole lifetime.
a

Mr. Voth: Objection. This here is mischaracterizing.


Te

Judge Holmes: He hasn't finished his question yet, I don't think.

Mr. Voth: Oh, I thought he did. I apologize.


w.

Judge Holmes: Have you finished your question, Mr. Salkin?

Mr. Salkin: Yes. Yes, I did.


ww

Judge Holmes: Oh.


om
Mr. Voth: Okay.

Judge Holmes: Yes. Now it's your turn, Mr. Voth.

n.c
Mr. Voth: I think he's mischaracterizing ?? that he read several books as well.

Judge Holmes: That one.

so
Mr. Salkin: I'm sorry. What was the last thing Mr. Voth said?

Judge Holmes: He read some books as well.

ck
Mr. Salkin: Okay. Let me ask the next question.

Judge Holmes: All right. That's a misstate. He did read some books as well.

lJa
Mr. Salkin: Based on...

Mr. Anson: May I answer the question? ae


Judge Holmes: No. I sustained the objection.

Mr. Anson: Oh, I'm sorry.


ich
Judge Holmes: So there has to be a new question.

Mr. Salkin: After hearing the testimony of Mr. Doelp, Mr. Forger, Ms. Langford and Mr. Branca, you
will agree with me will you not, that these witnesses were all consistent in testifying that there are
approximately a dozen completed recordings at the time that Michael Jackson died?
mM

A. Well, at the time he died, that may be true. However... I'm sorry, Mr. Toscher?

Mr. Toscher: I'm talking to my client.

Mr. Salkin: Yes. At the time he got...


a

Mr. Anson: I'm sorry.


Te

Mr. Salkin: All right.

Judge Holmes: Let him answer. Let him answer.


w.

Mr. Salkin: I believe he answered, Your Honor.

Mr. Anson: No. I'm not finished, Mr. Salkin. We also heard testimony that... from others who said
there's 40 songs out there. There could be 60. And we've also heard testimony there's up to 10,000
ww

snippets or what do they call them, artifacts of recordings.


om
Q. What testimony are you referring to...

A. They've not all been listened to.

n.c
Q. ...at this point?

A. They've not all been listened to. We don't know what might be left in the unlistened to.

Q. Excuse me, Mr.... when you said...

so
Judge Holmes: This is the 10,000 pieces, Mr. Salkin.

Mr. Salkin: He said 10,000...

ck
Mr. Voth: May the witness be allowed to finish his answer.

Mr. Salkin: What testimony are you relying on?

lJa
Judge Holmes: Hold on, Mr. Salkin. Are you done with your answer?

Mr. Anson: I just wanted to include by saying the following. The 10,000 pieces, snippets of recordings.
ae
Not all have been listened to. We also heard testimony from at least one witness who said there was...
there were 40 songs. My final point that I didn't... wasn't allowed to say earlier is that we also submitted
a list of songs to the estate. There were about 80 songs in the list. They confirmed many songs of being
in existence. So we attempted to do our research with the estate also to the extent that we could, Mr.
ich
Salkin.

Q. Yes. You mention a Forbes interview. Was there any other interviews you had besides Forbes?

A. As I said a moment ago, I don't recall.


mM

Q. All right. But to my recollection, none of them were referred to in your report. Is that right?

A. Right. We did not refer to any interviews.

Mr. Salkin: Let me go just a little bit more, then we can maybe break.
a

Mr. Anson: We could wrap up before lunch.


Te

Mr. Weitzman: Want to wrap up now?

Mr. Anson: Yes. That would be ideal, Mr. Weitzman.


w.

Judge Holmes: Mr. Weitzman.

Mr. Salkin: All right. We'd like to wrap up, Your Honor. Would that be all right? Not wrap up, just take
a break. We have a few more questions.
ww

Male: We could wrap up Mr. Anson.


om
Judge Holmes: Well, ask a few more questions.

Mr. Salkin: All right. We can proceed.

n.c
Q. During these proceedings, you heard testimony from several people that mention Michael Jackson's
difficult financial condition in the last five or ten years of his life. Is that correct?

A. Yes, sir.

so
Q. And it was almost desperate, wasn't it, as described.

A. As described, yes.

ck
Q. He caused Mr. Kane to go to AEG and do whatever he could to get a million dollars. Do you recall
that testimony.

lJa
A. That... it was... yes, it was sad. It's a sad story, yes.

Q. And that there was scheduled an auction at Julian's to auction off his memorabilia.
ae
A. Yes.

Q. And that was because he needed money very badly.


ich
A. Yes.

Q. You'll agree with me that if Michael Jackson had hundreds of unreleased recordings, as you assumed
in your report, that would have provided a great source of income, would it not?
mM

A. Theoretically, yes.

Q. Income he really needed to take care of his family so he wouldn't be fined on the mortgage
payments on his mother's house.

A. Yes, mm-hmm.
a

Q. And yet, to your knowledge, there were no efforts by Michael Jackson to try to sell these assumed
records, was there?
Te

A. Evidently, not.

Q. And he had to go out and borrow money from AEG to support his family. And then he made efforts
w.

to sell his memorabilia.

A. Yes.
ww

Q. Okay. I think we have a good break point now, Your Honor. We can go farther, if you'd like.
om
Judge Holmes: How much more do you have in your cross, do you think?

Mr.Salkin: One to two hours.

n.c
Judge Holmes: This would be a good time to break then. An hour break.

(Break)

Court Clerk: All rise.

so
Judge Holmes: Please be seated. Thank you, Mr. Salkin.

Mr. Salkin: Thank you.

ck
Q. Mr. Anson, before our break, you indicated that during the break, at the lunch break, you would add
up the numbers on Exhibit 632-P to be able to advise the Court how you determined the base for the
BMI royalties. Did you have a chance to do that?

lJa
A. I missed the very end of that. Add up what?

Q. Did you add up the numbers at the bottom right corner of Exhibit 632-P in order to determine how
ae
you determined the base of the BMI royalties on which you built your projection. Did you have a
chance to do that?

A. Yes, if we can go there... back to Exhibit 15.


ich

Q. Is that of your report?

A. Yes, it is.
mM

Q. Okay.

Mr. Salkin: Exhibit 15. I've got it here. I can read it.

Mr. Toscher: Have you got Page number 2, counsel?

Mr. Salkin: Look, I have it it in front of me. I think it's on the screen.
a

A. Right. And we take our historical royalties from Exhibit 16.


Te

Q. What... excuse me, could we start there. Is that determining the base?

A. Yes.
w.

Q. Okay. I'm on 16 now.

A. And we have our historical royalties from Exhibit 16, and we carry those forward to Exhibit 15.
ww

Q. Let's stay with 16 for a moment.


om
A. Mm-hmm.

Q. This has... historical it has average annual income $260,906. Is that right?

n.c
A. Yes, for domestic.

Mr. Voth: Your Honor, may I ask that...

so
Mr. Salkin: Average annual income of $1,200,465. Is that right?

Mr. Voth: Just stop. Your Honor...

ck
Judge Holmes: Okay.

Mr. Voth: ...talking could be used to interrupt.

lJa
Mr. Anson: Yes. The domestic...

Judge Holmes: All right. I'll watch, Mr. Voth. Now, I'm interrupting. Okay. Mr. Anson?
ae
Mr. Anson: Yes.

Judge Holmes: I'll stop interrupting you. Go ahead.


ich
Mr. Anson: Thank you, Your Honor.

Domestic plus foreign royalties are averaged. Then you see the average annual income for domestic
and foreign. And...
mM

Q. Is that these two items here on 42?

A. Yes.

Q. All right. And if my addition is correct, it's about a 1,461,000. Is that about right?

A. Yes.
a

Q. Okay. I guess I was right after all. Did that form the base then that you built your projections on?
Te

A. Yes.

Q. Okay. Enough of that. You mentioned bundling during your direct testimony today. Where do you
w.

refer to that in your original report?

A. I don't know where or if the words are used.


ww

Q. How about the concept?


om
A. I don't think I would mention the concept in the report.

Q. That's in your original report.

n.c
A. Correct.

Q. Right. And that's what you were retained to write originally by the Internal Revenue Service
representatives. How about your rebuttal report?

so
Mr. Toscher: He's got to voice the answers. He's shaking his head.

Mr. Anson: Oh, I'm sorry, Mr. Toscher.

ck
Mr. Salkin: Yeah. Can you make an audible response, please?

A. Yes. And the answer's yes.

lJa
Q. The answer's yes, and you don't recall if there's anything in your report that deals with that using the
concept or the word.

A. No. That's correct.

Q. All right.
ae
A. They're not referred to.
ich

Q. All right. And you also wrote a rebuttal to Mr. Dahl's report, didn't you?

A. Yes.
mM

Q. And that was in December after you had Mr. Dahl's report for close to two months?

A. Yes.

Q. All right. Did you make any mention of the concept of bundling in that report?

A. In the rebuttal report? No.


a

Q. So then, the only time it ever came up was in your supplemental report on the eve of trial. Is that
Te

right?

A. I believe I mention it in the supplemental report.


w.

Q. Now, who told you to do that kind of analysis?

A. I've been doing that "kind of analysis" for 30 years.


ww

Q. You were retained, according to your reports, to value the estate's interest in Sony/ATV. Is that
correct?
om
A. Yes.

Q. Okay. And the right of publicity or name and likeness, you were retained to do that. Is that right?

n.c
A. Yes.

Q. And you were retained to value the Mijac Catalog. Is that right?

so
A. Yes.

Q. Okay. And based on your 25 years' experience in the industry, where you see a catalog, a music
catalog, you know from your experience, do you not, that that represents to writer's shares only. Is that

ck
correct?

A. I'm sorry. Please say that again.

lJa
Q. Yes. Based on all of your experience in the music industry, you are aware, are you not, that a
publisher's catalog relies on the writer's share of revenue as its revenue. Is that correct?

A. Yes.
ae
Q. Okay. Let's go now to Page 74 of your original report, 682-R. Do you have that page?

A. Yes, sir.
ich

Q. Okay. Could you look at Figure 32? And that is titled Mechanical Royalties Per Album Sold
Domestically. Is that right?

A. Yes.
mM

Q. And there's a number of $0.93 at the bottom. Can you tell me what the $0.93 refers to?

A. This is based on a... assuming 11 songs... excuse me... 11 songs per album. And the mechanical
royalty, that at the time was approximately $0.091 per album for a total of $1.10 per album. Per the
quote just above there, the June 1980 agreement between Michael Jackson and Warner Bros., 92.5
percent of the mechanical royalties would be paid to Michael Jackson. And this would result in Michael
a

Jackson receiving approximately $0.93 per album. And that's the computation you see in Figure 32.
Te

Q. Right. And you mentioned, I believe, that if there are other writers, that would be divided among all
the writers to the extent they participated in the compositions. Is that right?

A. Yes.
w.

Q. So it could be $0.93, or it could be something less. Is that correct?

A. Yes.
ww

Q. Okay. Now, could you look to Page 78, Figure 38? That is entitled Mechanical Royalties Per Album
om
Sold Internationally. Is that correct?

A. Yes.

n.c
Q. And it ends up with a $0.73 amount, the bottom of that figure. Is that right?

A. Yes.

Q. Could you explain how that's derived?

so
A. Yes. If you turn back one page to 77, you'll see a quote from the same June 1980 agreement between
Michael Jackson and Warner Bros. in which they outline... no, I specifically state that 75 percent of the
mechanicals will go to Michael Jackson. And on Figure 38 on Page 78 that we're referring to, the

ck
mechanical royalties, which are 10.4 percent on average in the international marketplace... and I'll need
to explain that you, I think, how we get to 10.4 percent... equals a mechanical royalty per album of
$0.98. Seventy-five percent of that mechanical royalty, therefore, is $0.73 per album.

lJa
Q. Okay. Could you look at Page 69 of your report that I keep forgetting the exhibit number?

A. Can we just refer to it as my original report? That would make it easier for me.
ae
Q. Yeah. 682-R. Well, the record is usually clearer if the exhibit number is properly referred to, so I'm
trying to do that, you know. Unfortunately, I overlooked it.

Mr. Salkin: And my apologies to Your Honor.


ich

A. All right. Yes, Page 69. I see that.

Q. Can you look at Figure 27 at the bottom?


mM

A. Yes, I see that.

Q. Okay. It says Michael Jackson Career Sales Distribution. What does that explain?

A. This is a division of album sales between domestic and international. We were not able to discern
from the data provided to us from the estate this division. We relied, therefore, on an in-depth article
from the Wall Street Journal that analyzed Michael Jackson's career album sales. According to that
a

article, 55 percent were international sales and approximately 45 percent were domestic sales.
Te

Q. So if you took this weighting and had the $0.93 on domestic and $0.73 on foreign, you would end
up right around $0.82 per album if you tried to combine in total album sales. Would that be about right?

A. Simplistically, I need to do a quick computation.


w.

Q. Okay. It's about halfway between 73 and 93.

A. Yes.
ww

Q. Okay. Going to your Exhibit 26 of Exhibit 682-R, do you see you listed five albums and you
om
averaged them and came to 1,079,000 albums? Is that correct?

A. Yes.

n.c
Q. And that was domestic, right?

A. ....

Q. And the bottom was foreign, I believe. And that's, if my eyes are right, about 1,332,000. Is that

so
about right?

A. Yes.

ck
Q. Okay. Could you turn to Page 51 of your report and take a look at Figure 16? Is it fair to say that
you relied on that to estimate a decline of about 2.8 percent per year? Is that correct?

A. Yes.

lJa
Q. And that would be from... based on 1994 through 2009. Is that right?

A. Yes.
ae
Q. Did you do a calculation of what the decline per year would be if you started in 1999, which is
before the introduction of all these other ways to listen to music?
ich
A. I'm sorry. The question is did I what?

Q. Did you try to make a calculation of the decline between 1999 and 2009?

A. I don't recall.
mM

Q. But looking at the chart, it seems like the number's a little over 14,000 in 1999. Does that look about
right?

A. Yes.

Q. Okay. And the number would look about maybe 7,000 in 2009?
a

A. Approximately.
Te

Q. So that could be a drop of close to 50 percent over that 10 years... is that correct... from 14,000 to
around 7,000? It could be off a few percentage points?
w.

A. Approximately.

Q. Ballpark. Did you take that drop into effect when you worked with the numbers that appeared on
your Exhibit 26?
ww

A. We... well, we used this...


om
Q. Well...

A. I'm sorry.

n.c
Q. I'm sorry. Go ahead.

A. We used the compound long-term annual growth rate of a negative 2.4 percent.

so
Q. Is that adjustment shown in Exhibit 26?

A. Exhibit 26 deals with a single year sales. I'm not sure what your question is.

ck
Q. Well, we have sales albums in Year 1 depicted in Exhibit 26. Is that correct?

A. Yes.

lJa
Q. And that's by number of albums.

Mr. Voth: Your Honor, if I may clarify, I think what's up on the screen is Figure 26. Maybe that's
what's causing the...

Mr. Salkin: Yes.


ae
Mr. Voth: ...confusion.
ich

Mr. Salkin: Oh, no. Excuse me. I'm looking at Exhibit 26.

Judge Holmes: Exhibit or figure?


mM

Mr. Salkin: Exhibit 26, not Figure 26.

Judge Holmes: Oh, okay. Thank you, Mr. Voth.

Mr. Salkin: Yeah, it's confusing. Exhibit 26 and Figure 16... I'm working with both of them.

Q. Are you on Exhibit 26 again, Mr. Anson?


a

A. I am.
Te

Q. Okay. In... when we looked at your Figure 16 showing the arrow going down where there's a drop of
close to 50 percent in revenues over a period of 10 years, did you take any of that into effect in trying
to project these first year of sales to 2009 or 2010?
w.

A. Well, I'm just... I'm only dealing with a single year here in Exhibit 26. So the growth rate doesn't
apply to Exhibit 26.
ww

Q. Well, but for 2006, for example, you have the first album HIStory: Past, Present and Future. And
you have 2,063,000 sales, right?
om
A. Yes.

Q. Okay. Now, if we're comparing 1995 with 2009, there's a decline in the industry. Is that right?

n.c
A. Yes.

Q. Okay. And did you adjust that $2,063,000 to reflect the decline? Or to... that's units, I assume.

so
A. Yes, those are units.

Q. Yes.

ck
A. Yes.

Q. You did decline... did you adjust that downwards?

lJa
A. I'm sorry. I misspoke. No, we did not.

Q. All right. And so that your $1,078,000 average, if you took into effect the decline that you showed in
your Figure 16... that's the exhibit with the arrow going down... that number would drop significantly,
wouldn't it?
ae
A. Yes, it would be adjusted downwards.
ich
Q. All right. And the same with your foreign where you had 1,332,000 albums sold has an average of
these years... would that also have a decline if you took the industry trend into account?

A. Yes.
mM

Q. We talked before about medians and averages. I think you indicated you used a median with respect
to Sony/ATV, and then you used an average when you got to Ray Charles and the other popular artists.
Which did you use here?

A. Here we just used a simple average... a total and a simple average.

Q. So you preferred the average here rather than the median. Is that right?
a

A. Yes.
Te

Q. And would a median have produced a lower number?

A. A median would have produced a number less than 1079.


w.

Q. About 30 percent less, right?

A. It would have produced a number of 771,692.


ww

Q. Right. And that's about a 30 percent drop from 1,079,000. Is that right?
om
A. Yes.

Q. Okay. And on foreign, median would have been, what, 953,000?

n.c
A. Yes.

Q. And that's... it looks probably like more than a 30 percent drop, right?

so
A. Yes.

Q. Okay. But you use the average here because it created a higher number. Is that right?

ck
A. We used the average here because the... with only five data points, if you throw out the high and the
low, it leaves you with only three data points to... from which to select the median. And that does not
make for good math.

lJa
Q. And you're aware we went through the computation of the writer's share of approximately $0.82 per
unit sold on the rough average between foreign and domestic. Do you recall that a few minutes ago?

A. You can't use that average because of the difference in the amount of international sales versus
domestic sales.
ae
Q. Okay. I tried to get away with average between the two. But in any event, the writer's share would
be a little over 20 percent of the total aggregate royalties generated by the release of the album. Is that
ich
correct if you include the artist's share?

A. I'm not sure I understand the question.

Q. Well, if we take the artist's share plus the writer's share, would we get a number that's about five
mM

times the writer's share alone?

A. Well, let's take a look at that.

Q. Well, why don't you just give the estimate. You're... you know the industry. We don't have to be
precise here... just a rough calculation.
a

A. Well, your mechanical royalties, which run about $0.75 off an album, as compared to the artist
royalties, which run about $1.25, that rough... the proportion is roughly 60 percent to 100 percent, if
Te

that's the question you're asking me.

Q. Right. I'd like to know approximately what percent of the total royalties would be represented by the
writer's share.
w.

A. Well, in ratio to the artist royalty, if you have a dollar's worth... roughly a dollar's worth of
mechanical royalty and you have roughly $1.25 of artist royalty, that gives you some sort of indication.
ww

Q. Who... did the Internal Revenue Service suggest to you that you value the artist royalties as part of
Mijac?
om
A. No.

Q. You did that on your own?

n.c
A. I think I stated to you earlier that the IRS did not give us instructions on how to run our valuation.

Q. Okay. But you indicated in your assignment at the beginning of your report that you were retained to
value Mijac, weren't you?

so
A. Yes.

Q. And you know that Mijac as a publisher only receives writer's share. Is that correct?

ck
A. Yes, classically.

Mr. Anson: I'm sorry. Did you want to pass a note, Mr. Weitzman?

lJa
Mr. Salkin: And then...

Mr. Weitzman: I'll have my chance.


ae
Mr. Salkin: I believe in your deposition you said something like you went and added in the artist
royalties on top of it as a way to make it more convenient for the Court. Do you recall that?
ich
A. No, I don't think I said it to do... to make it more convenient for the Court. I believe what I said was
when we found these addition... this additional group of assets, financial assets, in the music industry, it
was clear to us that they had not been included in any other valuation that we were aware of. And we
did ask the IRS had they been included. The answer was no. We then bundled this additional music
asset with Mijac because it had not been valued or included anywhere else, to the best of my
mM

knowledge. And that's why we bundled it here.

Q. Yes.

Mr. Salkin: Could you mark this, please?

Court Clerk: Exhibit 689-P is marked for identification.


a

Mr. Voth: Your Honor, may I get a copy of the Exhibit 689-P marked for identification?
Te

Judge Holmes: Sure should. What was the number again, Ms. Wood?

Court Clerk: 689-P.


w.

Judge Holmes: You can go ahead, Mr. Salkin. And 689-P marked for identification, a couple pages
from the deposition.
ww

Mr. Salkin: Excuse me. I'm checking the reference because I didn't think this would come up.
om
Q. Yes, let me start with Line 16 of Page 14. And I'm referring to Mr. Anson's deposition relating to
Mijac. And let me read. "QUESTION: And you would project that out for a period of years and apply
your discount rate. Is that right?" And that was after we referred to the $0.93 and $0.73. "ANSWER:
And so you're going to have a basic not disagreement because you and I won't disagree about anything,

n.c
sir. But we're going to have a basic divergence in view here because what we have done is we have
valued Mijac to include the artist royalty." "QUESTION: Over the history of Mijac, are you aware of
any artist royalties Mijac received except perhaps by accident?" "ANSWER: No. As I said a moment
ago, we chose not to split out MJ Music for Mijac in order to simplify this valuation process to make it
a little easier for the trier of fact to understand. And so we've combined the artist royalty into Mijac."

so
"QUESTION: But would your answer be different if your assignment was just to value the Mijac
interest owned by New Horizon III and nothing else?" "ANSWER: Well, it would. But then you'd have
another report. It would have the MJ Music." Right. "QUESTION: Right. But that would be separate.
That would cover the recordings and master recordings and all that." "ANSWER: It would make the

ck
whole process complex." When we had the deposition, were you aware that the masters relating to MJJ
Productions, Inc. and MJJ Ventures, Inc. corporations hadn't settled by a stipulation of settled issued
filed with this Court?

lJa
A. Yes.

Q. And you still proceeded to try to make it simpler for the Court to mix these up?
ae
A. I have been told that all those other assets have been settled but these had not... excuse me... these
had not been included in that settlement.

Q. And that's what the representatives of the Internal Revenue Service told you?
ich

A. Yes, sir.

Q. Okay. So it wasn't your own doing. It was information you received from Respondent's counsel. Is
that right?
mM

A. I asked them...

Mr. Voth: Objection as to mischaracterization, Your Honor.

Mr. Salkin: Okay. Well, I'm not necessarily, counsel...


a

Judge Holmes: Oh, I guess he's withdrawing it.


Te

Mr. Salkin: I'm sorry. Representatives of the Internal Revenue Service broadly.

Mr. Anson: I... I'm sorry, Your Honor.


w.

I asked if this group of assets had been valued before. They said no. I said therefore it needs to be
valued. And it's a music asset. It should be put in with Mijac.

Q. Okay. Could you be more specific on who said no?


ww

A. I can't remember it was Ms. Herbert or not. I don't recall.


om
Q. The best of your recollection, though, it was probably Ms. Herbert?

A. I just don't recall.

n.c
Q. You just don't remember.

Mr. Salkin: Excuse me for a moment, Your Honor.

so
There are many other names. But in fact, we have several parties here representing sort of...

Mr. Anson: Yes, we do.

ck
Q. Yes. We have Mr. Camp. Do you recall if it might have been him?

A. It might have been.

lJa
Q. Okay. And how about Mr. Voth sitting to Ms. Herbert's right?

A. It might have been. Sir, if I can just add, there are several representatives of the service with whom
we deal. And that's why I honestly can't recall.
ae
Q. You just can't recall. We have Mr. Musen. We have representatives of the examination division here.
We have other representatives of counsel. And you just don't remember?
ich
A. It... I would have to guess, and I'd rather not guess.

Q. Let's assume for the moment that this really is a big tax scam like you indicated in your email
notice.
mM

Mr. Voth: Objection, Your Honor. The email does not state that it was sent by Mr. Anson himself. I
object as to that mischaracterization.

Judge Holmes: Sustained.

Mr. Salkin: Okay. It's... assume that there was an avoidance of estate tax based on that email in the
neighborhood of $450 million. Is that right? Forty- five percent of a billion?
a

A. I wouldn't... I know nothing about that.


Te

Q. All right. You don't... you put...

A. I don't even know what you're referring to.


w.

Q. Okay. You know that estate tax is a very substantial portion of asset value. We have a large estate.
You know that, don't you?
ww

A. Yes.
om
Q. Okay. And what...

A. Of course.

n.c
Q. ...motivation do you believe that Mr. Branca and Mr. McClain, the Jackson family, all their
representatives would have to reduce the estate tax, particularly Mr. McClain and Mr. Branca?

Mr. Voth: Objection. Beyond the scope of Respondent's direct, lack of personal knowledge, calls for
speculation.

so
Judge Holmes: All sustained. I assume the answer is that they're interested in reducing the estate tax.

Mr. Salkin: Well, I think that the evidence will show that executors get paid based upon assets and

ck
income. They don't get charged by expenses. So I think that the answer would be that they have
absolutely no motivation to reduce the estate tax improperly.

Judge Holmes: The adverb makes the sentence, Mr. Salkin. But go ahead and ask him a question. He

lJa
can answer.

Mr. Salkin: All right. ae


Q. Can you think of any motivation that Mr. Branca, who's sitting in the courtroom, and Mr. McClain,
who unfortunately can't be here, have a motivation to improperly understate the federal estate tax?

Mr. Voth: Objection, Your Honor. This is beyond the scope of Respondent's direct.
ich

Judge Holmes: Sustained. Sustained. You're asking him about the motivations of people. It's a
rhetorical question. He doesn't have to answer. Go ahead, Mr. Salkin.

Mr. Salkin: You do know... are you familiar with the fact that the higher the value of an asset for estate
mM

tax purposes, the higher the base for amortization that occurs? Remember we... do you recall that?

A. Yeah, it's a basic principle of asset depreciation, yes.

Q. So that if, for example, the estate was $1 billion larger, at least Mijac's portion of that $1 billion
could be amortized over 15 years. Is that right?
a

A. In principle, that's correct.


Te

Q. All right. And over this period of time, you've had federal income tax rates that have ranged from 35
percent and then 39.6 percent and then another 2.8 percent for Obamacare so that it averaged
somewhere between 35 and 40 percent. Is that about right?
w.

A. Yes, sir.

Mr. Voth: Objection. Relevance, Your Honor.


ww

Judge Holmes: I'll let him pitch from the windup for now.
om
Mr. Salkin: Okay.

Judge Holmes: Yes, the estate tax rates he said varied over the course of...

n.c
Mr. Salkin: Right.

Q. And they're in the 35 to 40 percent range. Is that right?

A. Yes, sir.

so
Q. Okay. And then you live in California. You know what they do to their citizens to raise the revenue
that is necessary to run the state... 10.3 percent and 13.3 percent?

ck
A. Yes.

Q. So it all averages out where somewhere around 50 percent?

lJa
A. Yes.

Q. All right. If the estate had an extra $1 billion in assets to amortize, it would have an income tax
savings of about $500 million federal for 15 years. Does that sound about right?

A. And the principle...


ae
Mr. Voth: Objection. Relevance, beyond the scope of Respondent's...
ich

Judge Holmes: Overruled for now. Go ahead.

A. In principle, if they had an extra $500 to amortize, it would over the long term reduce their tax
liability to some extent.
mM

Q. Right, and the $500 million spread over a period. And are you aware that 20 percent of the gross
estate goes to charity?

Mr. Voth: None of...

Judge Holmes: Now we're way far from... state a ground for objection.
a

Mr. Voth: It's not relevant. It's...


Te

Judge Holmes: There we go. Sustained.

Mr. Salkin: What I'm trying to establish, Your Honor, is that the income tax offsetting benefit can be
w.

close or even, in some cases, greater than the estate tax cost. So why would the executors do this...

Judge Holmes: He's not the... the problem is that he's not the witness for this, Mr. Salkin.
ww

Mr. Salkin: All right. We'll move on. Yes. Could we move for the admission of Exhibit 689-P?
om
Judge Holmes: Oh, that definitely comes in.

Mr. Salkin: And I believe you structured your report to estimate income based on a pretax basis. Is that
correct?

n.c
A. I'm not sure. To estimate income based on pretax basis?

Q. When you...

so
Mr. Voth: Your Honor, before we proceed, may I seek clarification regarding Exhibit 689-P? I'm
assuming it's only... it only came in for impeachment purposes?

Judge Holmes: Oh, of course.

ck
Mr. Voth: Okay. Thank you, Your Honor.

Mr. Salkin: When you're calculating your cash flow year by year by year, have you reduced that cash

lJa
flow by the income taxes payable on that cash flow?

A. No. Our valuation is done on a pretax basis.


ae
Q. But your weighted average cost of capital was patterned after Vivendi, wasn't it?

A. Yes.
ich
Q. And Vivendi is a public corporation.

A. Yes.

Q. To your knowledge, does Vivendi pay income tax?


mM

A. Yes.

Q. So the Vivendi number might be an after-tax basis. Is that right?

A. Which number?
a

Q. The weighted average cost of capital derived from Vivendi.


Te

A. Ah. Actually, we removed the tax shield from our WACC, the weighted average cost of capital.

Q. Well, that was only with respect to the cost of debt, wasn't it?
w.

A. Well, it... no, we reduced the... that tax shield. That is the tax implication in the WACC formula.

Q. Did you remove it from the cost of equity?


ww

A. Yes. Well, from the cost of equity, that's what you do when you remove the tax shield from the
formula, is you essentially make it a pretax WACC...
om
Q. Okay.

A. ...cost of debt.

n.c
Judge Holmes: You didn't quite answer his question. I saw the 1 minus T for the calculation of the rate
of return under Vivendi's debt. But where in your formula did you tax-effect the cost of equity?

Mr. Anson: We have not tax-effected the cost equity, Your Honor.

so
Judge Holmes: There you go. Go ahead, Mr. Salkin.

Q. Could you explain where in your report that it shows that?

ck
A. Yeah.

Judge Holmes: He just admitted that he didn't...

lJa
Mr. Anson: Yeah.

Mr. Salkin: Oh, he didn't?

Judge Holmes: Yeah.


ae
Mr. Anson: Yeah.
ich

Mr. Salkin: Okay.

Q. So let's assume we have two very competent appraisers appraising the same asset, okay? The one
tax-effects and, therefore, has a lower after-tax income. The other...
mM

A. I think you mean after-tax value?

Q. No, I'm talking about income now. Let's...

A. Oh.
a

Mr. Salkin: Well, I can put an example up on the board. Let me see if I can find it. It's not numbered. It
was an extra. It's a spreadsheet. I'm not sure if I gave that to you this morning.
Te

Here it is. Tax impact.

Q. Let me give you a preliminary question, and then we can possibly go with the examples. Let's
assume that you have an asset that generates $1 million of pretax income every year... very stable, very
w.

consistent. And you have an investor who would like to earn 10 percent per annum on his income.

Mr. Salkin: Okay. Excuse me for being a little sloppy. I'll take the... hand this to the Clerk. Could you
mark this, please?
ww

Court Clerk: Exhibit 690-P is marked for identification.


om
Mr. Salkin: And with all due respect, Mr. Anson, I have named our two appraisers Mr. After-Tax and
Mr. Pretax...

n.c
Mr. Anson: All right.

Q. ...so that we can follow what they've done.

A. Mm-hmm.

so
Q. And we start out with this asset, and the investor wants 10 percent per annum on his investment.
And he hires Mr. After-Tax. So we start with $1 million of income, right? That's our hypothesis, our
assumption. Do you see that? That's the first number in the right column.

ck
A. Yes.

Q. Okay. And then we deduct off his income tax. We have assumed it's 40 percent.

lJa
A. All right.

Q. So he has... would have $600,000 of after- tax income from this asset. And if he has a WACC of 10
ae
percent, that would bring his value up to $6 million. Is that right?

A. When you say bring...


ich
Q. If he's earning 600,000 a year and he wants to earn 10 percent, he would only be willing to pay $6
million, wouldn't he?

A. Well, simplistically, I'll accept that.


mM

Q. Okay. And cross-check if you want. That... he gets his 10 percent return if he earns the $600,000,
which he thinks he will on a consistent basis. Is that right?

A. All right.

Q. Okay. Now let's look at Mr. Pretax. He's going to start out with $1 million of income and not take
any tax deduction at all, correct?
a

A. Correct.
Te

Q. And we've just learned that this investor would be willing to pay $6 million for the asset. But if we
used a weighted average cost of capital of 10 percent on the pretax amount, his price would go up to
$20 million, and he wouldn't be able to earn his 10 percent, would he?
w.

A. I'm not sure I follow your argument, sir.

Q. All right. Wouldn't it take a WACC implied of 16.67 percent to get from the $1 million of income to
ww

$6 million of value?
om
A. Why?

Q. Well, how else would you get from the million to 6 million if you have a WACC, a weighted
average cost of capital?

n.c
A. Why do I have the 16.67 percent WACC?

Q. Well, if you assume the value of 6 million, what would the WACC be?

so
A. If I'm getting a 1 million... but why am I assuming that I'm... hmm. You're making all the
assumptions, not me.

Q. Well, I'm asking the questions, though. If this man wants to earn $1 million a year... rather... I'm

ck
sorry... $600,000 a year after tax, what would he pay for this asset based on this appraisal method
where we're starting with $1 million of income? Would you apply a WACC to it?

A. Well...

lJa
Mr. Voth: Objection. Compound or what he paid.

Judge Holmes: Overruled. Overruled. Overruled.

Mr. Voth: Okay.


ae
Judge Holmes: ??.
ich

Mr. Anson: Since I'm Mr. Pretax and my client lives in Bermuda, I would take the $1 million, give him
$600,000 a year, take the extra $400,000, put it into an 8 percent interest-bearing account in Bermuda
and restructure his finances entirely.
mM

Q. All right. Let me throw one more assumption in. Let's have him live in Los Angeles.

A. That's your assumption. That's not my assumption.

Q. Well, how would you value it if you have a client and he wants to know what your thinking is?

A. Well, I'd counsel him if he has this kind of cash on hand to seek out a better tax environment. I
a

mean, you're making assumptions here that fit your...


Te

Q. So should he...

A. ...view of the world.


w.

Q. ...move to Bermuda then?

Mr. Voth: Your Honor, the... objection. He was still trying to...
ww

Mr. Salkin: But...


om
Mr. Voth: ...answer the question.

Judge Holmes: But it wouldn't work. He'd have to move to Nevada or Florida.

n.c
Judge Holmes: Or Tennessee.

Mr. Salkin: What I'm trying to point out, Mr. Anson... I think it's very apparent from this chart... you
have to have a different weighted average cost of capital if you're valuing on a pretax income stream
than if you value on an after-tax income stream.

so
Mr. Anson: Of course.

Q. And this is designed to illustrate that Mr. Pretax would have to use a 16 and two-thirds percent

ck
WACC to arrive at the same number as Mr. After-Tax. Is that right?

A. In this very skewed example, of course. And of course we thought of that, Mr. Salkin, and had done
that calculation. The difference in our WACC is relatively minor. If you'll give me five minutes, I can

lJa
come back to you with what the WACC would be. We made that calculation.

Q. Well, let's come back to our particular case now because, Mr. Anson, you came out with a WACC of
9.72. And Mr. Dahl's was 9.7... virtually identical.
ae
Mr. Toscher: Excuse me, Your Honor. Could we instruct the witness to answer audibly? Because...

Judge Holmes: Oh, yes.


ich

A. What is the question?

Q. The question is...


mM

Mr. Anson: I'm happy to answer, Ms. Toscher. I need a question.

Mr. Salkin: Okay.

Q. The question is, Mr. Anson, your weighted average cost of capital that you used throughout all these
assets was 9.72 percent. Is that correct?
a

A. Yes.
Te

Q. Okay. Mr. Dahl used a 9 percent weighted average cost of capital. Is that right?

A. I believe that... we're very close, yes.


w.

Q. All right. So if one of you applied the weighted average cost of capital to before-tax income and one
applied it to after-tax income, you could have a dramatically different result, could you?

A. You'd have a somewhat different result. I could certainly tell you we did a more careful job
ww

establishing the WACC than Mr. Dahl did.


om
Mr. Salkin: I'd like to move to strike that.

Judge Holmes: Overruled. In your opinion, right?

n.c
Mr. Anson: In my opinion.

Judge Holmes: There you go.

Mr. Anson: Thank you, Your Honor.

so
Mr. Salkin: Well, another example I think is more common that you're probably more familiar with, if
there is two bonds that investors considered one of your clients... one is a California municipal bond
bearing interest at 3 percent a year, and the other is a United States Treasury bond bearing interest at 5

ck
percent a year. Assume the taxpayer has to pay 40 percent on the U.S. bond. Do you think that the
pricing would be about the same on those two bonds?

A. It would be roughly equivalent. One is tax-free; one is taxed. The 3 percent is tax-free, I'm

lJa
assuming. Is that the...

Q. That's correct. ae
A. Then you have roughly the equivalent return.

Q. All right. So you'd advise your client to take into effect the fact that one of these assets is tax-free. Is
that correct?
ich

A. Yeah. Yes.

Q. You mentioned earlier... excuse me. Let me have a drink.


mM

A. Good idea.

Q. You mentioned three music-related assets at the beginning, I believe. Is that right? Or were there
more than that that you had worked on?

A. In this valuation?
a

Q. No, in your whole experience as to your... in your practice.


Te

A. I mentioned four or five, yes.

Q. All right. I think I heard three, but let me mention the three. And if there's more, you can mention
those, too. One was something called Sugarland.
w.

A. Sugarland Express. That's Jennifer Nettles.

Q. And what type of asset was that?


ww

A. Her music library, music catalog.


om
Q. Was that writer's share?

A. Both writer's share and artist share.

n.c
Q. What... when did you do that?

A. Between... about two years ago.

so
Q. So if you recall, what was the date of value?

A. I don't remember.

ck
Q. But what? Two or three years ago?

A. Yeah, within the last two to three years.

lJa
Q. So 2013 to 2016. Okay. And then you mentioned the Eagles.

A. Yes. ae
Q. When did you do that?

A. More than five years ago.


ich
Q. Do you recall the date of value for the Eagles?

A. I don't.

Q. And what was the nature of their asset?


mM

A. The Eagles are a musical group.

Q. What was the asset that you were valuating?

A. The catalog and the trademarks.


a

Q. And the catalog was the writer's share again?


Te

A. Yes.

Q. Okay.
w.

A. Composer's share and also the artist share.

Q. So it was...
ww

A. And also in that case, trademarks and... trademarks.


om
Q. So you had writer and artist and trademark. And can you give some estimate? You said it was more
than five years ago. Was...

A. More than 5, less than 10.

n.c
Q. So now it would be between 2006 and 2011. Is that correct?

A. Yes. Yes.

so
Q. Okay. And how about the Mannheim Steamroller?

A. Three years ago, I would say... three or... three to four years ago.

ck
Q. And the... what was the date of...

A. 2012...

lJa
Q. Do you recall what the...

A. ...2013. ae
Q. ...date of value was?

A. What the value was?


ich
Q. What you all... the date... your valuation date was on Mannheim.

A. 2012/2013.

Q. Okay. And Mannheim, what was the nature of the asset?


mM

A. Music catalog.

Q. That would be writer's share?

A. Mechanical... yeah, writer's share and artist...


a

Q. Okay.
Te

A. ...performing share.

Q. Do you recall in any of these the weighted average cost of capital that you utilized to value the
asset?
w.

A. I don't.

Q. If it was up around 14, 15, 16 percent, do you think you'd recall?


ww

A. It was not that high.


om
Q. It couldn't be that high? What do you think the highest it could be?

A. I won't speculate. That's... I'm sorry.

n.c
Q. Well...

A. I'm not going to speculate with that.

so
Q. Over 12 percent?

A. Mr. Salkin, I'm not going to speculate without looking in my search documents. I'm not going to do
that.

ck
Q. Okay. So... but you say that 14, 15, 16 percent is too high, clearly?

Mr. Voth: Objection. Asked and answered, Your Honor.

lJa
Judge Holmes: Sustained.

Mr. Anson: Yeah, I'm not going to do that.

Mr. Salkin: Can you please mark these?


ae
Court Clerk: Exhibit 691-P is marked for identification.
ich

Mr. Salkin: Could you take a look at that, please?


Have you had a chance to review it?

A. Yes, sir.
mM

Q. What is the valuation date?

A. 2010, so older than I had remembered.

Q. All right. Could you take a look at Exhibit 33, please?


a

Mr. Voth: Your Honor, Respondent just wants to make sure that the record's clear that this is a draft...
Te

Judge Holmes: It is.

Mr. Voth: ...what's been marked in the Exhibit 691-P.


w.

Judge Holmes: So noted.

Mr. Salkin: And just addressing the third line where it says, "As of December 31, 2009," does that
show your valuation date?
ww

A. Yes. Yes.
om
Q. And so December 31, 2009, what was the nature of this case that you were retained for?

A. This was a, for lack of a better word, domestic dispute. A man and a woman were trying to settle

n.c
ownership of music assets.

Q. And which party were you retained to represent or give values for?

A. The woman, the wife.

so
Q. And would it have been in the wife's best interest to maximize value?

A. It wasn't a divorce. It was a case where... you know, I... it's hard to answer. These two people had a

ck
great interest in keeping this asset together. So of course they each want the maximum they can get. But
they have to arrive at a fair value here in order to consummate a transaction. So you're not looking for
maximum value. You're looking for fair value here.

lJa
Q. Okay. So to determine the fair value... would you take a look at Exhibit 33, which... and tell me
what that does?

A. Yes. This is the calculation of the WACC, which is 15.18 percent.


ae
Q. And it has two components, does it not? One is the equity. You see that?

A. Yes.
ich

Q. And what's the equity component?

A. 20.57.
mM

Q. And how about the debt component?

A. 6.39.

Q. And could you take a look at Exhibit 30, which is a few pages back? Let me read from 5, and then
maybe you can explain what that means. "A residual discount rate of 5 percent is the terminal ?? period
of growth, reflects the increased uncertainty associated with forecasts beyond the explicit 10-year
a

projection." What did you mean by that footnote?


Te

A. Mannheim Steamroller is a very... I'm not going to offend anyone in this courtroom, I hope... is a
very dated Midwestern sort of musical style, sort of in the genre of Lawrence Welk, and has, in our
view, a relatively limited remaining lifespan. It still has a Christmas market. But we felt at the time that
when we get out beyond 10 years, projecting a lifespan becomes tenuous for this style of music.
w.

Q. All right. Now, your allocation in Exhibit 33 was 38 percent for debt and 62 percent for equity. Is
that right? That's the second box towards the bottom of Exhibit 33.
ww

A. That's what it says.


om
Q. All right. And if we moved over to the Jackson situation for Mijac, you might recall that it was
about 70 percent equity and about 30 percent debt. Is that about right?

A. I'd have to look at the report, but I'm obviously trusting you, sir.

n.c
Q. Okay. It was a shade over 71 and 29. So if we went with 70/30, we would... our arithmetic would be
70 percent of 20.57 percent? That's the equity amount?

A. I'm sorry. Say that again.

so
Q. Okay. If we wanted to compute the weighted average cost of capital with the Mijac allocation
instead of the Mannheim allocation, we would go to the Mijac 70 percent equity, would we?

ck
A. I... okay. I'm listening.

Q. And then we would...

lJa
A. I don't...

Q. ...multiply that by... ae


A. ...there's a question yet.

Q. ...cost of equity?
ich
Judge Holmes: Hold on.

Mr. Voth: Your Honor, just for the record, Respondent just wants to indicate that the document in the
case that it's highly confidential.
mM

Mr. Salkin: Yes, we...

Mr. Voth: Again, this is a public proceeding. So I'm just...

Mr. Salkin: We realize that, and we plan to substitute these two exhibits for the entire report.

Judge Holmes: Okay. Ask a question, Mr. Salkin.


a

Mr. Salkin: Yes.


Te

Q. If we applied the Mijac component of equity, which is about 70 percent, so to get the equity
component of the weighted average cost of capital, we would take 70 percent of 20.57 percent if we
were using Mannheim numbers, wouldn't we?
w.

A. Why would I do that?

Q. Well, if the correct cost of equity at that time was 20.57 percent and you wanted to convert it over to
ww

Mijac, you would want to get the Mijac percentage of cost of capital, wouldn't you?
om
A. No. That would make no sense. This is a man and a woman living in a small town in Nebraska.

Q. Okay.

n.c
Mr. Salkin: Could we have a break now, Your Honor?

Judge Holmes: Okay.

Mr. Anson: We can keep going, Mr. Salkin.

so
Judge Holmes: No, no.

Mr. Anson: No?

ck
Judge Holmes: He wants a break.

Court Clerk: All rise.

lJa
(Recess)

Judge Holmes: Go ahead, Mr. Salkin.


ae
Mr. Salkin: May we do some housekeeping first, Your Honor?

Judge Holmes: Oh, of course.


ich

Mr. Salkin: All right. We'd like... Petitioner would like to move for the admission into evidence of
Exhibit 685-P, which is the email from Consor to Ms. Cruise ??.

Judge Holmes: Do you have that, Ms. Wood? 685-P.


mM

Court Clerk: I believe 685 was marked.

Mr. Voth: I thought it was already moved for impeachment.

Judge Holmes: Oh, yeah, that came in for impeachment. Next?


a

Mr. Salkin: 686, which is Mr. Anson's deposition on January 18, Pages 55 to 57.
Te

Judge Holmes: That one, the same ruling. Okay.

Mr. Salkin: Okay. Exhibit P-687, Mr. Anson's deposition January 18, Page 42.
w.

Judge Holmes: Same.

Mr. Voth: Same.


ww

Mr. Salkin: P-688, which was also Anson deposition of January 12th, Page 42.
om
Judge Holmes: Same ruling.

Mr. Voth: No, object...

n.c
Mr. Salkin: Exhibit P-690, the...

Mr. Voth: All right...

Mr. Salkin: ...the summary of...

so
Judge Holmes: I'm not saying...

Mr. Salkin: ...pretax against...

ck
Judge Holmes: ...it was good impeachment. I'm saying it was admitted for impeachment.

Mr. Voth: All right. Okay.

lJa
Judge Holmes: 689-P.

Mr. Salkin: And P-690...

Mr. Voth: 689 is in...


ae
Mr. Salkin: P-690, summary of a pretax against after-tax.
ich

Judge Holmes: Hold on. First, P-689, did we admit that one, Ms. Wood?

Mr. Salkin: What's 689?


mM

Court Clerk: That one's already admitted.

Judge Holmes: Oh, okay. Then we got... what's the next one?

Mr. Salkin: Our next one is for... I would like the... the Clerk has marked for identification Exhibit 33
of...
a

Mr. Salkin: It's a separate exhibit. It's Exhibit 33 of the Mannheim appraisal report.
Te

Court Clerk: Okay. Mr. Salkin handed these to me. So Exhibit 33 of the Mannheim report will be
marked as Exhibit 692-P.

Mr. Salkin: Okay.


w.

Court Clerk: And Exhibit 30 of the Mannheim report will be marked as Exhibit 693-P.

Mr. Salkin: All right. The Mannheim report, for the record, is 691-P. Isn't that correct?
ww

Court Clerk: That is correct.


om
Mr. Salkin: Okay. Could you...

Mr. Voth: Could you repeat... can we get some clarification as to what pages were? Hang on.

n.c
Female: Can we look for those again?

Judge Holmes: Ms. Wood?

so
Court Clerk: Yes.

Judge Holmes: Clarify for me in numerical order the last couple of exhibits there.

ck
Court Clerk: Well, we were talking about 689-P, which is Pages 14 and 15 of Mr. Anson's Mijac
deposition. It was marked and received. Then 690-P was the summary of the pretax and after-tax on the
weighted average cost of capital paid. I believe that is still only marked for identification.

lJa
Mr. Salkin: I'm moving to admit that.

Mr. Camp: Can we finish the numerical? And then Respondent will state its objections with the ones
that...

Judge Holmes: Okay. 691, Ms. Wood?


ae
Court Clerk: 691 was the Consor draft report for the Davis v. Davis case...
ich

Mr. Salkin: All right. And I...

Court Clerk: ...Mannheim Steamroller.


mM

Mr. Salkin: And I'm not moving to admit that. But I am moving to... well, could you...

Judge Holmes: Okay...

Court Clerk: Exhibit...

Mr. Salkin: ...show Exhibit 692...


a

Judge Holmes: Hold on.


Te

Mr. Salkin: ...to the witness?

Judge Holmes: Okay. 692... we're going over them in numerical order, Mr. Salkin. 692-R?
w.

Mr. Salkin: Right.

Court Clerk: No.


ww

Mr. Salkin: No, dash P.


om
Court Clerk: P.

Judge Holmes: Oh, I'm sorry. Dash P. Okay.

n.c
Court Clerk: It is Exhibit 30...

Mr. Salkin: Excuse me... 33.

so
Court Clerk: Exhibit 33 of...

Mr. Salkin: Would you rather have them the other way?

ck
Court Clerk: It doesn't matter.

Mr. Salkin: Okay.

lJa
Court Clerk: Exhibit 33 of the Consor evaluation report for Davis v. Davis, which is about Mannheim
Steamroller, is marked Exhibit 691-P.

Judge Holmes: And?


ae
Court Clerk: And Exhibit 30 of the Consor draft report for the Davis v. Davis case is now Exhibit 693-
P.
ich
Mr. Salkin: All right. Could you show the witness Exhibit 692 and 693, please?

Q. And could you identify Exhibit 692 for us, which is entitled Exhibit 33?

Mr. Voth: Before you proceed...


mM

Judge Holmes: Hold on, Mr. Salkin.

Mr. Voth: Oh, okay.

Judge Holmes: Go ahead, Mr. Voth.


a

Mr. Voth: All right. So with respect to 690-P, it's an illustration... this document...
Te

Judge Holmes: Mr. Pretax and Mr. Post-tax.

Mr. Voth: Right. This document was never exchanged with Respondent. It was... I think it was solely
for illustrative...
w.

Judge Holmes: It's a demonstrative kind of...

Mr. Voth: ...demonstrative... yeah...


ww

Judge Holmes: ...exhibit. It's part of the record, but it's not going to be admitted.
om
Mr. Voth: Okay. Okay. So moving on to Exhibit 692-P, Exhibit 33, Respondent objects on relevance
grounds. And also, it appeared to be used solely to refresh the witness's recollection as to valuation.
There was no impeachment on prior inconsistent statement. And the same would apply with respect to

n.c
693-P, Exhibit 30. Additionally, this is all information of other parties that ?? confidential, and it's also
a draft report.

Judge Holmes: Yeah. Were you trying to use that to impeach him or to refresh your recollection, Mr.
Salkin?

so
Mr. Salkin: Both, Your Honor. The impeachment was his testimony that...

Judge Holmes: In different cases, he reaches a different weighted average cost of capital?

ck
Mr. Salkin: And about the same time on a similar asset. Six months after our valuation date, an asset
that he identified was very similar to the asset in this case. So I think it would be very relevant if he had
mentioned that he never got up over 12, 13, 14 percent in weighted average cost of capital. We would

lJa
impeach that testimony. It would be terribly inconsistent...

Judge Holmes: Okay. ae


Mr. Salkin: ...with his 9.72 percent in this case.

Mr. Voth: May I reply, Your Honor?


ich
Judge Holmes: Yes, Mr. Voth.

Mr. Voth: Mr. Anson said he did not recall. He talked about a different... I think he was referring to a
different range. He also explained the reasons as to why. This is a very small catalog of a couple, I
believe, in Nebraska.
mM

Judge Holmes: Not that we ever want to dis Nebraska.

Male: I join in your objection, Your Honor.

Judge Holmes: There we go.


a

Mr. Voth: By no means am I doing that, Your Honor... solely with respect to the size. And so
Respondent fails to see the relevance of this.
Te

Judge Holmes: I agree with you, Mr. Voth. Those three exhibits are all excluded. Go ahead, Mr.
Salkin.
w.

Mr. Salkin: Okay. We will then withdraw Exhibit 691.

Q. You mentioned interviews with someone at Forbes with respect to this case. Is that correct?
ww

A. I'm sorry. I wasn't... I was wandering, sir. Could you ask the question again?
om
Q. Yes. Previously, you mentioned that you had an interview with somebody with Forbes Magazine... is
that right...

A. Yes.

n.c
Q. ...with respect to this case?

A. Yes, sir.

so
Q. Did you mention that in your report?

A. You asked me that question already.

ck
Mr. Voth: Objection. Asked and answered.

Mr. Salkin: Did you turn in...

lJa
Judge Holmes: Hold on, hold on. Overruled. Go ahead.

Mr. Salkin: Okay. ae


A. No.

Q. Did you make notes of that interview?


ich
A. I don't recall. I remember the interview.

Q. If you made notes, would you have turned it over to counsel for Respondent?

A. Yes.
mM

Q. Do you remember the name of the gentleman at Forbes?

A. It's a hyphenated last name. I always want to say Zacharias ??. That's not quite correct. But my...
excuse me. But we had a lengthy interview.

Q. Lengthy?
a

A. Yes.
Te

Q. And you relied on it, in part?

A. It certainly is a secondary source of research, yes.


w.

Q. And it's not mentioned in your report?

Mr. Voth: Objection. Asked and answered, Your Honor.


ww

Mr. Anson: That's the third time you've asked me that at least.
om
Judge Holmes: That one is sustained, Mr. Salkin.

Mr. Salkin: All right.

n.c
Q. Is there anybody else that you interviewed with respect to the Mijac Catalog?

Mr. Voth: Objection, Your Honor. Asked and answered. We've been through this before.

so
Judge Holmes: You put these in the footnotes and then into an appendix, didn't you, Mr....

Mr. Anson: Yes, sir.

ck
Judge Holmes: I can read the appendix, too, Mr. Salkin. It's there. Go ahead, Mr. Salkin.

Mr. Salkin: Okay.

lJa
Judge Holmes: That one's sustained, too.

Mr. Salkin: You... turn to Page 76 of your report.


ae
A. Yes, sir.

Q. And I'm terrible at remembering numbers, but I think it's 682-R.


ich
Mr. Salkin: Am I correct on that?

Male: Yes.

Mr. Salkin: Okay.


mM

Q. In particular, Figure 36... could you tell us what Figure 36 relates to?

A. Yes. This is a summary... oh, excuse me. This is a summary of domestic revenue splits. And we start
with the average wholesale album price in 2009. From that, we take the contractual container charge.
We assume that it was a CD container... 25 percent off. It leaves your wholesale price. And that
mechanical royalties, as we discussed earlier, $1.001. 92.5 percent of that means mechanical royalties
a

for an album with 11 songs net to the estate of $0.93. So that's the... that's A, the first component of
money flows to Michael Jackson and the... or the estate. Then you have the artist royalty percentage on
Te

domestic sales. Again, that's contractually established. That artist royalty is $2.89. And that's the B part,
the second part of cash flows. Now, as you note the revenue less those two elements, mechanical and
artist royalties, 316 from that joint venture distribution costs and marketing fund cost leaves a
remaining revenue a buck-forty- seven. And the joint venture split of profits, 50 percent to Michael
w.

Jackson and the estate, is $0.73. Adding up A plus B plus C, total domestic revenue to the estate per
album, or album equivalent, $4.55.

Q. Okay. And of that, what portion is the writer's share?


ww

A. The writer's share is what's identified as A in Figure 36-A, mechanical royalties to the estate.
om
Q. Okay. In the history of the period of time since Michael Jackson took back his publisher's rights,
were you aware of any instance ever in which any portion of this revenue other than the $0.93 would
have been included in the Mijac revenue?

n.c
A. No.

Q. Okay. And let me direct you to Page 80 of your report, Exhibit 682-R. Could you go through that
and explain how you derived these numbers?

so
A. Yes, sir. This is similar to the summary that I just read. The difference is this is a revenue split
summary for foreign... international sales, foreign sales. You see your wholesale price net of container
charge is $7.06. And then we have international mechanical royalties. And for that, we need to go back

ck
two pages, please, if you'll turn to Page 77. To arrive at that average international mechanical royalty,
we did a blended rate of both physical sales... in other words, album sales as well as royalty and digital
sales... in the... for the major markets. And you see the blended rate then at 10.39 percent rounded to
10.4. Now we can go back to Page 80. And I don't want to go too fast. Is there any questions on that

lJa
Page 77, Mr. Salkin?

Q. No. Proceed. ae
A. All right. That takes us back now to Page 80, Figure 42. And we're now looking at international
mechanical royalty percentage of 10.39 percent or mechanical royalties of $0.98 per album or album
equivalent. Seventy-five percent of those, by contract, go to Michael Jackson or his estate. And that
equals $0.73 per album. Below that, you see the artist royalty percentage. Again, this is established
ich
contractually for Michael Jackson or his estate. The artist royalty then becomes $1.23. And that's the
second component. After that, we deduct joint venture distribution and marketing costs, remaining
revenue $2.30. And the joint venture split is 50 percent to Michael Jackson or his estate and, therefore,
$1.15. Now we simply add up A, mechanical royalties, B, artist royalty, and C, the Michael Jackson
estate split. Those three numbers total $3.12 per album or equivalent.
mM

Q. All right. And would the Mijac share as the writer's share be anything other than the $0.73?

A. It's... the Mijac as the publisher would typically receive the mechanical, as we previously discussed.
These other two cash flows are being added to Mijac.

Q. All right. What information do you have that would establish that the other portions of the income in
a

Figure 42 were not taken into effect in valuing estate assets?


Te

A. Only what I've been told.

Q. By who?
w.

A. By the Internal Revenue Service.

Q. Which persons?
ww

A. We've had this discussion. We went round and round. And I don't recall specifically who amongst
the folks sitting at this table told me that.
om
Mr. Salkin: I think we ought to move to strike any portion of these charts on revenue. He has no
source. It's part of a settled issue. That's both on Figure 42 and Figure 36 that we've just gone through.

n.c
Judge Holmes: That's the subject of a continuing motion I need to rule on after trial.

Mr. Salkin: Okay.

Q. One last question. If the value of Mijac was being determined that anything other than the $0.73 in

so
Figure 42 and the $0.93 in Figure 36, would that change your valuation of the never-released materials?

A. Well, the cash flows would be reduced. And therefore, value would be reduced.

ck
Q. Okay. Thank you.

Judge Holmes: Redirect, Mr. Voth?

lJa
Mr. Voth: Yes, Your Honor. But Respondent requests just a 15-minute break to...

Judge Holmes: Fifteen more minutes? I'll give you 10.


ae
Mr. Voth: Ten minutes? And also as a housekeeping matter, the parties have agreed that it's best for Mr.
Branca to return on Wednesday to testify.

Judge Holmes: Will we still be through on Friday?


ich

Mr. Voth: Yes, Your Honor.

Judge Holmes: We can go late.


mM

Mr. Voth: Yes.

Judge Holmes: We can go... all right. That will be fine...

Mr. Voth: So 10 minutes.

Judge Holmes: ...and concise. I will continue to sit up here, but we're off the record.
a

(Recess)
Te

Judge Holmes: And we are back on the record. Go ahead, Mr. Voth. Redirect is yours.

Mr. Voth: Thank you, Your Honor. So first, Respondent would move to strike the testimony relating to
w.

the Davis v. Davis.

Judge Holmes: Overruled. But


ww

Mr. Voth: Second, may I approach to the Clerk to have a document marked for identification, Your
Honor?
om
Judge Holmes: Of course.

Court Clerk: Exhibit 694-R is marked for identification. It is Pages 63 through 65 of Mr. Anson's

n.c
deposition about Mijac.

Mr. Voth: And Respondent is moving this into evidence in response to Exhibit 687-P just for
completeness, Your Honor.

so
Mr. Toscher: Yeah, I think we need to get a chance to review it and maybe ask...

Judge Holmes: From the same deposition?

ck
Mr. Voth: From the same deposition, Your Honor.

Judge Holmes: Okay. I'll let this one in then, too. Go ahead, Mr. Voth.

lJa
Mr. Toscher: Over... Your Honor?

Judge Holmes: Yes? ae


Mr. Toscher: I haven't had a chance to review it. It's over my objection, for the record.

Judge Holmes: He's not your witness.


ich
Mr. Toscher: Okay.

Mr. Salkin: May I make an objection for the record, Your Honor?
???.
mM

Judge Holmes: It's too late now, Mr. Salkin. It's in. Go ahead, Mr. Voth.

Mr. Voth: Will do, Your Honor.

REDIRECT EXAMINATION BY MR. VOTH:

Q. This morning, Mr. Salkin referenced an email which was sent from a member of your firm on
a

February 9, 2017. Do you recall that?


Te

A. Of course I do.

Q. Did you authorize your staff to send this email?


w.

A. I didn't say I authorized that. I never saw that.

Q. No, I'm asking.


ww

A. Oh, I'm sorry. No, I didn't authorize that. Of course not. I guess mortification was the right word. We
have, I think, a good PR person in our office. She's worked for me... for us for a long time. And she
om
works autonomously and, evidently, Your Honor, too autonomously. I'll take care of the situation when
I get home. I apologize to the Court. I apologize to the Court. What else can I say?

Q. And does the content of that email in any way impact the analysis or conclusion in your report?

n.c
A. I mean, you took me by... not you... they took me by surprise today when they put that in my hand.
Of course not.

Q. Now, Mr. Salkin also asked you about Ray Charles. In relation to your...

so
A. Did you say Ray Charles?

Q. Ray Charles.

ck
A. Okay.

Q. In relation to your post-mortem spike calculation... and I think part of the critique was that there was

lJa
some attribution for a portion of the spike to a post-mortem album release in a film. And with respect to
in this case in your report, did you assume similar endeavors would be entered by a hypothetical buyer
of Mijac Music? ae
Mr. Salkin: Objection, Your Honor. It's leading.

Judge Holmes: Overruled.


ich
A. Well, I think if I can hear that question again.. I got interrupted by a train of thought.

Q. So we were talking about Ray Charles.

A. Right.
mM

Q. And Mr. Salkin asked you certain questions critiquing some aspect of your analysis. And so the
question I have for you is did you assume similar endeavors would be entered by a hypothetical buyer
of Mijac Music.

A. Yes, indeed. And you know, in... there are two topics here. One is, in looking at the Ray Charles data
and calculating our sales spike, it has an impact on the spike, but it's one of several data points. I think
a

the other thing about the Ray Charles data that Mr. Salkin perhaps was asking about was whether the
movie was in an unfair ?? impact. I think you can make the same comment upon Mr. Jackson's sales
Te

spike. He had a movie that came out, like, a year after his death. Of course it influenced his sales. It's
true with Selena. She had many events that happened. That's the very nature of a celebrity dying. So I
think we overly focus on one piece of input in the sales spike to no good purpose, frankly. The second
part of your question is would a rational buyer look at this sort of data ahead of time in order to project
w.

what sales might be. And the short answer is yes. I'm not sure if I'm being responsive to your question,
but the short answer is yes.

Q. Let's move on to Jeff Buckley. Mr. Salkin mentioned Jeff Buckley only had one album pre-death.
ww

And then he also mentioned that Mr. Buckley had released additional albums after death. The question
I have for you is did you include albums released after death in your analysis of a post-mortem spike of
om
Jeff Buckley?

A. No, of course not. We were very careful in assembling our data.

n.c
Q. Let's talk about the duration to return to pre-death levels of Michael Jackson. Mr. Salkin suggested
that your post-mortem spike would take approximately 20-plus years to return to the pre-death level.
Do you remember that?

A. Yes. And I remember... yes, I do.

so
Q. And in the 12 months prior to Michael Jackson's death, do you know what were the sales of Michael
Jackson's music?

ck
A. We do. I'd have to look at the report to give you the number.

Q. Do you have an approximate number?

lJa
A. I believe albums were about 600,000. But why should we guess when we can look it up?

Mr. Voth: One moment, Your Honor. ae


Judge Holmes: Okay.

Mr. Anson: I'm sorry. I misspoke. There are 450,000 pre-death. They jumped to...
ich
Judge Holmes: Wait. What are you looking at?

Mr. Anson: I apologize, Your Honor. Page 44, top of the page, first three lines... first two lines.

Judge Holmes: This is Page 44, Exhibit 682-R. Go ahead, Mr. Voth.
mM

Mr. Voth: I'll return to this topic in a second. Now, Mr. Salkin presented a quote from your deposition
and asked were you attempting to maximize the post-mortem spike. Do you recall that?

A. Yes.

Q. And did you clarify that later in your deposition?


a

A. I did not get a chance to. His question to me was something about taking 26 years to get to pre-death
Te

sales levels. And in fact, if you look at our projections and look at sales and at... on a net present-value
basis, it takes 9 or 10 years to get back to pre-death sales levels.

Q. Now, at one point, Mr. Salkin talked about Michael Jackson's post-mortem sales. And he showed
w.

you Exhibit marked 640-P. It was an exhibit ?? Mr. Dahl. Do you recall that?

A. I recall... yes, I recall looking at it.


ww

Q. And do you know if the data presented by Mr. Dahl was done on a quarterly basis?
om
A. I believe so.

Q. And if it was done on a quarterly basis and if the quarterly data ended on June 30th, would that
overstate pre-death sales?

n.c
A. Yeah, it would... it grossly distorts the numbers because what happens is the five or six critical days
between the announcement of his death on the 25th and the end of the fiscal year... or fiscal quarter on
midnight of June 30th, that... those last six days of the month are pushed into pre-death sales. And yet
that's when the biggest part of the initial spike in sales occurs. So that's... those six days of spiked sales

so
are moved out of post-death and into pre-death, which really grossly changes the data.

Q. Does that understate the spike?

ck
A. Yeah, very much so. It overstates pre-death sales and understates post-death spike in sales.

Q. Let's move on to your BMI calculation. Can you tell us what was your base?

lJa
A. As we discussed just before the break, the base is the average of the preceding quarters. If we go to
Exhibits 15 and 16 again, if you wish...

Mr. Voth: Mr. Camp, can you pull up Exhibits 15 and 16?
ae
Mr. Anson: You'll see on Exhibit 16, if we can go there... you'll see on the left-hand side of Exhibit
16... there we go... historical domestic royalties above and foreign royalties below. The total of those
two give us our revenue base to begin with.
ich

Mr. Voth: And can we go to Exhibit 15?

Q. And can you just briefly explain how Exhibit 15 comes into play with respect to your BMI
calculation?
mM

A. Well, we project out revenues. You notice there's... now, this is only for the... obviously, we're only
talking about Michael Jackson compositions now just so we're hopefully all clear on that. And you see
the spike in revenues... post- mortem spike in revenues and then the rapid drop-off over the next few
years and then down to 4.2 percent. And then at... after 2019, it drops down to the sustained negative
growth rate of 2.8 percent. And then beyond that is discounted below with a discount rate of 9.72
percent.
a

Q. All right. Let's briefly talk about Tohme Tohme. Now, Mr. Salkin asked you if you used Tohme
Te

Tohme as a source to identify any unpublished songs. Was there reference to Tohme Tohme on Page 58
of your report used in any way to identify songs in Exhibits 36 or 37?

A. No.
w.

Q. And you also mentioned the Michael Jackson 1993 deposition. And I think you used the term
abstract of the MJ deposition. What did you mean by that?
ww

A. I looked at an abstract of the deposition. I did not look at the whole thing. The two associates, Mr.
Anderson and Mr. Noble, in my office, I believe, viewed the whole deposition. I did not do so.
om
Q. And did you rely on the information provided to you by your associates?

A. Yes.

n.c
Q. Was there a film also of this deposition that took place in 1993?

A. Yeah. Yes, it is. It's videotaped.

so
Q. Are you aware if any of your employees watched the footage of the deposition?

A. Mr.... again, as I said... I meant to say a moment ago that Mr. Anderson and Mr. Noble both watched
it.

ck
Q. Did they convey that information to you...

A. Well...

lJa
Q. ...what they learned from the deposition?

A. Yes.
ae
Mr. Voth: Mr. Camp, can you please pull up Exhibit 26?

Q. Now, Mr. Salkin referenced Exhibit 26, which is included in your analysis of unreleased songs. And
ich
you mentioned that you failed to include the 2.8 percent decline in the industry in that exhibit. Do you
recall that?

A. Yes.
mM

Q. Now, if you looked at the compound annual growth rate on a 30-year basis, would the industry have
shown a rate of growth or of decline?

A. Well, if you look at the long term, there is a... there is long-term growth of about 1.8 percent,
according to IBIS ?? and other sources. The growth rate over the 15-year horizon and, I think, 18 years
is a decline. So what we elected to do in using these numbers and in projecting out sales, we declined
these sales at a rate of 2.8 percent per year. The other... the two other points in this exhibit that perhaps
a

you're not clear... one is we used base sales for the first year. We did not use total sales on any of these
albums. And for that reason, because we're using just Year 1 sales, we neither increased them to get to
Te

total sales, nor did we depreciate them by some discount or decline. We just used the first-year sales.
The... we also talked to a median versus average. I don't think we need to get back into that again.

Mr. Voth: Mr. Camp, can you please pull up Exhibit 25?
w.

Q. And was that 2.8 percent rate of decline incorporated elsewhere in your analysis of the Jackson
unreleased songs?
ww

A. Well, I think in all of our projections of revenue, we used the long term... a long-term growth rate of
a negative 2.8 percent.
om
Q. And Mr. Salkin also moved into evidence a certain portion of your deposition where you seem to
indicate that you were attributing the different... the three sources of income, whether it's artist royalty,
mechanical royalties, or joint venture income, to everything. So the question I have for you is that were

n.c
you only referring to Michael Jackson's unreleased songs at the time of his death.

A. If... I'm not sure I understand that question, Mr. Voth. I apologize. Could you ask me what... I'm not
sure what you're asking, frankly.

so
Q. Sure. So let's take one song. It's unreleased at the moment of his death. What sources of revenue in
your report did you attribute that to?

A. Right. Well, we... obviously, the sources of revenue from that unpublished song we're attributing all

ck
to Mijac. We're not attributing any other sources of revenue beyond the unpublished songs to Mijac, if
that's your question.

Q. That is my question.

lJa
A. Thank you.

Mr. Voth: One moment, Your Honor.

Judge Holmes: Sure.


ae
Mr. Voth: Let's go back to the critique that it would... that your post-mortem spike would take 20-plus
ich
years to return to pre-death level.

A. All right.

Q. All right. Let's assume that the sales of Michael Jackson's music in the 12 months prior to his death
mM

were 5.6 million. What impact, if any, would the rate of inflation have match... to match your
projections to return to the pre-death level?

A. Well, we're using a conservative long-term rate of inflation to discount sales. Obviously, if the
inflation rate went up, then you would need fewer years to return to equity, to return to even sales...
pre-death sales.
a

Q. And would your projections return to pre-death level in Year 10?


Te

A. Well, today... as you can see in our calculations in the report, under today's assumption and with
today's ?? assumptions of long-term inflation rates that we're currently experiencing, it will take 10
years to get sales back to pre-death levels.
w.

Mr. Voth: Just one moment, Your Honor. I just want to make sure that I don't have any further
questions. Can I just briefly consult with my team?

Judge Holmes: You may.


ww

Mr. Voth: Thank you, Your Honor. Almost done, Your Honor.
om
Q. Just for clarity purposes, for the parts of the catalog, including the Michael Jackson works... you
know, the major, the minor works, BMI, and Society rebates... did you include any artist royalties and
joint venture income to those cash flows?

n.c
A. No.

Mr. Voth: No further questions, Your Honor.

so
Judge Holmes: Okay. Oh, I have a few, Mr. Anson. Oh.

Mr. Salkin: Would you prefer that I...

ck
Judge Holmes: Do you have a few...

Mr. Salkin: ...wait until you're done, Your Honor?

lJa
Judge Holmes: ...pointed questions on recross?

Mr. Salkin: I do have a few. ae


Judge Holmes: Okay. Go ahead.

RECROSS-EXAMINATION BY MR. SALKIN:


ich
Q. With respect to the computation of the writer's share, that's a statutory $0.091 per track, is it not?

A. Yes, sir.

Q. And that's fixed.


mM

A. Yes, sir.

Q. With respect to the email that you were shown this morning, when did you first see that?

A. I saw that we were sending one out, but I first read it today.
a

Q. Did anybody describe to you what was being said?


Te

A. Nothing other than they... an email announcing that we were involved in this case.

Q. Who did you talk to about that?


w.

A. My secretary told me.

Q. What did she say?


ww

A. That we were sending out an email to our clients letting them know we were involved in this case.
om
Q. Did she describe the content at all?

A. No.

n.c
Q. Did she comment on what the... your qualifications would be shown as?

A. No.

Q. In fact, the language... the... some... I forget the language, but something like the appraiser of the

so
century, or something like that... has that ever been used before in other publicity that you've used?

A. Yeah, Mr. Salkin, I would never allow something like that to be said about me.

ck
Q. Referring to your Exhibit 25... and I unfortunately don't have it in front of me... but you said you
took the 2.8 percent decline into effect for the long term. Is that right?

A. Yes.

lJa
Q. But I think you testified earlier that you did not take it into effect for the starting point. Is that right?

A. Yes. We used a 95 percent rate of decline in Year 2, then 39 percent decline in Year 3, 33 percent in
ae
Year 4. And then we went to 2.8 percent decline per year thereafter.

Q. But did you take the decline, whether it be 2.8 percent from the start or maybe 5.5 percent from the
peak, into effect at your starting point?
ich

A. I don't understand that question.

Q. Well, you started with a certain amount. Then you added 2.8 percent... or deducted 2.8 percent.
mM

A. Yes.

Q. When you started, you started with a number.

A. Yes.

Q. And you had a certain number of albums that you referred to. I think it was 1,095,000 domestic. I
a

forget the foreign number.


Te

A. Yes.

Q. Did you make any adjustments because of the decline in the industry when you got to that 1,095,000
number?
w.

A. I get... well, I'll just answer again by telling you what the rates of decline are as stated on Exhibit 25.

Q. You mentioned that you had the Jackson deposition, and it was videoed. Where did it come from?
ww

A. I don't recall where we got it.


om
Q. Was it the IRS again?

A. I don't recall. I'm sure it's... I don't recall.

n.c
Q. Okay. And you didn't take the troubles to look at it?

A. I just testified not five minutes ago that I watched an abstract of it.

so
Q. With respect to the base before you got into the spike, you doubled the June revenue. Is that right?

A. You're right. We doubled the first six months of the year to get a full-year number.

ck
Q. And then when Mr. Voth just asked you a question, I believe you indicated that the starting point for
June was inappropriately moved up because there was lots of revenue the last five days. Is that... was
that your testimony?

lJa
A. No, I believe he asked me a different question.

Q. What do you recall testifying on? ae


A. He asked me whether, in calculating a sales spike, the sales spike numbers, if the starting date was
moved from June 25th to July 1, would that make a difference. And I told him, yes, it would because
what it would do is it would move essentially six days of post-death sales when there would have been
an incredible rush on acquiring recordings of Michael Jackson in the initial six days after his death.
ich
Those sales would have been moved in the pre-death sales, not in the post-death sales. So it would have
altered the amount of the spike. That, of course, is what Mr. Dahl tried to do over and over again in his
report.

Mr. Salkin: I'd like to move to strike that last comment.


mM

Judge Holmes: Sustained.

Q. Are you familiar with the timing on the issuance of royalty statements for music?

A. Yes.
a

Q. Is there a delay of any kind...


Te

Mr. Voth: Objection, Your Honor. Beyond the scope of Respondent's cross.

Judge Holmes: Overruled.


w.

Q. To your knowledge... excuse me. May we have the answer?

A. I said yes.
ww

Q. Yes. So there would be no royalty statements received by June 30th that referred to activity between
June 25th and June 30th, would it?
om
A. I'm not sure I understand the question.

Q. Well, if a royalty... the next royalty statement that Mr.... the Jackson estate would have received

n.c
would have covered some period of time... assume for the moment it included the month of June...
would that royalty statement have been received by the end of June?

A. No.

so
Q. With respect to Ray Charles, we talked about the motion picture that came out about four months
after death. Is that right?

A. Right, yeah. Yes.

ck
Q. Was that movie either finished or substantially finished prior to the date of death?

A. I don't know.

lJa
Q. And how about the album Genius Loves Company? Was that finished or... substantially prior to the
date of death? ae
A. I don't know, Mr. Salkin.

Q. And though if you compared Charles to Jackson, it would certainly be much more speculative,
would it not, if... whether or not there would be a movie?
ich

A. I don't agree with you, no.

Q. Then you first said that there were monthly albums of 600,000. And then you changed it to the
450,000 you have in your report.
mM

A. No, I didn't change it. I'm sorry. I have to interrupt you. I said let us look at what the number
actually is. And I opened my report and did that.

Q. I'm sorry. It's corrected. And you looked and you said 450. Is that right?

A. That's right.
a

Q. And that was just on those nine albums, right?


Te

A. I believe so.

Q. And if the writer's share of 450,000 items is $0.93, that would be about, what, $400,000 of income?
w.

A. I haven't done the math.

Q. Well...
ww

A. I...
om
Q. ...it would be less than 450,000 if it's under a dollar, wouldn't it?

A. Yes.

n.c
Q. And that would only be a small portion of the Jackson income of... well, we had the answer ??. I
think it was 6,052,000.

A. I... you know, Mr. Salkin, I'm not sure what numbers you're driving towards. But...

so
Q. Well, okay. But 450,000 out of 6 million would be significantly... would be insignificant when
you're trying to calculate the total.

ck
A. Yes, sir.

Q. With respect to the vocals on the so-called unreleased compositions, if any other artist had a voice
on those recordings, would those other artists share in the royalties?

lJa
A. It would depend on what arrangement Mr. Jackson made with the other artists.

Mr. Salkin: No other questions.

Judge Holmes: Shh. Mr. Weitzman, don't.


ae
CROSS-EXAMINATION BY JUDGE HOLMES:
ich

Q. All right. Primary report, 682-R... I just have a few questions here. Why did you pick Vivendi as
your source for the weighted average cost of capital?

A. We looked at a couple of alternatives. We liked Vivendi because they owned two music companies
mM

already. And they were an international firm that was part of what we thought as the rational pool of...
part of the rational pool of buyers... or pool of rational buyers. Excuse me.

Q. Is it an operating company?

A. I'm sorry. I missed that.


a

Q. Is it an operating company...
Te

A. It...

Q. ...or a publically traded catalog?


w.

A. It's a publically traded company that's both an operating company as well as an owner of catalogs.

Q. Did you disaggregate to try to get the catalog portion of the business and use your calculations from
that portion of the business?
ww

A. We would have liked to have done that, Your Honor. We were not able to do so.
om
Q. Where did you... how does your report reflect the increasing disintermediation of album sales in the
music industry?

n.c
A. We all recognized the facts of that occurrence. We were faced in writing this report with two
realities. Going back to 2009 and attempting to track with ?? actually the growth of digital and the
decline of albums is difficult in the extreme. So to some extent, we're using... excuse me... album sales
to some extent as a proxy for digital sales. You'll notice, for example, in our calculations of
international royalties, we use a ?? rate between albums and digital sales.

so
Q. But not for domestic projections, correct?

A. Not for domestic, no.

ck
Q. What has... do you know what the effect has been on the composer's share of royalties of the
movement towards digital sales of recordings?

lJa
A. Only qualitatively.

Q. What is that effect? ae


A. What was a very dramatic drop in the early 2000s has now become less painful to the composers as
very accurate and well-monitored payments are being received from the music download services. And
the popular artists are seeing their income suffer far less than they did. I can't answer for secondary
artists.
ich

Q. Is that true for living and dead composers? In other words, is the digitalization revolution... or I
guess the digitalization counter-revolution...

A. Mm-hmm.
mM

Q. ...represented by iTunes and the various services you just described benefitting more live... living
performers than dead performers?

A. Well, I can answer indirectly. It's benefitting more those performers who remain in the public eye so
that the whole premise, again, of... benefits the Michael Jackson estate are premised at least partially on
keeping Mr. Jackson alive, if you will... forgive the horrible pun... in the public's eye. Those
a

performers... and so now I'm asked... answering your general question. Those performers who are less
exposed to the public are having a harder time getting play time.
Te

Q. In considering the digitalization revolution, is it possible for music recorded in other media, like in
vinyl, to easily be transmuted into downloadable tracks?
w.

A. Oh, that's beyond my ken, sir.

Q. Turning to the unreleased music dispute here, you included in your list of source materials... I
believe it was MTV and a Billboard article as your source for the number of unreleased Michael
ww

Jackson songs. Is that correct?


om
A. Yes. Yes, sir.

Q. Was there any other information apart from that seemingly offhand conversation with Mr. Tohme?

n.c
A. Well, I had... on this project, I had two... have two terrific very senior people working with me who
have researched everything there... literally, everything there is that's been written about Michael
Jackson since before... well before his death. And I've talked to a number of people. We've also
researched as deeply and as widely as we can. We also submitted to the estate a long list of songs
asking for clarification from them as to whether the songs existed or whether they don't. I would direct

so
you to Exhibit 137 where all the songs are listed. I... if you have a chance to take another look through
it, you'll see how we identify the songs and, to the extent we got verification, where that verification
came from.

ck
Q. And so if there was credible testimony that an actual check of the inventory of Mr. Jackson's
belongings after his death produced many fewer songs, would you believe that credible evidence? Or
would you believe, based on the research that went into your report, that the estate is holding out other
unreleased songs?

lJa
A. I never want to accuse anyone of withholding anything. On the other hand, we've been... we've
collected an awful lot of information on these song titles. And the ones we've included in our list of at
least 105 have been verified by at least two sources... the source we found it from and then a second
ae
mention. My other feeling in this... and again, this is a personal conclusion... is that I'm hard-pressed to
believe that all 10,000 of these sound bites have been listened to. And until they are, I'm still a believer
that there is more music to be discovered.
ich
Q. What definition of song do you use in compiling your report?

A. All right. And that's a very good and very fair question.

Q. Thank you.
mM

A. Not... I'm sorry. It's not condescending. It's a very good question. A song has to be, at a minimum, to
our way of thinking, a usable track, not necessarily a fully...

Judge Holmes: No, Mr. Weitzman. No shaking head.

Mr. Weitzman: Sorry.


a

Judge Holmes: Go ahead, Mr. Anson.


Te

A. ...no fully harmonized, not fully tracked with instrumentation necessarily, but with sufficient
Michael Jackson vocals to be taken then to the mixers, to the studio and made into a usable piece of
music that could be issued.
w.

Q. So the definition of song that you used in assembling your report was limited to songs in which
there was a prospect of Michael Jackson as a performer, correct?
ww

A. In our view, yes.


om
Q. Did it therefore include songs with which Mr. Jackson may have sung but were not written by him?

A. Yes, absolutely.

n.c
Q. And this is reflected in the report that we've been talking today, 682-R.

A. Yes. It's part of that whole allocation process.

Q. Turn to Figure 26, which is on Page 69. Tell me when you're there. This is the sort of first sales year

so
for each album that Mr. Jackson had in the years before his death, correct?

A. Yes, sir. And they're...

ck
Q. Was the HIStory: Past, Present and Future, Book I an album consisting of original songs previously
unreleased or a compilation of previously released songs?

A. It's a compilation. And I believe these were not all previously released, but it is a compilation of all

lJa
of his songs.

Q. What percentage of those songs had previously been unreleased compared to a compilation of
previously released songs?
ae
A. I don't recall. I would certainly have to go back to the notes to find out.

Q. The Invincible album is next. Was that an album composed of previously unreleased songs or of... or
ich
was it a compilation of previously released songs or a mix?

A. Let's go to... so I'm not guessing at this...

Q. Mm-hmm.
mM

A. ...let's see what we say about this in our earlier part of...

Q. Oh, where was that?

A. Let's go to Page 23. The Invincible, I believe, were all songs by Jackson. And again, I would have to
go back to my notes. So this is an opinion I'm giving you, not a fact. My opinion is these were original
a

songs. This was a lead-up to the fallout that he had with Sony. If you recall, he had recorded something
in the order of 80 songs during this period, as I recall. And they... and there was 16, I believe, that went
Te

on Invincible. I'm speaking from memory. You can verify any of this that you wish.

Q. These are verifiable tracks one way or the other.


w.

A. Yes.

Q. Eventually, I'll have to learn about popular culture. Now, the third album listed there is Greatest
Hits: HIStory, Volume I. Was that a... an album of original songs? Or was it a remix of...
ww

A. Yes...
om
Q. Oh.

A. I'm sorry to interrupt. Yes.

n.c
Q. You do know that one.

A. Right. That one is original material.

so
Q. That was original material, Greatest Hits.

A. I believe so.

ck
Q. How about Number Ones is the next one?

A. That is not all original material. That's a mixture of various songs off of albums.

lJa
Q. That would be what we call a compilation, I think.

A. Yes. ae
Q. I may have the terminology wrong, but I'm sure somebody will correct me at some point. How
about the last one, The Essential Michael Jackson? Was that a compilation album? Or was that original
material?
ich
A. I don't... that one I don't recall. I don't know.

Q. In your experience, do compilation albums typically sell more or less or about the same as original
albums, given the same artist?
mM

A. That depends. That depends strictly on the artist. I am a valuation professional. I am not an A&R
professional. And so you know, my tastes run Amy Winehouse, Adele, and Lady Gaga. So if you ask
me about Winehouse, I could tell you a lot. But I am not an A&R professional, sir.

Q. I know you don't like Mannheim Steamroller either.

A. No, I don't like Mannheim Steamroller at all... at all.


a

Q. Well, if you look at the numbers on the right-hand column sales Year 1 album, there's a rather large
Te

dispersion among those five albums. Why did you choose to use the mean rather than the median?

A. Well, if I had used the median, I would have... you've got to throw out, as you know, the top and the
bottom. That leaves me the three very disparate numbers. And it does not lead to good mathematics.
w.

And so using the mean or the average is a better piece of statistical arithmetic in this case.

Q. All right. Page 73 of... tell me when you're there.


ww

A. Yes, sir.
om
Q. There's the intriguing sentence, "Container charges are also applied to electronic sales even though
there is no physical container."

A. Mm-hmm.

n.c
Q. What does that mean?

A. It's really true. You have these old contracts, and they call for a container charge. Even though the
producer is selling an electronic album, there's still a deduction of 25 percent for an album cover or a

so
CD case, what they call a jewel case.

Q. It's a legacy of a standard form of contract then, huh?

ck
A. It's a legacy of some form of a rip-off.

Q. Okay. And that was based on somebody named Richard Schulenberg, Legal Aspects of the Music
Industry...

lJa
A. Is that right?

Q. ...An Insider's View. That's Document 103, right?

A. Yeah.
ae
Q. Okay. Is that book publications? Do you know that?
ich

A. Yes, I believe that one is.

Q. Okay.
mM

A. There's some interesting reference books on the list of documents.

Q. Let's see what I've got here. Okay. You testified already that later on in the report where you
attribute certain income to Michael Jackson that that was an attribution to Michael Jackson and not
Mijac, correct?

A. Yes.
a

Q. Okay. Let's go over some of those. For instance, on Page 76, you have the mechanical royalties to
Te

the estate. Are you there? This is Figure 36.

A. Yes.
w.

Q. But it's very similar to the...

A. Yes, I'm there now.


ww

Q. ...same questions on 37, of course. On Page... Figure 36 on Page 76 of Exhibit 682-R, we have
mechanical royalties to the estate. What did you mean by that term?
om
A. That is the composer's royalty, and that is the typical royalty flow to Mijac.

Q. Okay. And then we have B, the artist royalty. Would that flow to whoever owned the master

n.c
recordings...

A. Yeah.

Q. ...of Mr. Jackson? Okay.

so
A. Yes, sir.

Q. And then there's the estate percentage split on joint venture distribution costs. Where would that

ck
flow?

A. That would flow to Mr. Jackson in... or in this case, his estate.

lJa
Q. Would that go through Sony/ATV? Or what joint venture are we talking about?

A. Yes, I believe that's true. I... it's been... ae


Q. So that would go somewhere, but it would... you think it would go to Sony/ATV, but you're not sure.

A. It... it's an agreement generated from the Jackson recording agreement subdivision, distributed to
Sony Music with the remaining 50 percent payable to MJB.
ich

Q. Okay. Well, I understand what you did there. And the same answers for Figure 37... that was where
you were looking specifically at the mechanical royalty. You were using the same definitions, in other
words, in calculating international as domestic, correct?
mM

A. Yes, sir.

Q. And Figure 42... same answers, right? That's on Page 80.

A. On Page 80, yes, sir.

Q. Okay. Did you make any assumptions about the percentage of Michael Jackson songs, by which I
a

mean songs Michael Jackson wrote, as a percentage of the total compositions on a posthumous album...
Te

A. Yes.

Q. ...compared to...
w.

A. Oh, sorry.

Q. ...still living albums? Is there such a word as "prehumous"? You know what I mean.
ww

A. Or humous.
om
Q. Okay.

A. We assumed in the posthumous work that each album would contain 11 songs and they were all...
would all come from Michael Jackson.

n.c
Q. So you were assuming 100 percent composition and the 100 percent vocals, right?

A. Yes.

so
Q. Okay. Do you know who Jeff Buckley was? Oh, he's the Hallelujah guy.

A. Exactly.

ck
Q. Did he have any other songs? Or...

A. His albums are good. I bought one since the testimony last week and...

lJa
Q. Oh.

A. Yeah. I enjoy it a lot. ae


Q. What genre would you say he's part of?

A. He's got a beautiful voice that just captures the... he would be... sorry ?? rock and roll, I guess,
would be the best way I would describe him.
ich

Q. Fair enough.

A. Worth buying. Worth buying.


mM

Q. What was the average life of the Vivendi that you used in your cost of debt component for WACC?

A. The average life of the debt?

Q. Yes.

A. Oh, I know that.


a

Q. Oh, I'm looking at 633-P, which is Mr. Dahl's rebuttal to your Mijac report. This is Page 21.
Te

A. And they have two... in '09, they have two large pieces of debt. One was...

Judge Holmes: Thank you, Joshua.


w.

A. ...relatively brand new.

Judge Holmes: Do you have a last name, Joshua?


ww

Mr. Rosefsky: Just trying to... Rosefsky.


om
Judge Holmes: Rosefsky. Thank you, Mr. Rosefsky.

Mr. Anson: They have two large pieces of debt. And the new one is perhaps in my rebuttal report,

n.c
which I no longer have here. Without it in front of me, I would be guessing. It would be...

Judge Holmes: But it's somewhere in your rebuttal report.

A. It is. Yes, sir.

so
Q. You're ?? to that.

A. Yes, sir.

ck
Q. Okay. Have you ever tax-effected a valuation?

A. Yes, sir, whenever directed to.

lJa
Q. Okay.

A. And if we... for example, a client will say here's what we're valuing. We know who has made an
ae
offer to us for this asset. And we do a lot of transactional work this way, so we know who the buyer is.
We know what their tax basis is; we know what our tax basis is, so do the valuation with their tax basis
in mind.
ich
Q. And that's not a decision you make. That's a decision assumption, I guess, that's supplied to you as
part of the appraisal process?

A. Right.
mM

Q. Okay.

Judge Holmes: Follow-up questions, Mr. Salkin?

Mr. Salkin: No, Your Honor.

Judge Holmes: Follow-up questions, Mr. Voth?


a

Mr. Voth: No, Your Honor.


Te

Judge Holmes: Oh. Thank you very much, Mr. Anson.

Mr. Anson: Thank you, Your Honor.


w.

Judge Holmes: Can we go on to a different Anson report? It's only 4:30.

Mr. Anson: Oh, please.


ww

Mr. Salkin: Second, no.


om
Judge Holmes: We'll be going to Mr. Branca then next Wednesday, and we'll continue with Mr. Anson
as well next week. Do you have fact witnesses that you know you'll be calling next week in addition to
Mr. Anson's expert testimony?

n.c
Ms. Herbert: Your Honor, we... we're... we don't know at this point whether we have any...

Judge Holmes: Okay.

so
Ms. Herbert: ...other fact witnesses.

Mr. Toscher: So why don't... sorry. Just an inquiry as to what Mr. Anson is going to start with.

ck
Judge Holmes: Oh, what's he... what's his next subject matter going to be? Are you going with
NNL/ROP or Sony/ATV?

Mr. Camp: Sony/ATV.

lJa
Judge Holmes: Okay. We will resume with that. And thank you very much. We're adjourned for the
weekend. ae
Court Clerk: All rise.

(Adjorned)
ich
mM

February 22nd 2017

Court Clerk: The court is in session.


a

Judge Holmes: Please be seated. I hope you all enjoyed your weekend. And I believe it's Mr. Camp.
Te

Mr. Camp is standing.

Mr. Camp: Yes, Your Honor.


w.

Judge Holmes: What do you have to say, Mr. Camp?

Mr. Camp: Respondent calls Weston Anson.


ww

Judge Holmes: Very good. I'll remind him he's still under oath. And Mr. Anson, you're still under oath,
of course.
om
Mr. Anson: Yes. Good morning, Your Honor.

Judge Holmes: Go ahead, Mr. Camp.

n.c
Mr. Camp: May I approach and have documents marked?

Judge Holmes: Of course.

so
Court Clerk: Exhibit 695-R is marked for identification. It is the original fair market value report of
Mr. Anson for New Horizon Trust II.

Court Clerk: And Exhibit 696-R is marked for identification. It is the rebuttal report of Mr. Anson for

ck
New Horizon Trust II.

Judge Holmes: And the original report was 695?

lJa
Court Clerk: Yes.

Mr. Camp: Thank you, ma'am. ae


DIRECT EXAMINATION BY MR. CAMP:

Q. Mr. Anson, do you recognize Exhibit 695-R?


ich
A. Yes. Yes, I do.

Q. And do you recognize Exhibit 696-R?

A. Yes.
mM

Mr. Camp: Respondent moves that Mr. Anson's reports be admitted into evidence at this time.

Judge Holmes: They are.

Mr. Camp: Thank you, Your Honor. May I proceed?


a

Judge Holmes: You may.


Te

Mr. Camp:

Q. Good morning, Mr. Anson.


w.

A. Good morning, sir.

Q. You testified last week about your experience and qualifications. Is there anything that we didn't
cover that you would like to add today?
ww

A. I think only one thing that may be pertinent. One of the groups we've been active in for the last 15
om
years is the American Bankruptcy Institute, a group of a few thousand financial professionals that deal
with the valuation of companies and assets. Recently, for the last five years, I've been Chairman of the
Asset Sales Committee, which deals with the valuation and sale of companies both distressed and non-
distressed. And in that role, obviously, we spend a lot of time valuing and ... those assets and learning a

n.c
great deal about the methods of valuation.

Q. Are there any other publications we didn't cover that you might want to mention today?

A. Yes, there's been one book that came out of that experience called the Intangible Asset Handbook.

so
And in that book, you'll find 10 or 12 case studies, examples of real companies that have been valued
and sold under various scenarios.

Q. Thank you. Let's move on to the state of the music industry in 2009. Some have speculated that the

ck
music industry was in turmoil. What is your opinion of the state of the market at that time?

A. Well, it had been turmoil. By 2009, the industry, I think, had begun to ... well, more than begun ... it
had come through a period of turmoil and reorganized itself. The form and format of sales had changed.

lJa
Album sales had been declining in favor of single- song sales. Digital sales had obviously begun to
increase in favor of a hard copy of the old analog- type sales. On the other hand, piracy had diminished
substantially. The Napster settlement had been reached in 2008. And in the early 2000s, the organized
digital download and paid music dispersal systems like Spotify, Google iTunes, and Pandora had all
ae
come into being. So they had gone through a period of turmoil and come out and resolved most of the
piracy issues by that time.

Q. Thank you. And let's discuss your methodology. If we could please look at Exhibit 1 of your report
ich
marked as Exhibit 695-R. Tell me when you have that in front of you.

A. Yes, sir.

Q. Does this exhibit represent the conclusion you reached with respect to the value of New Horizon
mM

Trust II?

A. Yes. Those inclusions of the two approaches we used.

Q. And has your conclusion of value changed in any way since the submission of your expert report?

A. No.
a

Q. And what is the primary asset held within New Horizon Trust II?
Te

A. It's a half interest in Sony/ATV.

Q. And how did you go about valuing the 50 percent interest in Sony/ATV?
w.

A. We used two methodologies. We used the market approach and the income approach.

Q. And specifically, what did you rely on in formulating your market approach?
ww

A. In the market approach, we ... as the term would imply, we used the market comparables and ... as
om
a ... an outgrowth of that. We used NPS, net publisher's share, as a measure of a market standard.

Q. And with respect to formulating your income approach, what method ... what did you rely on?

n.c
A. We used a ... excuse me ... discounted cash flow methodology and, of course, applied an appropriate
discount rate to get at a present value of future cash flows.

Q. And did you rely on historic financials?

so
A. We did. We were furnished financials by Sony/ATV.

Q. And with ... let's look at your market approach analysis. Why did you use an NPS multiple instead
of an EBITDA multiple?

ck
A. Well, there are a couple of reasons. On the most basic level, an NPS number, net publisher's share
number, is less manipulatable than an EBITDA number where an EIBTDA number can be subject to, I
suppose, the word loading of different expenses from company to company, whereas an NPS is a purer

lJa
expression of free cash flow with just gross income, less direct expenses. More importantly in this
particular case where Sony has relatively high operating expenses and where the primary objective of
Sony at this point in time was growth and they were spending substantial amounts of money on catalog
acquisitions and talent acquisitions, the ... an EBITDA number for Sony would not give you a clear
ae
indication of long-term cash flow capabilities out of Sony. And so the NPS number was a truer
expression of cash flow.

Q. Is that because NPS doesn't take into effect the expenses?


ich

A. Well, it filters out the effect of operating expenses, particularly when operating expenses may be
inflated because ... when they may be inflated for various reasons.

Q. And were there expenses incurred by Sony/ATV in 2009 that would not be incurred by a
mM

hypothetical buyer?

A. Yes. And you know, if the hypothetical buyer were focused on the ... on profitability, there are a
number of expenses that could be eliminated both on the out ... in operations and in acquisition
expenses.

Q. And were there any expenses in particular that would have been removed?
a

A. Well, one comes to mind immediately, of course, is the admin expense that Sony Music charges to
Te

Sony/ATV, which is the $7.5 million expense that's currently being ... was at that time being charged,
amongst others.

Q. And were you aware that David Dunn testified that the Sony admin fee is a fee that Sony takes
w.

every year that doesn't necessarily have any justification? They don't really provide any services for it.

A. That sounds like a direct quote, actually.


ww

Q. I believe it is, yes.


om
A. Yeah, I do remember that.

Q. And do you agree with that statement?

n.c
A. Very much so.

Q. If we could look at Figure 8 on Page 21 of your report marked as 695-R. Let me know when you're
there.

so
A. You've got it on the screen. All right.

Q. And what does Figure 8 show us?

ck
A. This is a summary of the comparable transactions that we could find between the years 2006 and
2011.

Q. And these are the comparable track ... transactions you relied upon.

lJa
A. Yes.

Q. Were there other transactions you identified which were not incorporated in your analysis?
ae
A. There was one other, but it's not truly a comparable. There was a transaction, the so-called EMI
transaction, that took place in 2011. But that's a distress transaction, and that transaction ...
ich
Q. What do you mean it was a distress transaction?

A. Well, what happened was EMI had borrowed a great deal of money, defaulted on those loans.
Citigroup was forced to take back the company and then sold it off in pieces. They sold half to Vivendi
and half to Sony and then took, roughly, a $1 billion loss on the deal. So it's as distressed as you can
mM

get.

Q. And was this the same transaction that was relied upon by Mr. Wallis in his analysis?

A. Unfortunately, yes, it is.

Q. And the other comparable Mr. Wallis relied upon, I believe, was Warner Music. Was that an
a

appropriate comparable in your opinion?


Te

A. No, it's not a comparable at all because it's ... first of all, it's not a transaction. What it was, was Mr.
Wallis identified Warner Music Group, which ... like EMI, by the way ... was both a music publisher
and a music recording company. And he was not able ... by the way, if you look at 9.8 and 9.9 of his
report and his analysis, you'll find that he has several caveats in there. First of all, WMG was not a
w.

music publisher purely. So he had to make an arbitrary and very personal analysis where he tries to
divide the operating expenses of WMG between music publishing and music recording. And he frankly
states he just does it based on his own best analysis. Beyond that, because it's a publically traded
company, it doesn't ... I'm going to simplify this ... it didn't have enough market value. So he grossed up
ww

the value and, again, based on a personal decision of how much he should gross it up. And then
finally ... again, I recommend you read 9.9 carefully ... he makes a couple of other judgmental
om
decisions as to what the multiple should be in order to get at a value for WMG. So along three or four
major dimensions, it doesn't stand up as a comparable at all.

Q. Let's turn to your income approach. You mentioned earlier that you relied upon a discounted cash

n.c
flow analysis. How did you develop your projections.

A. Well, again, we were furnished some historical financials from Sony.

Q. And did you adjust the historical earnings to remove the impact of the Napster settlement?

so
A. We did. In 2009, music publishers, Sony amongst them, was given a settlement from Napster. Sony's
... the amount was 13.4 million, so that has to be backed out of the 2009 income statement. It's a non-
recurring, one-time windfall income item.

ck
Q. And did you assume Sony ATV's historical operating expenses would be consistent with those
incurred by a hypothetical buyer?

lJa
A. Yes. At one point in our report ... I think it's Figure 16 and 17, but I'm ...

Q. Sorry. You said ... are you sure it was ... you did assume that Sony/ATV's historical operating
expenses would be consistent with those incurred by a hypothetical buyer?
ae
A. No, no. What I'm saying is, at one point, what we did is we analyzed expenses from other music
publishers in order to get at a normalized expense level for Sony/ATV. And it's illustrated at one point
in my report. We can get to it later, I'm sure.
ich

Q. Is that ... I believe it's Figure 15 and 16 on Page 34. Let's turn there.

A. All right. Let's do that. Do you have that on a slide? All right. Right. Well, what this is ... if we look
at Figure 15, these are the EBITDA margins for ... at the top for ATV with the Napster settlement taken
mM

out, of course. And so you see over five years their average EBITDA is 40 percent. Down below, we
look at four other music publishing companies, and there your median is 53.2 percent. The issue,
obviously, is that Sony/ATV is spending a lot more on their operating expenses than comparable
companies. And so the assumption that we made is a rational buyer is going to get those operating
expenses down to a level where EBITDA is going to match or come close to the median of other music
publishers. Excuse me. I've got a bit of a cold.
a

Q. It's fine. Take your time. I'm going to move on to discounts anyways.
Te

A. Mm-hmm.

Q. In your analysis, did you apply any discounts?


w.

A. Are we talking about ...

Q. Let's start with an illiquidity or a marketability discount. Did you apply a discount for lack of
marketability?
ww

A. We didn't. We didn't, and I think that's a non-issue in this particular evaluation for ...
om
Q. Why is that?

A. Well, I ... let me just cite two things. First of all, in this period, in the 2009 time period, music

n.c
publishing assets are ... there's a substantial market and a demand for music publishing assets. And I
think everything you read, all the background material you read, confirms that. And secondly, I think
there's no debate between Mr. Wallis and myself that there's a substantial demand at this point in time
for this type of asset. So there is no need for marketability or "illiquidity" discount.

so
Q. What about the nature of the assets? I believe Mr. Wallis referred to aspects of the catalog as trophy
assets. Do you agree with that characterization?

A. Yes. And that just reaffirms the lack of need for an illiquidity discount because what you have here

ck
in addition to a very marketable asset, in general, is you've got the obvious ... the addition of the
Beatles catalog, which is roughly 250 titles in that catalog alone, along with a very high-quality catalog
in general.

lJa
Q. And now let's ... let me ask you about any lack of control, I guess, of minority discount. Did you
apply a discount for lack of control?

A. No, we did not.

Q. And why not?


ae
A. Well, let's talk about what that really means. Here in this case, the rational buyer is looking at
ich
whether or not there really is lack of control. And the rational buyer asks himself/herself/themselves
what are the important issues that I'm concerned about. Well, I'm concerned about the following. I'm
concerned about whether or not I've got control over who's the CEO, what is the annual operating
budget going to be, do I have veto power over major expenditures, do I have control over who the CFO
is, can I veto the hiring of a new CFO. These are the issues that a rational buyer is concerned with. The
mM

rational buyer isn't particularly concerned with who's the head of human resources. That's not the
question that they're concerned with. And so the rational buyer looks at this 50/50 board control and
this veto power over key issues and says I don't have a minority issue here. And for that reason, I don't
believe a minority discount is appropriate. I really don't.

Q. How about the buy-sell mechanism in the operating agreement? Did that impact your analysis
regarding discounts?
a

A. Well, yeah, also, that has to be looked at because, you know, the buy-sell agreement is very clear.
Te

And it says should the buy-sell agreement be put into play, there shall not be discounts applied in the
valuation process. It's very clear.

Q. And was it your assumption that a hypothetical buyer would end up with 100 percent of Sony/ATV?
w.

A. Yes.

Q. And were you aware that the estate sold its 50 percent interest in Sony/ATV last year?
ww

A. Yes, of course.
om
Q. Do you know how the sale was triggered?

A. I believe Sony invoked the buy-sell agreement.

n.c
Q. So if we rewind here, what impact does the 2016 transaction have on your conclusion of value, if
any?

A. Well, we didn't use the transaction in our primary evaluation analysis. But it's a very good ...

so
Q. I'm sorry. What was that?

A. It's a very good reasonableness check and confirms, I think, the assumptions that we used in coming

ck
to our valuation conclusions. Also, while we did not use these post-death assumptions to get at our
primary valuation, it does show post-death can be valuable. Mr. Wallis certainly, in reaching his
valuation conclusions, used only post-death "comparables." Also, and finally, the analysis that Mr.
Dunn went through reaffirms and reconfirms, a, the methodologies we used because, in the market

lJa
approach, he uses the market approach and he uses an NPS, a net publisher's share, methodology. Also,
Mr. Dunn in his analysis points out very clearly that the operating expenses can be reduced and the
level of EBITDA should be raised and the rational buyer would look at that and make those
assumptions. I think the those are the main things that I get ... that I gather from it. Beyond that, I don't
have any further comment.
ae
Q. Okay. Thank you, Mr. Anson.
ich
Mr. Camp: No further questions, Your Honor.

Judge Holmes: Okay. Cross, Mr. Salkin?

CROSS-EXAMINATION BY MR. SALKIN:


mM

Q. Good morning, Mr. Anson.

A. Good morning, sir.

Q. Is it your understanding that the asset that is being valued is the estate's one-half interest in
Sony/ATV Music Publishing LLC?
a

A. Yes, sir.
Te

Q. Is Sony/ATV entitled to any recorded music royalties?

A. Yes, sir.
w.

Q. That's your understanding?

A. Yes, sir.
ww

Q. Music recording royalties ... that would be the works of an artist singing or et cetera. Is that your
om
understanding?

A. It's entitled to all of the royal ... it's entitled to all of the income and all of the royalties that
Sony/ATV currently collects.

n.c
Q. All right. Is music recording royalties included in that?

A. Not directly because it is a catalog and it collects the publishing royalties ... mechanicals, primarily.
It does not collect for performance royalties.

so
Q. Have you ever valued a partial interest in a limited liability company or a partnership?

A. Yes.

ck
Q. Have you issued a formal appraisal report with respect to that?

A. We've done a lot of transactions where we've done that, yes.

lJa
Q. How about in the music industry?

A. No, I don't think so.


ae
Q. Can you name formal appraisals with partial interest and partnerships or limited liability companies
you've made in the last 10 years?
ich
A. No, I'm not going to do that for you.

Q. Okay. Have you ever prepared a report that calculated a discount for lack of marketability for an
interest in a limited partnership or a limited liability company?
mM

A. I haven't thought about that, but I think our firm has.

Q. How many in the last 10 years?

A. I don't know, Mr. Salkin.


a

Q. And have you ever prepared a report that computes a discount for lack of control of an interest in a
partnership or limited liability company?
Te

A. I'm sure as a firm that we have done so, yes.

Q. Well, how about you individually?


w.

A. I'm sure that I have. Yes, sir.

Q. Okay. Can you name some reports you have written in that regard?
ww

A. Mr. Salkin, I think you are under some misapprehension that the transactional work I do is available
om
for your inspection. It's not.

Q. So is your answer that you decline to answer the question?

n.c
A. Yes.

Q. Have you ever read the portion of a court decision dealing with the issue of the value of an interest
in a partnership or a limited liability company should be discounted for lack of marketability?

so
A. I have no idea what you're referring to.

Q. All right. Is there any court decision you recall reading a specific portion that deals with this issue
that talks about whether or not a discount for lack of marketability is available?

ck
A. Mr. Salkin, again, I'm in the dark as to what you're referring to.

Q. All right.

lJa
Judge Holmes: Is that a no?

Mr. Anson: I'm sorry, sir?

Judge Holmes: That means a no.


ae
Mr. Anson: No is the answer. No.
ich

Judge Holmes: Okay.

Mr. Salkin: Okay. And have you ever read the portion of a court decision dealing with the issue of
whether the value of an interest in a partnership or a limited liability company should be discounted for
mM

lack of control?

A. No.

Q. And have you ever read the portion of any court decision that computes the discount for lack of
marketability?
a

Mr. Camp: Objection. This is question ... same question. Asked and answered.
Te

Judge Holmes: Sustained. Do you have such a thing that you want to impeach him with?

Mr. Salkin: He is opining, Your Honor, that these discounts are not available in this case. But he's
testified that he has never read a court decision that deals with the issue. I think that's very relevant.
w.

Judge Holmes: Oh, no. You asked him about whether he himself testified leading to a court decision
that discussed whether a DLOM or DLOC was available.
ww

Mr. Salkin: Excuse me. My notes ... I must have misread my notes.
om
Judge Holmes: Okay.

Mr. Salkin: May I restate?

n.c
Judge Holmes: Yeah, yeah.

Mr. Salkin: Have you ever read the portion of a court decision that calculates the amount of the
discount for lack of marketability of an interest in a limited liability company or a partnership?

so
A. No.

Q. And have you ever read the portion of a court decision that calculates the amount of the discount for
lack of control of an interest in a limited liability company or partnership?

ck
A. Not a court decision, no.

Q. And do you recall that in your report you cite several tax court cases? Do you recall that?

lJa
A. And several books on the subject of valuation, yes.

Q. Yes. And do you recall during the course of your deposition I asked if you read the portions of those
ae
court decisions that dealt with discounts? Do you recall that?

A. I recall it. I
ich
Q. Do you recall your answer?

A. I don't.

Q. Was it, no, you had not read those portions of the court decision? Is that right?
mM

A. I don't recall.

Q. And have you read those court decisions since the time of your deposition?

A. No.
a

Q. Okay. Let's take a look at your computation of value with the market method. Directing your
attention to Exhibit 6 of your report ... that is 695-R ... you list a series of transactions which you claim
Te

are comparable to the transaction before the Court, namely, the estate's value of a one-half interest in
Sony/ATV. Have you been able to locate Exhibit 6?

A. Yes.
w.

Q. Do any of these transactions involve the sale of a partial interest in the company?

A. I don't believe so.


ww

Q. Your first item is BMG Music Publishing sold to Universal Music on September 1st, 2006. Is that
om
right?

A. That's right.

n.c
Q. And that shows an NPS multiple ... that's net publisher's share ... of 9.63. Is that correct?

A. Yes.

Q. Was there a financial crisis that occurred between 2006 and June 30th, 2009?

so
A. Yes.

Q. Excuse me for moving back and forth in your report, but I need it to show what we're talking about.

ck
Can I direct your attention to Figure 6 on Page 15 of your report? That's Exhibit 695-R. Do you see
that, Mr. Anson?

A. Yes.

lJa
Q. And that shows various economic criteria for four calendar quarters ending June 30th, 2009,
correct? ae
A. Yes.

Q. And based on that data, is it fair to say that there was a very substantial decline in the United States
economy during that period?
ich

A. Yes.

Q. And was there also a substantial decline in the music industry during that period?
mM

A. Yes.

Q. Did you take that decline into effect in transmitting the BMG comparable at a 9.63 multiple to a
lower comparable in 2009?

A. Well, by 2009, the multiple probably would have been higher, if that's your question.
a

Q. All right. Could you ... you have the Mijac report.
Te

Mr. Salkin: Could I have the Mijac Exhibit 40?

Mr. Rosefsky: It's 682 ... Exhibit 682.


w.

Mr. Salkin: That's Exhibit 682?

Q. Exhibit 682, Exhibit 40. And that ... with your Mijac report, do you recall?
ww

A. And I'm looking now at Exhibit 40?


om
Q. Yes, 40 of the Mijac report, Exhibit 682. It's got a detailed chart and then a bar graph. There was an
arrow going downwards.

Judge Holmes: Oops. We're on Page 40, I'm afraid.

n.c
Mr. Rosefsky: Yes, I got it. It's Page 167 of the report.

Judge Holmes: There we go.

so
Mr. Salkin: That's it. Yes. And you said you have a laser pointer?

Mr. Rosefsky: Yes, sir.

ck
Mr. Salkin: Excuse me, Your Honor, while I get the pointer. It might help. Maybe we don't have a
pointer.

Mr. Rosefsky: I have another one.

lJa
Mr. Salkin: All right. I'll go without the pointer.

Mr. Rosefsky: Here we go.


ae
Mr. Salkin: Okay. Could you put that back on the screen, please?

Mr. Salkin:
ich

Q. All right. You see I'm pointing to 1999? You see that bar?

A. Yes, I see all the bars.


mM

Q. Do you see the slope going down and it goes all the way to 2009?

Mr. Salkin: If you could move the exhibit over?

Mr. Salkin:

Q. And that's a drop of about 50 percent over a period of 10 years. Is that correct?
a

A. I haven't worked out the percentage.


Te

Q. Well, could you take a look at the chart up above, the bar chart, and look at the year 1999? You
notice 14.5 billion.
w.

Mr. Camp: Your Honor, could we get some clarification? Are we going back through Mijac now?

Judge Holmes: I think he has a point somewhere on here. Overruled. Go ahead, Mr. Salkin.
ww

Mr. Salkin: Yes.


om
Q. Do you see that in 1999 it shows 14.5 billion of revenue?

A. Yes.

n.c
Q. And then go to the far right on that line, so 7.8 billion of revenue for 2009.

A. Yes.

Q. And that's a drop of about 50 percent. Is that right?

so
A. It's a drop of about ... it's ...

Q. So that's a very ...

ck
A. It's a big ...

Q. ... very substantial ...

lJa
A. It's a big drop, Mr. Salkin.

Q. ... a very substantial drop in the industry. Is that correct?

A. That's correct.
ae
Q. And you just testified a few minutes ago that there was an escalation in the industry, as I recall.
ich

A. I'm sorry. I didn't hear what ...

Mr. Camp: Objection. Mischaracterization.


mM

Mr. Anson: I didn't say that, Mr. Salkin. Please.

Judge Holmes: That one's sustained.

Mr. Salkin: All right. Back to Exhibit 6 of your Exhibit 695-R, could you look at that again, please?

A. Okay. This is Exhibit ... all right. Yes, okay.


a

Q. You're a little ahead of me. Let me get there. The next comparable you show is a Famous Music
Te

Publishing transaction in July of 2007. Is that right?

A. That's right.
w.

Q. If you see any ... it shows a sale price of 370 million. Is that correct?

A. Yes.
ww

Q. Okay. Is that the ... all allocated to the publishing catalog?


om
A. Yes.

Q. Okay. Could you take a look at Exhibit 201-J? That's a joint exhibit.

n.c
Mr. Salkin: Could you put that up on the screen?

A. From what report?

Q. It's a stipulated exhibit. It's not in a report. This is the financial statement for Sony/ATV Music

so
Publishing. And could you move to Page 16, Footnote 5, please? You have looked at these financial
statements, haven't you, Mr. Anson?

A. It's been some time.

ck
Q. All right. You notice down at the bottom it explains the Famous transaction. And then it has an
allocation. It says ?? catalogs 347. Do you see that?

lJa
A. Give me just a second. Okay. I'm with you now.

Q. All right. So was that necessary to adjust your Exhibit 6 for that different allocation?
ae
A. I'm sorry. You have to expand it again so I can read it, sir. Expand the type.

Q. Are you talking about on the screen?


ich
A. Yes.

Q. Okay.

Mr. Salkin: Could you make it a little larger.


mM

A. It's fine now. He had ...

Q. All right.

A. He had shrunk it. The total cost of the transaction of the company was 370 with fees. I can lower the
cost by 10 million, if you'd like.
a

Q. It would go to 347 million for the catalog portion, wouldn't it ...


Te

A. It ...

Q. ... based on the footnote in the financial statement?


w.

A. Right. It would stay at 360 because all the intangibles together are 360.

Q. All right. Now, Rodgers and Hammerstein is the third one. Is that right?
ww

A. Apparently so.
om
Mr. Camp: Are we back to ...

Mr. Salkin: We're back ...

n.c
Mr. Camp: ... Mr. Anson?

Mr. Salkin: We're back to Exhibit 6 ... I'm sorry ... of Exhibit 695-R.

so
A. Yes, there you go. Yes.

Q. You heard Mr. Wallis testify that the Beatles were a trophy asset. Is that correct?

ck
A. Yes.

Q. And do you consider Rodgers and Hammerstein to be a trophy asset?

lJa
A. Not particularly.

Q. All right. And then the next one is Evergreen with a net publisher's share of $7 million. Is that
correct?

A. Yes.
ae
Q. And do you believe that's comparable to Sony/ATV with $190 million net publisher share?
ich

A. It is comparable in that it was the transaction that was available in the time frame that we're dealing
with.

Q. All right. And you ... but this is just a catalog sale. It's not a going business, is it?
mM

A. I believe it was just a catalog, yes.

Q. And the next one is Stage Three. That also has a $6.9 million net publisher share. And you believe
that's comparable to Sony/ATV's $190 million net publisher's share?

A. It is comparable in that it is a catalog. It is contemporary music ... Aerosmith, Jim Morrison, ZZ Top,
a

et cetera. It is in the right time frame, and it is an arm's length acquisition, unlike the comparables that
Mr. Wallis ... well, strike that.
Te

Q. And that's also just a catalog, right?

A. Yes, sir.
w.

Q. All right. And the next one is Chrysalis.

A. That's ...
ww

Q. That's a little more net publisher's share, 21.6. But ... so you're feeling that it's comparable, despite
om
the $190 million net publisher share of Sony/ATV. Is that right?

A. I'm sorry. I didn't catch the balance of that question.

n.c
Q. Well, do you feel that Chrysalis is also comparable, despite its net publisher's share being a little
more than 10 percent of Sony/ATV's?

A. It is an actual comparable from an appropriate time frame. It is arm's length. It is a music catalog
with contemporary content.

so
Q. Then your last one is Bug Music.

A. Including Michael Jackson ...

ck
Q. I'm sorry?

A. ... I might add. Including David Bowie and Michael Jackson.

lJa
Q. Okay. And the ... now, regarding Bug Music, $26 million, that also, you feel, is comparable to
Sony/ATV's $190 million net publisher share? ae
A. It is a comparable transaction, the outer edge of the time limit that we could work with.

Q. And also, this is a catalog, not a going business, right?


ich
A. Right.

Q. But none of these are the sale of ...

A. It also ... I do want to point out also the manager of part of its catalog.
mM

Q. None of these are the sale of an interest in the limited liability company or a partnership, are they?

A. I don't understand. I'm sorry. I don't understand that.

Q. Did any of these transactions ... these transactions involve the sale of a full catalog, is that right, 100
percent?
a

A. Yes.
Te

Q. All right. None of these represent the sale of a partial interest in a limited liability company, do
they?
w.

A. You're absolutely right.

Q. Now, when you testified last week with respect to Mijac, you listed seven artists whose
comparability was involved to determine the spike in revenues after death. Do you recall that?
ww

A. I recall the conversation, indeed.


om
Q. Yes. And we talked about Ray Charles. Do you remember that?

A. Yes.

n.c
Q. And we talked about medians. Do you remember that?

A. Very well.

so
Q. And we talked about averages.

A. Excuse me. I'm sorry, Mr. Salkin. We talked about medians and averages. Indeed, we did.

ck
Q. And in that instance, you concluded that the average was the best way to calculate your comparable
amount. Is that right?

A. You'd have to read that back to me. We had a lot of talk about medians and averages.

lJa
Q. All right. Well, isn't it true that with respect to the seven artists that you cited as comparables for
Mijac to determine the spike that you based your comparable on the average of the seven. Is that right?
ae
Mr. Camp: Objection, Your Honor. Are we going back to Mijac again? This is beyond the scope of his
direct.

Judge Holmes: Oh, no. It's part of the whole EBITDA conversation and the use of various
ich
comparables, switching between mean and median. Go ahead, Mr. Salkin. The objection's overruled.

A. Okay. You have to set the scene for what you're asking me. Can you just go back ...

Q. Let's ... let me restate it.


mM

A. Yeah. Go back just a little bit before that question so I can understand the context in which we're
speaking of.

Q. All right.

Mr. Salkin: In fact, could you bring up ... find that ...
a

Mr. Rosefsky: I'm looking for it right now.


Te

Mr. Salkin: Okay.

Q. When we were talking about Mijac ... and one of the important issues in Mijac is the size of the
w.

spike in revenues caused by the death of a well-known artist such as Ray Charles or Michael Jackson or
so on ... your report indicated seven artists that you thought were comparable. The one I remember the
best was Ray Charles, but there were other ones. There was John Denver. There was Notorious BIG.
There was ...
ww

A. Buckley.
om
Q. ... Buckley, Selena. I forget the rest of them, but there were seven. And to compute an appropriate
spike, as I recall, you determined the average of the results of those seven for the year after death. Is
that correct ... the average rise?

n.c
A. I believe we used the average. I believe that's correct. And I ...

Q. You believe ...

so
A. I'm ... if you tell me that's what it says in the transcript, I believe you.

Q. You wrote the report, didn't you, Mr. Anson?

ck
A. I did.

Q. Okay. And you recall that ... in your testimony so that the average was the number and that was the
right way to do it?

lJa
A. Yes.

Q. Yes. You're nodding your head. You mean yes.

A. Yes, yes, yes.


ae
Mr. Camp: He said yes.
ich

Mr. Salkin: Now, with respect to ...

Mr. Rosefsky: I just ... I'm bringing up the Page 119.


mM

Mr. Salkin: All right. He's recalled it now. It's all right.

Mr. Anson: Oh, there it is. Yes.

Mr. Salkin: All right.

Q. And with respect to Exhibit 6 of Exhibit 695-R ...


a

A. Is that this report?


Te

Q. That would be your report for Sony/ATV.

A. Okay.
w.

Q. You used the median to produce a multiple of 10.7. Is that right?

A. Yes.
ww

Q. Okay. And you're aware that every time you increase this multiple by one, the value of the company
om
goes up by $190 million. So every portion of that median is very important, isn't it?

A. Yes.

n.c
Q. And if you took an average and if the average was 10.15, that would make a meaningful difference,
wouldn't it?

A. Yes, it would.

so
Q. So we have five of the seven so-called comparables. At least five are the sale of a catalog, right?
That's the bottom five?

A. Yes.

ck
Q. Okay. And BMG is about the right size, that it predates the financial crisis on its transaction,
correct?

lJa
A. Yes.

Q. And Famous is at least closer to our valuation date. If we make a correction to bring the price down
for the catalog to 347 million, then the multiple drops to just a little over 8 times. Is that right?

A. Yes.
ae
Q. Okay. Why don't we start talking about the income approach. Could you turn to your Exhibit 11? It's
ich
Exhibit 695-R. Okay. Exhibit 11 contains your computation of the value of Sony/ATV based on the
discounted cash flow method, correct?

A. Yes.
mM

Q. Directing your attention to the 2010 column, you show operating expenses of $92 million. Is that
right?

A. Yes.

Q. And if you look at Exhibit 13 of Exhibit 695-R ... that's just two pages later ... you see operating
expenses of $143 million. Is that right?
a

A. And what column are you looking in, please?


Te

Q. That would be the 2009 column.

A. Yes.
w.

Q. All right. And you mentioned the $7.5 million of administrative expenses that really don't belong
there. Do you recall that? So that's an adjustment downward that should be made. We all agree, I think.
The question is would you agree that the $143 million of expenses should be reduced by 7.5 million for
ww

that administrative expense that we talked about that was inappropriate. Is that right?
om
A. Yes.

Q. Okay. And even Mr. Wallis eliminated that from his expenses and his projections, correct?

n.c
A. Yes.

Q. Did you read the services agreement that relates to Sony/ATV?

A. The services agreement between Sony Music Publishing and Sony/ATV?

so
Q. Right.

A. At one point, I did, yes.

ck
Q. All right. And you recall that that provides it cannot be amended as long as Sony owns at least 20
percent of Sony/ATV? Or not amended ... terminated. I'm sorry.

lJa
A. Right. It can't be ended.

Q. It can't be ended. ae
A. Right.

Q. So that anyone who acquires less than 80 percent interest in Sony/ATV would not be able to amend
that agreement. Is that correct?
ich

A. I believe that's right. Yes.

Q. Now, even if your hypothetical buyer was able to take control of the company, could you explain
what expenses a company the size of Sony/ATV could eliminate to drop its expenses by ... what was
mM

it ... about $45 million ... I'm taking the administrative expenses out because we all agree that should go
out ... in one year?

A. Yes. In broad strokes, it would be an elimination of primarily management cost, which would
include employee costs, reduction in talent costs ...

Q. Wait. Let's pause on talent costs for a moment. You took talent costs out of the expenses in your
a

schedule. Is that right?


Te

A. Yes.

Q. So that wouldn't affect the reduction, would it, because you disregarded talent costs.
w.

A. Well, you ... if you remove them from your operating expenses, it has a direct effect, obviously, in
your total operating expenses.

Q. So you would eliminate talent cost. Is that right?


ww

A. They become a non-cash expense.


om
Q. Okay. And what else would you eliminate?

A. You reduce employee costs, and you reduce - - obviously, the admin fee goes out and support

n.c
services. And then the other expenses would ... are examined, and I don't recall in this report whether
we have the detail for those expense reductions.

Q. Yeah. Did you do an analysis of Sony/ATV beyond what's in the financial statement?

so
A. These are the only details we have. We weren't provided from Sony any further details,
unfortunately.

Q. From looking at this statement, out of $143 million, 17 million is talent cost, 34 million is catalog

ck
amortization. So we've already cut 51 million out of things that can't be cut. That takes you down to
$90 million. And you're suggesting that be reduced by tens of millions of dollars in one year?

A. I don't follow that. If you remove your admin fee and you cut your talent cost and your catalog am

lJa
costs, cut your employee costs somewhat ... and we ... again, we don't have any detail beyond what we
have here, unfortunately, that we ...

Q. Would you be able to explain ...

A. I just ... not ...


ae
Q. I'm sorry. Finish that.
ich

A. Yeah. We weren't furnished any other detail beyond what we have here from Sony, unfortunately. So
we can only operate on a gross level.

Q. All right. So it ...


mM

A. We can't ... let me just for one final comment, sir. So we can't give you any finer detail than this,
unfortunately.

Q. All right. Is it your testimony then that, based solely on this financial statement, you can recommend
to a hypothetical buyer that that buyer could eliminate tens of millions of dollars of expenses if they
became the operator of this company?
a

A. We can do that based on an analysis of what competitive companies do in terms of their EBITDA on
Te

a year-in and year-out basis, yes.

Q. No. I'm suggesting if you had solely, which you looked at which is this one financial statement that
has seven, eight, nine lines of expense items, you could recommend that 30, 40, $50 million of
w.

expenses could be eliminated and the company would still be viable. Is that your testimony?

A. No. No ...
ww

Mr. Camp: Objection. The witness has answered the question.


om
Judge Holmes: Overruled.

A. No. No, it's not my entire testimony, Mr. Salkin. I simply direct you to the total operating expenses
for 2006, which were $84 million.

n.c
Q. Well, since ...

A. I'm sorry. And let me just add parenthetically, $84 million is almost $10 million less than what we're
suggesting operating expenses will be in 2010, Mr. Salkin. We're simply suggesting that we return to

so
the historical level of expenses that Sony/ATV had run. We're not suggesting any cuts deeper than what
historical operating expenses had been, sir.

Q. All right. You've had the financial statements at least from 2002 through 2009. Is that right?

ck
A. We have ... what we ... what you see here is what we have. It's all we were given from Sony.

Q. And do you recall any events that occurred in 2006, 2007, and 2008 that might have a dramatic

lJa
impact on the amount of operating expenses?

A. Well, there was an acquisition, of course. ae


Q. And that was the $370 million acquisition of Famous?

A. Yes.
ich
Q. And would that have an impact on the amount of operating expenses?

A. Yes, but it certainly should not have doubled them from 82 to 145.

Q. Well, there would also be amortization costs by that, wouldn't there?


mM

A. Yes.

Q. You also are aware ... you've mentioned ... we've talked about Lieber Stoller acquisition at about $46
million in 2007, I believe.

A. Yes.
a

Q. Okay. So we have $430 million worth of acquisitions. That would have a material impact on the
Te

total amount of expenses, wouldn't it?

A. Yes, I think you're making my point.


w.

Q. Okay. Now, in Exhibit 11, you add back talent costs. And you mentioned that this morning. With the
talent cost, or something, that's not a cash expense. Is that right?

A. Yes, sir.
ww

Q. Okay. Let's go through a few examples to see how that works. Let's assume that Sony/ATV enters
om
into a contract ... entered into a contract with a writer.

A. I'm sorry. With whom?

n.c
Q. Sony/ATV entered into a contract with a writer.

A. Oh, with a writer. Yes, of course.

Q. Yes. And by years, by the way, I'm talking about the years ending June 30th. So if I say 2009, I

so
mean the year ending June 30th, 2009.

A. Fair enough.

ck
Q. Okay. In 2009, let's assume that Sony/ATV enters into a contract with a writer. And they agree that
50 percent of the revenues will go to the writer, 50 percent will go to Sony/ATV.

A. Okay.

lJa
Q. And that's a fairly common transaction that's occurred in this industry, isn't it?

A. Yes.
ae
Q. All right. And let's assume that Sony/ATV gave the writer a $500,000 advance in 2009.

A. Okay.
ich

Q. All right. 2010 comes and $1 million of revenue comes in. Sony says half of that is ours under our
contract. Half of it would normally belong to the writer, but we don't have to pay the writer because the
writer received an advance of $500 million in the prior year. So Sony would keep the entire $1 million.
Is that right?
mM

A. In principle, I think you're correct.

Q. All right.

A. I'd have to read the contract.


a

Q. Well, it's just very simple. It's one line, a 50/50 deal.
Te

A. I was trying to be ??.

Q. Okay.
w.

A. I apologize.

Q. Let's make it an ?? deal, which they often do in this industry.


ww

A. Mm-hmm.
om
Q. How would that be reflected in the profit and loss or the income statement in 2010, assuming no
other expenses, just that isolated transaction?

A. Oh, golly. All right. You would reflect - - so we're getting $1 million in 2009. Is that correct?

n.c
Q. No, we're getting $1 million in 2010. We're keeping all of it because 500,000 was paid in 2009.

A. Well, you'd reflect an income of $1 million.

so
Q. In 2009 ... '10, sorry.

A. Right in 2010.

ck
Q. Okay. How about cash flow? What would that do to cash flow?

A. Well, the cash ... obviously, the cash flow would all stay within Sony that year.

lJa
Q. Yeah. So it would have $1 million of cash flow.

A. Right. ae
Q. All right. Now let's go to 2011. And the advance is all recouped. Another $1 million comes in.
Sony/ATV pays $500,000 for the writer, keeps $500,000. Do you have that picture?

A. ...
ich

Q. All right. What would the Sony income be for that year with respect to this transaction?

A. Well, you'd have a gross income of 5 ... I'm sorry ... of $1 million. You'd have a payout to the writer
of 500 and remainder in the company of 500.
mM

Q. Would that be income for the company?

A. It would be ... net after writer's share would be 500.

Q. All right. How about cash flow? How much cash flow would that give the company for 2011?
a

A. It would be a net cash flow of 500,000.


Te

Q. All right. Now let's take ... this will be the last one. Let's assume we now come up to 2012 and they
renegotiate, extend the contract. And the writer's able to negotiate an advance in 2012 for $500,000
again.
w.

A. Mm-hmm.

Q. And let's assume there's no revenue that came in that year. And then in 2013, $1 million of revenue
comes in, and Sony says we're entitled to keep it all because half is normally ours and half covers the
ww

advance we made to the writer. Now, on those two years combined, how much income would you say
that Sony/ATV has earned on this transaction?
om
A. Well, your total revenue in is $1 million, obviously. In 2012, you have net cash flow ... net negative
cash flow out of 500,000 ... 2013 of net negative cash flow in ... cash flow out of 500,000. So you have
a neutral cash flow. Over the two-year period, you have neutral cash flow. Profits to Sony over the two

n.c
years is also neutral because it had a total of 1 million in over the two years and a total of 1 million out
over the two years.

Q. I must have stated the example wrong. I'm sorry. Second year revenue of 1 million comes in. Sony
keeps its own 500,000, and it also keeps the 500,000 that would normally be the writer's share because

so
there's an advance that was paid the prior year. You understand that?

A. Right. And ...

ck
Q. Is your answer the same?

A. Well, if I understand your hypothetical, it's a 50/50 split. So 1 million comes in in 2013, right?

lJa
Q. Right.

A. So they're going to keep the 500,000 they advanced in 2012. They're also going to keep their half in
2013.
ae
Q. Right. And how much would the profit be in 2013 from this transaction?

A. They're not going to make any profit in 2013 because they're going to break even on the $1 million.
ich

Q. All right. And how about cash flow? How much would this transaction, this last one, the 2012- 2013
transaction, add to cash flow, in your opinion?

A. Well, it would be neutral because they have to recoup the 500 from the year before, and they're
mM

recouping the 500 and paying out in 2013.

Q. So you're saying as a result of the fact that it split into two years there would be no impact on cash
flow one way or the other?

A. Well, I mean, over the two years, it would be neutral because in 2012 you've got negative 500,000
cash flow. And in 2013, you ... while a positive 500,000 remains in the company, it balances out to
a

negative 500 in the year before.


Te

Q. All right. So your testimony is that, as a result of what happened in those two years, the company
has no positive cash flow. Is that right?

A. Overall for the two years, you have neutral. You have neither positive nor negative overall in the two
w.

years.

Q. All right. So in effect, you arrive at that. At least one component of your getting to neutral was
deducting that $500,000 that went to the writer. Is that correct?
ww

A. Yes.
om
Q. And would you call that talent cost?

A. It would be, yes, talent cost. It's advancing its talent contract.

n.c
Q. Now, could you take a look at your Exhibit 11 of Exhibit 695-R? Do you see that exhibit?

A. I do.

so
Q. All right. Could you look down to the section that's headed Adjustments? Do you see that section?

A. Yes, I do.

ck
Q. Okay. And the second line says, "Plus talent cost." Do you ... is that correct?

A. Yes.

lJa
Q. All right. And then year by year, you start with 13.888 million, and the numbers go up year by year.
Is that right in that line?

A. Yes.
ae
Q. And the impact of having that 13.888 in the year 2010 would be to increase cash flow. Is that
correct?
ich
A. Yes.

Q. And that's because you ... effectively, you're not deducting talent cost as part of the determination of
cash flow.
mM

A. Yes.

Q. Okay. And we just agreed a few minutes ago, have we not, that cash flow should be reduced by at
least $500,000 of that writer's share in the various years that we've talked about. Is that correct?

A. Under the scenario that you laid out, yes.


a

Q. Okay. You have a second adjustment in that adjustment section for less catalog acquisition expense,
correct?
Te

A. Yes.

Q. Okay. And that actually reduces cash flow, doesn't it?


w.

A. Yes.

Q. All right. And you've projected 15.9 million in 2010. And then that gradually goes up year by year.
ww

Is that right?
om
A. Yes.

Q. All right. And you've had the Sony forecast that projected for the years 2010, '11, '12, and '13, each
of the four years, catalog acquisition cost of $50 million per year. Is that correct?

n.c
A. Yes.

Q. And in your explanation, in the text of your report, you came out with a much lower number, which
is this 13.8 million instead of the 50 million for the first year. Is that right?

so
A. Yes.

Q. All right. And you indicated that for the years involved in your average ... I think it was the five

ck
years before 2009 ... you were going to eliminate Lieber Stoller because it was an extraordinary
transaction, or words to that effect, for the 45 or $46 million. Is that right?

A. Yes.

lJa
Q. Okay. So in computing your talent costs based on a five-year average, you've eliminated Lieber
Stoller from that average. Is that correct? ae
A. I believe so. I would have to double- check.

Q. All right. And your schedule, although it mentioned Lieber Stoller and it explained it away, did it
mention the Famous acquisition at all of $370 million in the 2008 year?
ich

A. I don't believe so.

Q. So we have Lieber Stoller that was mentioned and explained away. And then we have Famous that
wasn't even mentioned. So we have two transactions in the five years leading up to 2009 that aggregate
mM

over $400 million. That would make the average just for those two transactions would be, what, $80
million or so per year?

A. If it were a five-year ...

Q. Yes.
a

A. ... schedule.
Te

Q. Okay. And you only put down 15.9 million, right?

A. Yes.
w.

Q. Okay. And then you also recall ... I think it's in the history in your report ... the 2002 transaction of
Acuff Rose for 157 million. That's outside the five-year average. But would that be indicative that these
type of transactions do occur from time to time ... we have a big one in 2002, a big one in 2007, a big
one in 2008 ... so that maybe Sony was trying to set up a projection that it might have another big one
ww

in the next few years?


om
A. It's possible.

Mr. Camp: Objection. Calls for speculation.

n.c
Judge Holmes: Overruled.

A. It's possible.

Q. All right. Let's go to income tax. Your discounted cash flow does not take a deduction for income

so
tax. Is that correct?

A. I'm sorry. I was wandering there a moment.

ck
Q. The question was does your discounted cash flow analysis take a deduction for income taxes.

A. No, this valuation is on a pretax basis. I think we discussed this on Friday.

lJa
Q. And one of the sources you cite for another purposes in your report, but you cited, is the book by
Rosenbaum and Pearl entitled Investment Banking. Do you recall that?

A. I believe so.
ae
Q. Yes. And you're familiar with that book. I think you mentioned it in your deposition, also.

A. No. Yes, yes.


ich

Q. All right. I'm not intending to confuse you because I ordered the 2013 edition when you were citing
the 2009. But I believe the substance is about the same.

Mr. Salkin: Could we mark these exhibits, please? Thank you.


mM

Court Clerk: Exhibit 697-P is marked for identification.

Mr. Anson: Oh, that's way too small, Mr. Salkin.


Oh, great. Thank you.

Mr. Salkin: All right. I've given you a copy of Pages 141 through 47.
a

Mr. Camp: Of what?


Te

Mr. Salkin: Of Rosenbaum and Pearl's book entitled Investment Banking, the second edition in 2013.

Mr. Camp: Your Honor, if we could clarify what ... are there specific sections Mr. Salkin would like
w.

the witness to look at?

Mr. Salkin: If he ... I was ... he's trying to familiarize himself, and I'm giving him time to do it. And I
will pin it down to shorter sections.
ww

Q. Perhaps we can short-circuit it, Mr. Anson.


om
A. Yes.

Q. If you look at the first page, Page 141 of Exhibit 697-P, it has a statement, Exhibit 3.3. It says Free

n.c
Cash Flow Calculation. Do you see that?

A. Yes.

Q. Okay. And it starts out by saying, "Earnings before interest and taxes, less taxes at the marginal tax

so
rate." Do I read that correctly? Should I read it again?

A. I'm sorry. I can read it.

ck
Q. All right. I'm not sure if the recorder caught it because you were coughing.

A. Oh, sure.

lJa
Q. It says, "Earnings before interest and taxes, less taxes at the marginal tax rate." And then it goes on
to give other adjustments like less capital expenditures and less increase or decrease in net working
capital. Do you see that? ae
A. Yes.

Q. Okay. Now, in addition to not considering the taxes, I believe your report says you did not consider
capital expenditures in your discounted cash flow analysis. Is that right?
ich

A. I don't recall that specifically. But we're not looking at capital expenditures here, no.

Q. All right. And then it says, "Less increase/decrease in net working capital." Does your cash flow
analysis take into effect increases and decreases in net working capital?
mM

A. We did not provide you with the cash flow analysis, per se.

Q. Well, isn't that what Exhibit 11 is?

A. It is an analysis of the company's overall cash flow, but we're not here to provide you a formal, as
they have here, what's called a free cash flow calculation. I think your question that you're leading up to
a

in this ... I'm not going to anticipate. Go ahead. Ask your question, Mr. Salkin.
Te

Q. All right. Well, if you didn't take it into effect, I guess we don't need to know more about that
particular subject. Could we go to Exhibit 18 of Exhibit 695-R, a few pages later?

A. I'm sorry. Where are we?


w.

Q. Exhibit 18 ...

Mr. Toscher: What page?


ww

Mr. Salkin: ... of the main report. That's Exhibit 695- R.


om
Mr. Toscher: What page of the report?

Mr. Salkin: The page ...

n.c
Judge Holmes: It's not paged.

Mr. Salkin: They don't have page numbers on them.

so
Judge Holmes: Yeah. There we go.

Male: Page 100.

ck
Mr. Salkin: Where are the page numbers? I can't find them.
Oh, all right. The one we did ... have doesn't have page numbers.

Q. This is the ... well, tell me what Exhibit 18 does.

lJa
A. Exhibit 18 looks at the EBITDA margins for several companies ... we ... you can read who they
are ... BMG, Famous, and EMI ... and looks to EBITDA as a percentage of NPS.
ae
Q. All right. And EMI I think is the one that you said because it was a distressed sale it really shouldn't
count very much. Is that right?

A. Not as a comparable sale transaction.


ich

Q. And if they were about to default on their loans and were trying to survive, they obviously would be
trying to reduce their expenses any way they could, wouldn't they? They wouldn't be building for the
future, would they?
mM

A. Right. And they certainly did a good job of doing that.

Q. And you took the median on this one. It comes out to 53.2. Is that right?

A. That's correct.

Q. Did you realize that if you took an average of the three other than EMI it would be a lower number
a

here?
Te

A. Yes. Yes. If you took an average, yes.

Q. Now, with respect to any of these companies, did you do an analysis of NPS to see what the
components are?
w.

A. The components of what?

Q. Well, as I understand, NPS is the gross royalty revenue either from the writer's share or from
ww

administrative deals. And the testimony, I believe ... correct me if I'm wrong ... indicated that originally
in the industry, the past yesteryear, I guess we'd call it, the deals were generally 50 percent for the
om
publisher, 50 percent for the writer. Is that correct? In the older deals, most of them were like that?

A. In the older deals.

n.c
Q. Right. And I think you cited ?? book for that. Is that right?

A. Yes.

Q. Okay. And then the testimony has shown that in the more recent deals ... and I'm not sure how far

so
back that goes ... but the writers have finally determined that they have more bargaining power so that
now, instead of 50/50 deals, the range is roughly between 50 percent for the writer up to 75 percent for
the writer. Is that right?

ck
A. Yes.

Q. Okay. And did you do an analysis to see what the ratio of what the writers receive to the collections
that the company gets?

lJa
A. I don't understand that question.

Q. Well ...

A. Can you ask that again?


ae
Q. For example, if we have two companies with identical gross royalty income ...
ich

A. Mm-hmm.

Q. ... and one of them has to pay 75 percent to the writers and the other has to pay 50 percent to the
writers, would that tend to lead to differing expense ratios?
mM

A. Well, if that were true, it would have ... it would, indeed. I think that all of these companies have a
range of deals. We don't have access to their range of deals.

Q. So you really don't know what the components of their NPS is doing.

A. No one does.
a

Q. All right. And if there were what we call administrative deals where they just administer, they don't
Te

have an ownership interest in copyrights, I think in your deposition you said the range was from 5
percent to 15 percent that Sony/ATV would keep. Is that right?

A. I think I said 5 to 20, but I don't recall exactly.


w.

Q. Okay. So 5 percent to 20 percent. So in administrative deals, instead of getting 25 to 50 percent of


their collections that they can put in their pocket, administrative deals, they would only get 5 to 20
percent. Is that correct?
ww

A. Yes.
om
Q. And that could have a material impact on EBITDA margins. Is that correct?

A. Yes.

n.c
Q. So in effect, you really can't tell unless you have access to far more data. Is that correct?

A. Well, whenever one analyzes a company in any industry, one always would like to have more and
more and more data, Mr. Salkin.

so
Q. Okay. But here, did you have any data in excess of what is shown on Exhibit 18?

A. No.

ck
Q. And so that ... you used that as the basis for telling your hypothetical buyer that expenses could be
cut by 40, $50 million in one year?

lJa
A. Well, this ... these are the numbers by which one analyzes music publishers and music catalogs. So
yes, these are the standards against which one judges investments in this industry.

Q. All right.
ae
Mr. Salkin: And my compatriots here are sort of nodding like they'd like a break. Would that be all
right, Your Honor?
ich
Judge Holmes: That would be fine.

Court Clerk: All rise.

(Recess)
mM

Court Clerk: The court is in session.

Judge Holmes: All right. Please be seated. Back to you, Mr. Salkin.

Mr. Salkin: Mr. Anson, can you turn to your Exhibit 20 ...
a

A. 20, sir?
Te

Q. ... of Exhibit 695-R? That's your original report ... initial report.

A. All right.
w.

Q. Page 102, I've been told.

A. 20, yes. Thank you.


ww

Q. All right. And this is your computation of the weighted average cost of capital. Is that right?
om
A. Yes, sir.

Q. And you're ... as you're heading across the pages Vivendi in the source, and you'll note if you go
down to the Vivendi column, we have debt cost of capital, 4.62 percent. Is that right?

n.c
A. Yes.

Q. And that was based, was it not, on Vivendi's average interest rate on indebtedness acquired over
several years. Is that right?

so
A. Yes, that's correct.

Q. Are you aware that Vivendi put in place a new bond issue of $1 billion in January of 2009?

ck
A. Yes.

Q. And that bond issued had a yield of 7.82 percent. Is that right?

lJa
A. Yes. Yes, that's right, Mr. Salkin.

Q. All right. So any buyer of the estate's interest in Sony/ATV who had to obtain financing would have
ae
faced an interest rate in the range of the 7.82 percent if they were comparable credit-worthy as Vivendi.
Is that right?

A. I'm not sure I understand.


ich

Q. I garbled the words. Let me try that again.

A. Right. Please.
mM

Q. If your hypothetical buyer had a credit rating comparable to Vivendi's and went into the marketplace
in 2009 to secure financing to acquire the estate's interest in Sony/ATV, they would have had to pay
somewhere around 7.82 percent. Is that right?

A. On a standalone basis, they might have paid that rate. I need to know more about the borrower.

Q. Well, I said comparable credit worthiness as Vivendi. So the ... assume the banks would treat them
a

the same as they would treat Vivendi.


Te

A. I'm ... I don't know. I'd have to research the issue.

Q. Okay. So you don't know if it would be around 7.82 or something else. I ... in effect, then ... I think
you testified on deposition ... let me recall it ... but I think I asked you about the ability to obtain
w.

financing on a potential $1 billion-plus transaction, and I think you said you weren't asked to do
anything on financing and did not do anything. Is that paraphrasing you correctly?

A. That's correct.
ww

Q. All right. So financing wasn't one of your considerations.


om
A. No.

Q. All right. Let's take a look at your ... in your market approach ... your terminals. I'm sorry.

n.c
A. I'm sorry. Say it again, sir.

Q. Take a look at your Exhibit 11 which has the terminal value included.

so
Mr. Salkin: Excuse me for a moment, Your Honor.
May I approach the Clerk, Your Honor?

Judge Holmes: You may.

ck
Court Clerk: Exhibit 698-P is marked for identification.

Mr. Salkin: Mr. Anson, I have prepared Exhibit 698-P off of your Exhibit 11 to do some arithmetic so

lJa
we don't stumble like we did a little bit last time. So if we could go down the line and compare it with
your Exhibit 11, we start with EBITDA of 100 ... I'm rounding to the nearest million ... we start with
EBITDA of $144 million. Is that consistent with the EBITDA you have on Exhibit 11?
ae
A. Yes, it is. Yes, it is, sir.

Q. Okay. And then you have free cash flow. You took EBITDA of $144 million. You reduced it by
catalog acquisitions of 22 million because you felt that actually would increase EBITDA. And then you
ich
reduced it by the talent cost that you stated was just a paper accounting that wasn't costing any cash. It
was 19 million. And then you arrived at a free cash flow of 141 million. Is that right?

A. Yes, that's correct.


mM

Q. Okay. And after doing that, you arrive at a terminal value, which is in that box over in the left in
purple. Is the color purple there? Oh, I'm sorry. It's in your schedule, but you can correspond it with
mine ... $2.244 billion terminal value.

A. Yes.

Q. All right. And so if we compare it to EBITDA, the terminal value is 15.58 times EBITDA. Is that
a

correct?
Te

A. Yes, that's right.

Q. All right. Now, if we reduce EBITDA by tax because EBITDA is before tax, Mr. Wallis used a 39.6
percent rate. We've seen other rates, but they're all close. So I used the 39.6. So if we're going to after-
w.

tax, we would take the $144 million of EBITDA and multiply it by .604, correct?

A. If you were doing it after tax, yes.


ww

Q. All right. So that would give us an after- tax number around $87 million.
om
A. That's correct.

Q. All right. So your terminal multiple of EBITDA reduced by tax comes to 25.8 times. Is that correct?

n.c
A. Apparently so.

Q. And that's your computation.

A. No, that's your computation.

so
Q. Oh, I'm sorry. But if you took 2.244 billion and divided it by 87, you agree that it would come to
approximately 25.8. Is that right?

ck
A. Yes.

Q. Okay.

lJa
A. Is there a question?

Q. Not yet. ae
Mr. Salkin: Can you give me the EBITDA financial statement?

Court Clerk: Exhibit 699-P is marked for identification.


ich
Mr. Anson: Thank you.

Mr. Salkin: Okay. The Clerk has handed you Exhibit 699-P. Are you familiar with this document?

A. I believe I've seen it once before, yes.


mM

Q. Yes. And you ... I believe you cited it as one of the references in your report. Is that correct?

A. Yes.

Q. All right. First, could you turn to Page 33? And I believe that your testimony has been that Vivendi
has some similarities to Sony/ATV because it has a music division. Is that right?
a

A. Yes.
Te

Q. And that's called Universal Music?

A. I believe so.
w.

Q. Okay. Could you look at the second column heading on top of Page 33? It says Universal Music
Group.
ww

A. Yes.
om
Q. All right. And do you see what the gross revenues are?

A. Yes.

n.c
Q. What are they?

A. This appears to be in euros.

Q. That's correct. Yeah. Yeah, for clarity, all these numbers are in euros on these financial statements ...

so
this financial statement.

A. Revenues at 1,026,000,000 euros.

ck
Q. Okay. And could you look down, what, three inches? There's a line that says Earnings Before
Interest and Income Taxes, EBIT.

A. Yes.

lJa
Q. And that ... what's that number?

A. Thirty-six million.
ae
Q. All right. So you have 36 million out of 1-point-something billion, which is, what, maybe 3.5
percent EBITDA ratio to revenues for Universal Music?
ich
A. No, EBITDA is 143 million.

Q. Oh, I'm sorry. I was at EBIT. That's down at the bottom.

A. You ... well, you just said EBITDA. I don't ...


mM

Q. Okay. I'm sorry.

A. I was just responding to your question.

Q. I was talking about earnings before income tax after amortization and so on. But also, this ratio, if
we look at the EBIT, earnings before income tax, of 36 million euros to 140 million euros, we get a
a

ratio of, what, about 25 percent?


Te

A. I'm not sure what ratio you're running here, but your EBITDA ratio is 14 percent to revenues. Is that
the ...

Q. Okay.
w.

A. I'm sorry. What ratio are you looking at, sir? I'm sorry.

Q. Well, let's go to EBITDA. That's fine. So EBITDA is about 10 percent of revenue. Is that right?
ww

A. It's 14 percent of revenues.


om
Q. Fourteen? Okay. That's satisfactory. And you heard Mr. Wallis testify that Sony/ATV was around 30
percent?

n.c
A. I ... this is as of revenues. I don't have a number to compare Mr. Wallis' EBITDA to NPS calculation.

Q. Okay. But aren't these numbers fairly consistent? In fact, they probably indicate that Sony/ATV's
ratios are even better, would they?

so
A. I can't answer that.

Q. Okay.

ck
Mr. Salkin: Let me give the Clerk another exhibit.

Mr. Anson: Mr. Salkin, are we done with this one?

lJa
Mr. Salkin: No, please stay with it.

Mr. Anson: Okay. ae


Court Clerk: Exhibit 700-P is marked for identification.

Mr. Anson: Thank you, ma'am.


ich
Mr. Salkin: All right. Can you look at this, Mr. Anson, to see what it is?

Mr. Camp: Your Honor, Respondent's been handed two documents. Is that what has been marked as
700 ...
mM

Mr. Salkin: No, the first one ... excuse me, counsel. The first one is the Vivendi stock price. I haven't
given the Clerk the second one yet.

Mr. Camp: I just wanted to clarify. Thank you.

Mr. Salkin: Do you see this says Vivendi up in the left corner?
a

Mr. Anson: Yes, and today's date ... or yesterday's date.


Te

Mr. Salkin: And what was that exhibit number?

Mr. Toscher: 700-P.


w.

Mr. Salkin: Okay.


All right. And then if you look down at ... there's a blue line that says Price Chart. Do you1 see that?

A. Yes.
ww

Q. And then going down, there is a box in red dated 3/31/2009.


om
A. Yes.

Q. All right. And it shows a closing price of 19.28226 euros, and that's the stock price of Vivendi at

n.c
33109 ??, correct?

A. Yes.

Q. All right. Now, let me give you the next exhibit for identification.

so
Mr. Salkin: The government has it, but the Clerk does not.

Court Clerk: Exhibit 701-P is marked for identification.

ck
Mr. Salkin: Okay. This is another one of my homemade charts.

A. This ... there's no marking on this. How ... you're not going to be able to tell this exhibit from this

lJa
exhibit.

Q. The heading is Anson Multiple Compared with Vivendi Multiple. Do you have that?
ae
A. I do.

Q. All right. And the ...


ich
Mr. Salkin: It's 701?

Q. It's Exhibit 701, Mr. Anson.

A. Yes, sir. I have it.


mM

Q. All right.

A. Thank you so much.

Q. And page references are to the Vivendi quarterly financial statement for the first quarter of 2009.
That's Exhibit 699-P.
a

A. That's the exhibit you just gave me a moment ago.


Te

Q. That's the big one.

A. Right. Thank you.


w.

Q. Okay. Could you turn to Page 4 of 699-P? And if you could look down ... do you want a moment to
look at it, or should I take you to the place?
ww

A. No, no. Please take me through it, sir.


om
Q. All right. If you could go down the left side and you see in bold print Adjusted Net Income Per
Share, do you see that?

A. I do.

n.c
Q. All right. Then in the 2009 column, it says .55 euros.

A. I see that.

so
Q. All right. And if that's representative or a representative quarter, that would be about 2.2 euros per
share earnings. Is that correct?

A. Yes.

ck
Q. All right. And just to make sure it's not an outlier, you'll notice the four right columns on that line
show year ending profits ranging at ... starting with 2005 of $1.93, 220 ... dollar ... 1.93 euros, 2.27
euros, 2.44 euros, 2.34 euros. So it would indicate that 2.2 euros per share is about representative,

lJa
wouldn't it?

A. Yes. ae
Q. All right. Now, if you could go to my Exhibit 701-P, up on top, I reflect the first quarter annualized
earnings of 2.2 euros, correct?

A. Yes. Okay. Now I have it now.


ich

Q. All right. And I reflect the stock price of 19.28 euros, right?

A. Give me just a second. Okay. I've got it now. I have the right exhibit.
mM

Q. All right. And to compute a price earnings ratio, you would take 19.28 and divide it by 2.20,
wouldn't you?

A. Yes.

Q. All right. And it my computer works right, that would create a price earnings multiple of 8.76. Does
that look about right? I realize you don't have to be exact. But ...
a

A. Yes, sir. It looks about right.


Te

Q. All right. Now let's apply this to Sony/ATV. Sony/ATV, according to your calculation ... we believe
that the numbers should be lower, but your calculation is $144 million, correct?
w.

A. Of ...

Q. Of EBITDA.
ww

A. ... Sony's.
om
Q. Sony/ATV's EBITDA.

A. And we're applying ...

n.c
Q. Okay. And if we applied the Vivendi price earnings multiple, which is a big national company,
freely tradable, freely marketable, comparable in your mind to Sony/ATV, to get a market value, we
would take the price earnings ratio of 8.76, or price to EBITDA, and multiply it by 144 million,
wouldn't we?

so
A. Well, it's certainly an exercise, yes.

Q. Okay. And I got $1.261 billion in that exercise. Does that look about right?

ck
A. What? The multiplication? I'm sure your multiplication is correct, Mr. Salkin.

Q. All right. Now, if we go to your Exhibit 11 again, in that box on the left with the purple banner
above it, it says Terminal Value. If you go to the bottom line, there's the word Discount Factor. Do you

lJa
see that?

A. I've got ... right now I've got five exhibits on my table here.
ae
Q. All right. Take a minute because I want to make sure we get this right.

A. So I'm going back to my report, and I'm going to my report and my Exhibit 11.
ich
Q. Correct.

A. Okay. And I'm going to ...

Q. The section that says Terminal Value with - - underneath a purple banner.
mM

A. Okay. Right. And the ...

Q. And the last line says Discount Factor .41. Is that correct?

A. All right. I'm with you now.


a

Q. Okay. Does that .41 represent the present value of a dollar 10 years in the future?
Te

A. Yes.

Q. All right. So if the EBITDA times 8.76 comes to 1.261 million, that could be a way to determine
value. And we discount it to ... by .41. That would bring it to a present value, wouldn't it?
w.

A. Yes.

Q. And that would be around 40 percent, which would match my 517 million. Is that right? That's the
ww

right side of 701-P about two inches from the bottom. You see that 517 million?
om
Mr. Camp: Objection. It's unclear how ... there's no computation there. It's just 517.19 on Mr. Salkin's
exhibit.

Mr. Anson: Thank you. I ...

n.c
Judge Holmes: I don't understand this either.

Mr. Anson: I don't either, Your Honor.

so
Mr. Salkin: Okay. Let me ...

Judge Holmes: Find me the 517, Mr. Salkin. Where is that?

ck
Mr. Salkin: Okay. Let me back up.

Q. If the 10-year value, terminal value, of Sony/ATV was $1.261 billion and we wanted to determine
the present value, your schedule says that we should multiply it by .41 to get present value. So we want

lJa
to bring the 1.261 billion back to today's value. And is that correct? You would multiply it by .41, Mr.
Anson?

A. Yes.
ae
Q. Okay. And if we multiply it by .41, that would come to 517.19.

A. Okay.
ich

Q. All right. And then you also ... to get the total value of Sony/ATV, you had a present value of cash
flow ... that's about three or four lines down above the bottom purple banner ... PV of free cash flows.
You see that? So you have two purple banners. This is the lower purple banner on your Exhibit 11 I'm
talking about.
mM

A. Okay.

Q. Okay. And it says PV of free cash flows.

A. Yes.
a

Q. Okay. Seven hundred and sixty-eight million?


Te

A. Yes. I'm with you now.

Q. All right. I rounded it up to 769.


w.

A. I see. Okay. I'm ... now I'm with you, sir.

Q. Okay. So if the terminal value as determined by the Court turns out to be 517 million, we would add
that to the present value of the 10-year cash flow, which your number is 769 million. Is that right?
ww

A. Yes.
om
Q. Okay. So the two of them together come to 1.286 billion.

A. Yes.

n.c
Q. Okay. Then if we were valuing the company after the Sony amount, we would deduct the Sony
amount, which your report says 755 million, even though the estate's suggested a lower number. So I
put that in just for fair presentation. Do you see that? We would deduct enterprise value minus the debt?

so
A. Yes.

Q. Okay. And that would leave the enterprise amount after the Sony amount at 531 million for the
whole company if my 517 million terminal value was right. Is that correct?

ck
A. Yes.

Q. Okay.

lJa
Mr. Salkin: I'd like to move to admit Exhibits 699-P, 700-P, 701-P, and 698-P.

Mr. Camp: Okay. Let's start with 698-P, Your Honor.

Judge Holmes: Which one is 698-P again?


ae
Mr. Camp: It's another demonstrative exhibit.
ich

Judge Holmes: Oh. That's the Michael Jackson estate review of Anson terminal value?

Mr. Camp: Correct. Respondent objects on the grounds of that it is a demonstrative exhibit and that it
was never exchanged with the respondent.
mM

Judge Holmes: Okay.

Mr. Goldman: This is impeachment, Your Honor.

Judge Holmes: It is. It's admitted as a demonstrative exhibit, of course.


a

Judge Holmes: 699?


Te

Mr. Camp: No objection to 699-P.

Judge Holmes: That one comes in.


w.

Judge Holmes: 700?

Mr. Camp: No objection to 700.


ww

Judge Holmes: That one's in.


om
Judge Holmes: 701?

Mr. Camp: Respondent objects on the same grounds ... never exchanged demonstrative exhibit. I'm not
sure that there was an inconsistent statement either to be used for impeachment purposes.

n.c
Judge Holmes: Well, the inconsistency is his valuation, isn't it, Mr. Salkin?

Mr. Salkin: Pardon, Your Honor?

so
Judge Holmes: The inconsistency is with his valuation ...

Mr. Salkin: Yes, it is.

ck
Mr. Camp: However, Mr. Salkin's merely offering a hypothetical of his numbers.

Mr. Salkin: Based on the Vivendi financial information.

lJa
Judge Holmes: Yeah.

Mr. Camp: Which is ... ae


Judge Holmes: I understand. This one comes in as well.

Judge Holmes: Go ahead, Mr. Salkin.


ich
Mr. Salkin: All right. Thank you.

Mr. Camp: And 701 is in as demonstrative ...

Judge Holmes: Yes.


mM

Mr. Camp: ... only, Your Honor.

Judge Holmes: Yes.

Mr. Camp: Yes, thank you.


a

Mr. Salkin: Let's talk a little bit about valuation discounts. We've already covered your background, so
I won't repeat it. If the ... your rational buyer desires to purchase the estate's half interest in Sony/ATV
Te

and continues to hold it as an investment, it would be facing the following things, would it not ...
distributions of $11 million a year guaranteed for approximately two and a half years with no
assurances after that. You would not have the right to inspect books and records and would not have the
right to elect members to the board of representatives.
w.

Mr. Camp: Your Honor ...

Mr. Salkin: Is that right?


ww

Mr. Camp: ... what is the question here? This is a compound question for sure.
om
Mr. Salkin: Well, that's ...

Mr. Toscher: Break it down.

n.c
Mr. Salkin: We'll break it down.

Judge Holmes: Okay.

so
Mr. Salkin: All right.

Q. Your buyer of Sony/ATV, okay, the estate's half interest in it, would be acquiring an economic
interest in Sony/ATV. Is that correct?

ck
A. Yes.

Q. All right. And as the holder of an economic interest, he would realize that he would be entitled to

lJa
distributions of $11 million per year for about two and a half years ... is that right ... unless Sony agreed
otherwise?

A. Well, I think you're making the assumption that the rational buyer would only acquire a half interest.
Is that correct, Mr. Salkin?
ae
Q. Yes. I ... my assumption that I'm making is that if the rational buyer desires to purchase the half
interest and continue to hold as an investment. So we're going ... not going to the second step yet. So
ich
the rational investor wants to invest a significant amount of money. It's going to have to be $300
million or more just as an investment to be a partner with Sony.

Mr. Camp: Is that a question? Objection.


mM

Mr. Salkin: Well, I'm trying to clarify because he ...

Judge Holmes: Do you understand the hypothetical condition Mr. Salkin is posing?

Mr. Anson: I do understand it, Your Honor. It doesn't seem logical, but I understand it.

Judge Holmes: Okay.


a

Mr. Salkin: All right.


Te

Judge Holmes: Go ahead, Mr. Salkin.

Mr. Salkin: All right.


w.

Q. And this rational buyer would realize that, without Sony's consent, distributions would be limited to
$11 million per year. Is that right?
ww

A. Yes.
om
Q. And there'd be no assurance after two and a half years of any distributions, would there?

A. That's correct.

n.c
Q. And he would not have the right to inspect the books and the records. Is that right?

A. True.

Q. And he would not have the right to elect members of the board of representatives, would he?

so
A. He has the right to control his half of the board of representatives.

Q. All right. Even if state law is contrary to that right as a holder of an economic interest, would that

ck
still be your opinion?

A. I'm sorry. I missed the end of that. But I ...

lJa
Q. All right. Well, we can ...

A. ... think what you're ... I think ... ae


Q. We can cover that in brief. If there was no economically feasible way to initiate the buy-sell
proceeding, would you say that the pool of parties interested in purchasing a half interest in Sony/ATV
would be either limited or nonexistent?
ich
A. If there were no way for a rational buyer to ... I want that question read back to me.

Q. All right. If there was no economically feasible way to initiate a buy-sell proceeding, the pool of
parties interested in purchasing a half interest in Sony/ATV would be limited or nonexistent. Is that
right?
mM

A. It would be limited, yes.

Q. Or possibly nonexistent.

A. Possibly.
a

Mr. Camp: Asked and answered.


Te

A. Everything is possible in this world.

Judge Holmes: Overruled.


w.

Mr. Salkin: So it would be limited or nonexistent?

A. Possibly. I ... yeah, I stand by my answer.


ww

Q. Possibly means yes?


om
A. Yes.

Q. Okay. Thank you. And I think you testified you did not look into financing. So you won't be aware
of sources then of billion-dollar financing in 2009, would you?

n.c
A. I think you asked me that question already.

Q. And I don't recall. What's your answer?

so
A. We were not asked to look into sources of financing on this assignment.

Q. So you're unaware then of whether or not such a lender would be available.

ck
A. You've asked me that question already.

Q. And your answer was you wouldn't be aware of it one way or the other.

lJa
A. We were not asked to look into sources of financing.

Q. You said you did not look into it? That's correct?
ae
Mr. Camp: Asked and answered, Your Honor.

Judge Holmes: I think your answer is no because ...


ich
Mr. Anson: It's no. It's no, Mr. Salkin. Again, it's ...

Judge Holmes: ... you weren't asked to look at ...

Mr. Anson: Right. It's no.


mM

Mr. Salkin: Are you aware of any purchase of a partnership or LLC interest during 2009 in the billion-
dollar price range?

Mr. Camp: Objection. Vague.

Judge Holmes: Overruled.


a

A. I haven't looked into the question, so I'm not aware.


Te

Q. There are ... then even in the $100 million price range, you wouldn't be aware of it one way or the
other?
w.

A. I haven't been looked ... I haven't been asked to look at the question. I just don't know one way or
the other.

Q. All right. But you are aware that if someone were to exercise the buy-sell right and be the successful
ww

bidder, they would not only have to pay the estate for whatever it had to pay, pay Sony for its half and
pay off all of the Sony amount, which we've had a $692 million number and a $755 million number.
om
But you put it all together, we're well over $1 billion. Is that correct?

A. Yes.

n.c
Q. All right. And also, if for some reason the buy-sell procedure could not be consummated, perhaps
because of regulatory issues or some other reason, Sony would be able to initiate the buy-sell right and
your rational buyer could end up with less than what he paid for the half interest, could he?

A. I don't follow that statement.

so
Q. Well, you might recall that under the terms of the operating agreement for Sony/ATV there's a
lengthy procedure, which I think Mr. Wallis says at least six to nine months, to go through to determine
whether one party or the other is the buyer, or possibly there might be a third party buyer through that

ck
proceeding. Do you recall that?

A. Yes. It's not unusual in a deal of this size.

lJa
Q. All right. And you recall testimony that when there was the transaction in 2016, there were
requirements that you get approval of a European administrative body and possibly the United States
antitrust process. Is that right? ae
A. I remember that, yes.

Q. All right. So there's still a possibility that the sale could take place and your rational buyer is sitting
there with an investment of $300 million or more, knowing that possibly Sony could take him out at a
ich
later time. Is that right?

A. That's possible.

Q. You're also aware, are you not, that the interest rate charged by Sony to Sony/ATV was well under
mM

market?

A. I don't remember the exact interest rate. I'm sorry.

Q. I have the financial statement ?? statement. Yeah, do you still have the financial statement which is
Exhibit 201? This is the Sony/ATV financial statement for years ending March 31, 2009 and 2008.
a

A. Would that be ... here we go.


Te

Q. I have extra copies as well.

A. If you can just put it on the screen right behind you, that's fine.
w.

Q. Whichever you prefer. I have copies if you like.

A. Electronic is great. I have it on my screen right here ...


ww

Q. Okay. Why don't we do that.


om
A. ... Mr. Salkin. Thank you.

Q. Okay. Could you turn to Page 3, which is the balance sheet? And under noncurrent liabilities, do you
see the number 721 million?

n.c
A. Yes, I certainly do.

Q. All right. And then could you turn to Page 4? And you see interest expense?

so
A. Yes.

Q. Of 27.6 million?

ck
A. Yes.

Q. So 27.6 would be, what, around 4 percent interest rate that Sony was charging?

lJa
A. Even less than 4 percent.

Q. Even less than 4 percent. So a new buyer then might have to pay the Vivendi rate of 7.92. And if
they aren't as strong as Vivendi, it could even be higher. Is that right?

A. Presumably, it's possible.


ae
Q. All right. And that could be very damaging to profitability. Let's take a look at 2016 transaction now.
ich
You made a comparison and I wasn't clear on what you determined the enterprise values would be that
the party selected in 2016. We know that the estate paid $750 million for half interest. How does that
translate into the value of the whole company?

A. I think it ...
mM

Mr. Camp: Objection. Mischaracterization. I don't think the estate paid 750 million.

Mr. Salkin: I'm sorry. The estate received 750.

Judge Holmes: That's ... that one's sustained then.


a

Mr. Salkin: Thanks for the correction.


Te

Q. The estate received $750 million for its half interest, party of which, by the way, you noticed, I
believe, about 18 million of that was current distribution. So arguably, it could even be only 732
million. But how did you determine the value of the whole company?
w.

A. Well, if you'll give me a minute, we'll turn to the back of my report.

Q. Okay.
ww

A. And we'll look at the total value.


om
Mr. Salkin: The gentleman is suggesting Page 116.

Mr. Anson: Thank you.

n.c
Mr. Camp: Can we have the exhibit number?

Judge Holmes: Yes.

Mr. Rosefsky: 695.

so
Mr. Camp: No ...

Mr. Salkin: No, I thought the ...

ck
Judge Holmes: Oh.

Mr. Salkin: ... exhibit of the exhibit. What's the exhibit?

lJa
Judge Holmes: You have the page numbers, Mr. Rosefsky.

Mr. Rosefsky: I just went on the last page, which is Figure 1.

Ms. Herbert: It's also on Page 48.


ae
Judge Holmes: I'm sorry. Mr. Rosefsky, you have the page numbers; we don't on these exhibits.
ich

Mr. Rosefsky: I'm on Page 102 of 695.

Judge Holmes: But what is the figure number or exhibit number?


mM

Mr. Rosefsky: Figure 1. Sorry.

Judge Holmes: Figure 1.

Mr. Camp: No, I don't believe that lines up.

Judge Holmes: That could not possibly be the case.


a

Mr. Rosefsky: Okay.


Te

Mr. Salkin: Have you been able to find it, Mr. Anson?

A. If we take a look at Page 49, Figure 31.


w.

Q. Wait a minute. One page at a time, if we could, please. Page 31 or 49? Which of the pages should
we look at first?
ww

A. That's Page 49.


om
Q. Okay. Just a minute, please. All right.

A. And that'll give us a quick summary. So we have the ... just some background preamble. Of the $750
million payable to the estate and all of the amounts payable to Sony I haven't taken care of ... so you

n.c
have a nominal net value, therefore, of 1.5 billion. And half of Mr. Jackson's share was acquired at the
option price, which is below market value.

Q. Well, let's just look rather than what it was acquired for. What ... or did you do a computation based
on that to what the whole value was?

so
A. We're just giving you here the projected ...

Q. Oh, okay. And where are you reading now? You said ...

ck
A. I'm on Figure 31.

Q. Okay.

lJa
A. So you have the projected Sony/ATV NPS.

Q. Well, that's based on your projection. That's not based on the purchase price, is it?

A. No. You asked me how ... if we valued ...


ae
Q. No. I'm ... what I'm asking you is did you value it based on the purchase price? Did you do reverse
ich
engineering? Starting with Sony paid the estate $750 million, how does that work up to an enterprise
value?

A. Well, we're doing our own valuation based on the ...


mM

Q. Right. But that's not my question, though. My question is, if we start with the fact that Sony paid the
estate $750 million, how would you calculate the value of the entire enterprise by starting at that point?

A. I think we took a different approach here.

Q. Right. But I'm asking if ... can you do it starting ...


a

A. Would I do it right now?


Te

Q. Right.

A. I would rather take a few minutes break and do it for you. I don't want to attempt to do it on the fly
for you.
w.

Q. All right. Would you like to do that at the next break?

A. Yes.
ww

Q. All right.
om
Mr. Salkin: Could we ... Your Honor, that it would be Mr. Anson as the person that does the
calculation, not his two associates?

n.c
Judge Holmes: Well, he worked as part of a team. If they want to help him, they can.

Mr. Salkin: All right.

Judge Holmes: He has to stand by it, of course.

so
Mr. Salkin: You're fairer than I am, Your Honor.

Mr. Camp: Your Honor, I'm not sure if Figure 30 helps Mr. Salkin with what he's looking for on the

ck
previous page. I'm not sure if ... really what he's looking for.

Mr. Anson: Yeah. I'm ... Your Honor, I have to ask for clarification.

lJa
Judge Holmes: Yeah. What calculation ...

Mr. Anson: What is it he's looking for? ae


Judge Holmes: ... do you want him to do, Mr. Salkin?

Mr. Salkin: Well ...


ich
Judge Holmes: I understand it's a hypothetical.

Mr. Salkin: Right. But he ...

Judge Holmes: What are the inputs?


mM

Mr. Salkin: ... Your Honor, what he calculated going back to 2009, first he took a multiple of net
publisher share. And based on that, he said the whole company is worth a certain amount. And then he
went through the discounted cash flow analysis and came to the conclusion that the whole company is
worth a certain share ... certain amount. And then he averaged the two to came ... come together with
what he called an enterprise value.
a

Q. Did I phrase that right, Mr. Anson?


Te

A. Your paraphrasing is fine.

Q. All right. But I did forget to ask one of the questions that my associates asked, is how did you ...
what made you average the two things when they were so far apart?
w.

Mr. Camp: I don't think this has anything to do with the 2016 line of questioning now.

Judge Holmes: No, it doesn't.


ww

Mr. Salkin: But I'm trying to explain why ...


om
Judge Holmes: Let's ...

Mr. Salkin: ... I'm looking for his enterprise value.

n.c
Judge Holmes: ... he could ask the questions. So why did you take a 50 percent average of your DCF
and comparable analysis?

Mr. Anson: Well, it's always been my view that a DCF valuation almost

so
invariably comes in at a lower valuation, 10 to 15 percent lower than a market valuation. And part of
the reason for that is a DCF captures only ... a DCF valuation captures only cash flow. A market
valuation tends to capture all value, and this ... and I find this to be repetitively true. For that reason, I
averaged the two. The difference between ... and just to finish that thought, the difference between the

ck
two values in this case is, in fact, 15 percent, which is not unusual in the valuation of intellectual
property.

Mr. Salkin: Is that the case as of June 25th, 2009? Fifteen percent differential?

lJa
A. Yes, sir.

Q. Okay.

A. That's what I'm referring to.


ae
Mr. Salkin: Since I would like to see him be able to do his calculation, Your Honor, can we take our
ich
lunch break now?

Mr. Camp: Your Honor, I object to this.

Judge Holmes: Wait. Why do you object?


mM

Mr. Camp: Because it ... are we asking Mr. Anson ... is this a math test that he wants him to perform?

Judge Holmes: Well, I still don't understand the inputs to the math test, if that's what it is. Okay. You
want him to do a computation using some numbers under some hypothetical, right, Mr. Salkin?

Mr. Salkin: Yes. What ...


a

Judge Holmes: What are those numbers?


Te

Mr. Salkin: You may recall, Your Honor, we put in an exhibit through Mr. Wallis in which he
calculated the enterprise value based on the $750 million price for half interest. And his schedule
indicated that it corresponded very well with his $1.1 billion date of death value for the enterprise. I
w.

was trying to see what Mr. Anson's enterprise value was so we could compare it with the Wallis
computation.

Judge Holmes: We know what his hypothetical enterprise value is because he puts it in his report. And
ww

that is ... help me here, Mr. Anson.


om
Mr. Anson: We go back to ...

Judge Holmes: It's the average of the comparable in DCF.

n.c
Mr. Anson: ... right. The average of the two if we go back to Exhibit 1. Let me take you back to
Exhibit 1, if I can, and let me help Mr. Salkin because he seems confused. And let me read this to you
on Page 12. I'll read the pros to you first. "As both the market and income approaches are reliable and
commonly used methodologies," I have applied a 50 percent weighting ... Mr. Salkin, "I have applied a
50 percent weighting to the value derived from each approach. This results in a fair market value for

so
estate tax purposes for New Horizon Trust II as of June 25th, 2009, of 206295934."

Judge Holmes: Okay.

ck
Mr. Anson: That's summarized in Exhibit 1.

Mr. Camp: Figure 1, I believe.

lJa
Mr. Salkin: The question I would like an answer to ... and it would be perfectly fine to take a lunch
break to compute ... knowing that Sony paid $750 million for half interest in 2016 ...

Judge Holmes: Well, no. Sony paid $750 million for ...

Mr. Salkin: ... half interest ...


ae
Judge Holmes: ... Mr. Jackson's interest, but that included a forgiveness of the $300 million debt. Am I
ich
wrong about that?

Mr. Salkin: No. It did not.

Judge Holmes: It did not?


mM

Mr. Salkin: No.

Judge Holmes: So it was 750 minus 300 million? Is that right?

Mr. Salkin: Right. The estate netted the 450 million less costs. So starting with the $750 million figure,
what I'm asking you to do is try to calculate how that translates into the value of the enterprise as a
a

whole so we can compare enterprise value in 2016 with enterprise value in 2009 based on that price.
Te

Judge Holmes: Do you understand that, Mr. Anson?

Mr. Anson: Yes, but I don't believe that's an enterprise value. It's an artificial value that they have
established. What I have calculated is enterprise value based on looking at the income in 2016.
w.

Judge Holmes: Is there a reason that you would not simply start with doubling the 750 million to
achieve a sort of gross enterprise value and then make some adjustments to it as you did ...
ww

Mr. Anson: That's what we have done.


om
Mr. Camp: Your Honor, if you look at Page 48 of Mr. Anson's report, the ... it indicates just that.

Judge Holmes: That was one of his checks. I remember.

n.c
Mr. Camp: And additionally, I object that our expert needs to perform a calculation for Petitioner.

Judge Holmes: No. This is to demonstrate something else. That's fine. But why isn't this all on Page
48, Mr. Salkin? What's ... what am I missing here?

so
Mr. Salkin: Well, Page 48 he does say implied net value of $1.5 billion.

Judge Holmes: Right.

ck
Mr. Salkin: If that's the case, I think that Petitioners just won the case on this issue. I think he has to
add ... at least add the debt back and maybe make some adjustments for the Sony option price. So it
gets above that, but I'm certainly willing to accept that $1.5 billion is the value. That puts the case
away.

lJa
Mr. Camp: I don't believe 2016, as Mr. Anson has testified, is the basis for his valuation, Your Honor.

Judge Holmes: It wasn't. It was a check. He even says that.

Mr. Anson: We ... if I can respond to your ...


ae
Judge Holmes: Yes, why don't you since you're the witness.
ich

Mr. Anson: If I can respond to Mr. Salkin for just a moment, what I have been asked to do here is to
value this asset in 2009. Now, the only reason we have looked at 2016 is simply to see if methodologies
used in 2016 were similar to or supportive of our methodologies in two- nine ... 2009. And they happen
to be ... and oh, by the way, at the very end of our report, we do compute what we believe is the value
mM

in 2016. It's different than the value ... than the price that was paid in 2016. We don't use 2016 valuation
for any other purpose. And Mr. Salkin, I'm not here ... forgive me for saying this, Your Honor. I'm not
here to be your performing dog. I'm here to support my valuation of 2009.

Judge Holmes: Yeah. But at the same time, expert witnesses are often in my Court asked to perform
these kind of confrontations using different inputs so as to bolster the side of the cross-examiner by
showing that if I believe the inputs are correct, the output, even using the expert's methodology, would
a

lead me to support the opposing party. So that's okay. But I still don't understand from Mr. Salkin what
he wants you to do, Mr. Anson. So I need to ask, Mr. Salkin. We have on Page 48 the rough check of
Te

$750 million times two, leading to an implied net value of Sony/ATV in 2016 of 1.5 billion. That's
simple multiplication. What are you saying is wrong with that as a way to calculate the enterprise value
of Sony in 2016, for whatever that's worth?
w.

Mr. Salkin: I'm perfectly willing to accept an enterprise value of $1.5 billion in 2016. To be fair,
though, it actually has to be higher because there was debt that was in the company that was taken into
consideration.
ww

Judge Holmes: Are those the ... is that the Sony amount?
om
Mr. Salkin: Yes.

Judge Holmes: That right?

n.c
Mr. Salkin: That's right, Your Honor.

Judge Holmes: Okay.

Mr. Salkin: But it's a different Sony amount in 2016 than in 2009 ...

so
Judge Holmes: Because that amount changed over the intervening seven years, correct?

Mr. Salkin: That's correct, and we have given the financial statements to counsel so they can give Mr.

ck
Anson the financial statements and start with the $750 million, and they should be able to say here's
what the value is based on the fact that somebody was willing to pay $750 million for half interest.

Judge Holmes: Okay. So I think he's referring, Mr. Anson, to the first verbal paragraph up on Page 48

lJa
of Exhibit 695-R. That states, "The $750 million payable to the estate already reflects the repayment of
all Sony amounts and any reductions in value attributable to the options price." I think he wants you to
add to the 750 million, and thus the 1.5 billion, the "all Sony amounts" as they existed at the time of the
transaction in 2016. Is that accurate, Mr. Salkin?

Mr. Salkin: Very accurate, Your Honor.


ae
Mr. Camp: And ...
ich

Judge Holmes: Okay.

Mr. Salkin: You phrased it much better than I could.


mM

Mr. Camp: And Your Honor, if I may, if we look at Page 50, I believe Mr. Anson indicates that they
were never provided with the information regarding the balance of the Sony amounts. And perhaps
there is additional analysis here ...

Judge Holmes: There we go.

Mr. Camp: ... which answers Mr. Salkin's questions.


a

Mr. Anson: If I may ...


Te

Mr. Salkin: Don't you have the financials we gave you, Ms. Herbert?

Mr. Anson: If I may?


w.

Judge Holmes: Hold on.

Mr. Camp: I'm sorry. Is she testifying?


ww

Judge Holmes: Hold on, Mr. Anson. Mr. Salkin, is Mr. Camp correct? On Page 50, it does indeed say
om
that Mr. Anson was using the 2009 Sony amounts because he didn't have the 2016 Sony amounts.

Mr. Salkin: Well, they ... I can represent they were given to counsel long before that report was
written. So it was available.

n.c
Judge Holmes: Okay.

Mr. Salkin: All he had to do was look at it.

so
Judge Holmes: Do you know where they are, Mr. Camp or Ms. Herbert?

Mr. Camp: I would have to look into that, Your Honor. I ... not necessarily ...

ck
Judge Holmes: Okay.

Mr. Camp: ... off the top of my head.

lJa
Judge Holmes: Do you know where they are, Mr. Salkin?

Mr. Salkin: Okay. If we take the lunch break, Your Honor, we'll be able ...
ae
Judge Holmes: Okay.

Mr. Salkin: ... to answer the question.


ich
Judge Holmes: And then you're asking Mr. Anson to subtract one number from another number. Is that
all?

Mr. Salkin: Probably ...


mM

Mr. Anson: Your Honor?

Mr. Camp: Hold on. Hold on. I'm making it simple for you, Mr. Anson.

Mr. Salkin: Probably add, not subtract?

Judge Holmes: What?


a

Mr. Salkin: Probably add.


Te

Judge Holmes: Oh, that's right. That's right. It's the subtraction of a negative amount.

Mr. Anson: Your Honor, may I add one last thing?


w.

Judge Holmes: Yes.

Mr. Anson: If Mr. Salkin and Your Honor would read Page 49, you'll see that we did value using the
ww

market approach Sony/ATV as of March 2016, and you see that in Figure 31. You'll see in Figure 32 we
subtracted what we thought the Sony amounts were at that date to come to a net value of Sony/ATV of
om
1,803,699,000 ??.

Judge Holmes: Right. And I think he's saying that the amounts were not 778.4 million, but some other
number for 2016.

n.c
Mr. Anson: And I can change that 778, Your Honor.

Judge Holmes: Let's see what that is. If they can find it somewhere in the masses ...

so
Mr. Salkin: Have ... may I give one additional copy after this calculation? He is projecting the value
based upon his 2009 schedules going forward. I am asking him to base it on a real transaction. Over
$750 million changed hands between two parties negotiating with the assistance of investment bankers
to come to a negotiated deal in which one party paid the other party $750 million for half interest in this

ck
company. That should be able to form the basis of the valuation because that's the best comparable
there is for 2016.

Mr. Anson: That's such an artificial comparable. I'm sorry. I spoke out of turn. Mr. Salkin ...

lJa
Judge Holmes: I think that would be more of an argument, I think, for the brief.

Mr. Salkin: Okay.


ae
Judge Holmes: But if you want him to do computations in his capacity as an expert witness using
different numbers for the Sony amounts he had used for the 2009 amounts to adjust the value of a 2016
transaction, I'll certainly allow that. But he needs to be given the Sony amounts ...
ich

Mr. Salkin: Okay.

Judge Holmes: ... for 2016.


mM

Mr. Salkin: That's fair enough.

Judge Holmes: Do you have those?

Mr. Salkin: That's certainly reasonable.

Judge Holmes: You'll find those, and then you can do the subtraction. I suspect you can do it without
a

the help of your assistants.


Te

Mr. Anson: I think I can do it right here on the stand.

Judge Holmes: I can even do subtraction, yeah.


w.

Mr. Anson: I think we can do it here on the stand, Your Honor.

Judge Holmes: Yeah. Okay. We can adjourn for lunch then.


ww

Mr. Anson: Thank you, Your Honor.


om
Judge Holmes: Oh, 2:00 o'clock it is.

Mr. Anson: Wow.

n.c
Court Clerk: All rise.

(Recess)

Judge Holmes: Please be seated. Mr. Salkin.

so
Mr. Salkin: Yes, Your Honor. We are in the process of obtaining the financial statements up to the date
of sale. And with the Court's indulgence, we can have them being printed while we're going on. But
may I make an assumption? Did you do a calculation, Mr. Anson, during the lunch break?

ck
Mr. Camp: Objection. How was he supposed to do a calculation? We never got the Sony amounts from
...

lJa
Judge Holmes: Oh.

Mr. Camp: ... Petitioner, Your Honor. ae


Mr. Salkin: Well, let me ...

Judge Holmes: Were you randomly doing calculations during lunch break, Mr. Anson.
ich
Mr. Anson: No. No, sir, we were not.

Judge Holmes: Okay.

Mr. Salkin: Well, if you assume the Sony amount is $280 million, are you able to do a calculation?
mM

A. I'm still not clear what calculation ... I can give you an example, but I'm not sure what calculation
you want done.

Q. Calculation of the enterprise value starting with the fact that one party paid $750 million for half
interest in the company. And just to clarify the confusion that there might have been, the estate had to
pay its $300 million debt out of the 750, leaving 450. But we're working with the 750 on the enterprise
a

value.
Te

Mr. Camp: I believe there's still confusion, Your Honor.

Judge Holmes: Okay. Perhaps if you looked at a particular figure in Mr. Anson's report where he did a
calculation using Sony payments as of June 30th, 2009, we could make some progress here. Figure 32
w.

maybe?

Mr. Salkin: June 30th, 2009, he has places where I certainly can follow.
ww

Judge Holmes: Okay.


om
Mr. Salkin: But I did have a great deal of difficulty following 2016. Did you say Exhibit 33, Your
Honor?

Judge Holmes: Figure 32 of his primary report, 695-R. Can you bring that up, Mr. Rosefsky?

n.c
Mr. Rosefsky: Yes, sir.

Judge Holmes: That's Page 49 of the report.

so
Mr. Salkin: Okay. This is a 2016 calculation.

Judge Holmes: Right.

ck
Mr. Salkin: And it's my understanding that this is based solely on what he did in 2009. It doesn't take
into effect 2016 events, as I understand it.

Judge Holmes: See where it says Sony amounts as of June 30th, 2009, Mr. Anson?

lJa
Mr. Anson: Yes, sir.

Judge Holmes: What number are you saying would be the correct number as of 2016?
ae
Mr. Salkin: I have been told verbally that it's $280 million.

Judge Holmes: Okay. If it were $280 million for Sony amounts as of the time of the transaction, what
ich
would that do to the net value of Sony/ATV in your analysis, Mr. Anson?

Mr. Anson: It would increase the net value of Sony/ATV, at least nominally, to 2.5 million. But I have
to qualify that answer, Your Honor, because if that were true, if $500 million had been paid down on
the net amounts, then the number above that, the fair market value of Sony/ATV would be substantially
mM

modified because you would have drawn $500 million in cash out of the business. And I would need to
then recalculate the fair market value of Sony/ATV as of that date. And to do that, we would need to go
back and ... we would need to go back and recalculate the value of the company. You can't just simply,
Your Honor, change the amount of 778 and add that increment to 1.8 million. That's just not the way it's
done.

Judge Holmes: How would paying down the Sony amount affect the top line number in Figure 32,
a

which was calculated as a multiplication of Sony's NPS for the 12 months prior to March 14, 2016?
How might it?
Te

Mr. Anson: Well, the way it almost certainly would have affected it would be that the ... there would be
an increase in direct expenses, we would suspect, because what I'm being told is $500,000 of
expenses ... direct expenses probably would have been incurred, or at least speculative it would have ...
w.

speculatively would have been incurred. That being the case, the value arrived at - - the fair market
value arrived at would have changed under both the market approach and the income approach.

Judge Holmes: So you're concerned that the NPS that you were using as one of your ... what's the
ww

word? Multi-plans? No. There has to be a ...


om
Mr. Anson: Multi-plans, right.

Judge Holmes: Yeah. You know ... would be affected by the pay down of the Sony amount.

n.c
Mr. Anson: Yes, sir.

Judge Holmes: Okay.

Mr. Anson: That's correct.

so
Judge Holmes: That's a testable proposition. Anything else, Mr. Salkin? Am I getting what your point
is?

ck
Mr. Salkin: It sounds like we don't have a 2016 calculation on enterprise value by ...

Judge Holmes: That's true.

lJa
Mr. Salkin: ... Mr. Anson based on the $750 million purchase price.

Q. Is that fair to say, Mr. Anson? ae


A. That's correct. What we did here in both Figure 32 on Page 49 is a calculation of market value based
on NPS. And then on Figure 35, we have an analysis of fair market value based on the income
approach. And if you go to Page 49 ... I'm sorry, Page 50, I apologize ... Page 50 Figure 35, you'll see
the fair market value based on an extension of income out through 2016.
ich

Q. Are any of these values based on anything other than the calculations you made in 2009?

A. They are an extension, but we don't have ... we did not have ... do not have data beyond 2009.
mM

Q. But you could have had been blindfolded between 2009 and 2016, and you still would have been
able to make these exact calculations, right?

Mr. Camp: Objection. What does counsel mean by blindfolded?

Judge Holmes: It's a good question. Sustained. What do you mean by blindfolded ...
a

Mr. Salkin: That ...


Te

Judge Holmes: ... Mr. Salkin?

Mr. Salkin: ... that he did not ... this appears that he did not take anything into effect that occurred after
2009 in coming to these 2016 numbers other than just applying his percentages as he did in his original
w.

report with respect to the 2009 year.

Judge Holmes: As this check on your work for DCF in comparables ... this is, after all, a check on that
work ... Mr. Anson, were you using only 2009 data for the Sony amounts?
ww

Mr. Anson: Yes, sir. We were extending out growth rates in the case of the income approach. We were
om
extending out growth rates and ... for the market approach ... we also took ... and simply an extension of
growth rates in NPS revenues.

Judge Holmes: See, I at least understand that, Mr. Salkin.

n.c
Mr. Salkin: Okay.

Judge Holmes: I mean, he was using ... he was taking that veil-of-ignorance approach when it comes
to subsequent events, except his insanity ?? check. But he wasn't taking into account, for instance, the

so
midline projection of Sony itself at that time, which may or may not have been known. So that's the
point that comes out on the ratings that I have seen so far.

Mr. Salkin: Let me ...

ck
Judge Holmes: Is there another point lurking in there, Mr. Salkin?

Mr. Salkin: Yes. Let me ask a few more questions.

lJa
Judge Holmes: Sure.

Mr. Salkin: And maybe it will show my point.


ae
Q. All right. Do you know what the net publisher's share was in 2016?

A. I do not.
ich

Q. Okay. And do you know what EBITDA was in 2016?

A. I do not.
mM

Q. Okay. Do you know what the free cash flow was in 2016?

A. No, sir.

Q. Did you have any interviews with management relating to 2016?

A. No.
a

Q. Were you aware of any material transactions that occurred between 2010 and 2016?
Te

A. Anecdotally, but not factually.

Q. Did you know that Sony/ATV went from number four in the industry to number one in the industry
w.

between 2009 and 2016?

A. Yes.
ww

Q. Okay. And did you know that the economy improved between 2009 and 2016?
om
A. Yes, of course.

Q. In fact, you pointed to the S&P 500. You know that it more than tripled between 2009 and 2016,
didn't it?

n.c
A. Yes. I think we know that.

Mr. Salkin: Okay. Your Honor, I have been handed ... let me ...
Excuse me for a moment, Your Honor.

so
Judge Holmes: Sure.

Mr. Salkin: I've committed the cardinal sin of working with exhibits that I'm seeing for the first time in

ck
the middle of a trial. Would it be possible, Your Honor, to start the ... well, allow the redirect and
possibly start with Mr. Branca, and then we can come back and pick this up?

Judge Holmes: No, no, no. We have got to finish this one. But I'll go off the record to let you consult

lJa
with Ms. Strachan off the record and get up to speed.

Mr. Salkin: Okay. Then I think we'll get the printed ...
ae
Judge Holmes: Okay.

Mr. Salkin: ... material that will clarify.


ich
Judge Holmes: We'll go off the record. Everybody can be at ease.

(Recess)

Judge Holmes: Mr. Salkin has said that he no ... has no more questions. We can move to redirect.
mM

Redirect, Mr. Camp?

Mr. Camp: Yes, Your Honor. May I have just a few minutes to print something out myself?

Judge Holmes: Okay. Off the record again.

Mr. Camp: Thank you.


a

Mr. Salkin: Okay. I do have one question.


Te

Judge Holmes: Oh, wait.

Mr. Salkin: I ...


w.

Judge Holmes: Wait a second. Back on the record again.

Mr. Salkin: Did ...


ww

Judge Holmes: I was premature in saying Mr. Salkin was speechless.


om
Mr. Salkin: Did you ...

Judge Holmes: Go ahead.

n.c
Mr. Salkin: ... calculate the purchase option price for any date after June 25th, 2009?

A. The purchase option price, no, sir, we did not.

so
Q. Okay.

Judge Holmes: Now we can go off the record again while you do your copying and printing.

ck
Mr. Salkin: Uh ...

Judge Holmes: Wait a second. You got your one question. You have another one?

lJa
Mr. Salkin: Do I ... may I have another one?

Judge Holmes: All right. Back on the record. ae


Go ahead, Mr. Salkin.

Mr. Salkin: Fortunately, I have a very liberal judge. Thank you.


ich
Judge Holmes: Please don't say that.

Mr. Camp: Your Honor, I move to strike.

Judge Holmes: Thank you. That would be stricken. Accommodating ...


mM

Mr. Camp: Unresponsive.

Judge Holmes: An accommodating jurist will be substituted.

Mr. Camp: Accommodating jurist. So stipulated.


a

A. Yes, Mr. Salkin?


Te

Q. I assume, Mr. Anson, you have been involved transactions where prices were being negotiated?

A. Yes. A lot.
w.

Q. And both sides retained investment bankers? Is that right?

A. Yes, sir.
ww

Q. And each one makes a presentation to show whatever value is most advantageous to their own side?
om
A. Yes.

Q. Okay. And when you heard Mr. Dunn testify, did you understand him to be saying that that's what he
was doing? He was trying to maximize the sale price?

n.c
A. In his testimony here, yes, I heard him say that.

Q. Okay. Thank you.

so
Mr. Salkin: I'm through now, Your Honor.

Judge Holmes: Okay. You're really through now, Mr. Salkin.

ck
Mr. Salkin: Well ...

Judge Holmes: Now we can go off the record.

lJa
(Recess)

Judge Holmes: ... direct. ae


Mr. Camp: Thank you, Your Honor.

REDIRECT EXAMINATION BY MR. CAMP:


ich
Q. Good afternoon, Mr. Anson.

A. Good afternoon, sir.

Q. Why did you use an average for the seven comparables in your Mijac post-mortem spike and a
mM

median in your seven Sony/ATV comparables?

A. Yes, the average versus median that Mr. Salkin and I have discussed today. Excuse me. What ... let
me start with the median. In looking at comparables for Sony/ATV where we have a stable, steady
corporation, whether Sony/ATV or another company, we want to use a median to be sure that we don't
introduce any aberrant or outlier data into our conclusions. And so therefore, a median is an appropriate
measure. On the other hand, the other day when we were talking about Mijac ... and by the way, we
a

happen to have seven comparables in both cases. The other day, we were talking about Mijac. We had
seven comparables when we were looking at the spike. There we used an average because there you're
Te

looking at Michael Jackson, an entertainer, arguably perhaps the greatest entertainer of our time. And
he himself is in some ways an outlier. So there as you look at the seven comparables, you want to
include all the data to make sure that you do include the outlier information. And there, it ... an average
is the more appropriate mathematical measure to use.
w.

Q. Okay. Thank you. And do you recall Mr. Salkin presented a chart showing a compound annual
growth rate of negative 2.8 percent from your Mijac report?
ww

A. Yes. We looked at it again this morning. Yes.


om
Q. Yes. If you were to look at a longer horizon ... time horizon, maybe 30 years, would it show long-
term growth?

A. In the music industry?

n.c
Q. Yes.

A. Yes. Yeah. Long term in the music industry has solid growth prospects.

so
Q. And Mr. Salkin also mentioned that none of your comparable companies presented, I believe at
Exhibit 6, included the sale of a partial interest in a ...

A. That's right.

ck
Q. ... limited liability company or a partnership?

A. That's right.

lJa
Q. Does this make your comps any less comparable?

A. No. Absolutely not.


ae
Q. And regarding the discounted cash flow and operating expense discussion, Mr. Salkin asked about
specific expense line items which could be removed by a hypothetical investor. Do you recall that?
ich
A. Yes.

Q. And was your assumed reduction in expenses similar to the reduction in expenses in Mr. Dunn's
analysis?
mM

A. Yeah. Yes. It's quite similar.

Q. Was your analysis of expense reductions done independently to Mr. Dunn?

A. Yeah, of course. Very ... completely independently.

Q. And Mr. Salkin brought up ... talking about the discount rate ... he brought up the debt instrument
a

taken out ... taken on by Vivendi in the first quarter of 2009. Do you recall that discussion?
Te

A. When we were talking about the ... yes. Talking about instruments. Yes.

Q. He stated that it had a yield of 7.82 percent. Do you know? Did Vivendi take on any other debt
instruments in early 2009?
w.

A. Yeah. There was ... yes. There was a second debt drawn that had a rate of about 4.5 percent. Yes.
There was a second one ... second debt.
ww

Q. And why is it significant that there were two debt instruments?


om
A. Well, when you're looking at the cost of debt, you have to look at the blended or weighted cost of
debt. So if you take the ... that first instrument that Mr. Salkin brought up and the second 4.5 percent
debt yield, the two together had a weighted or blended cost of debt of 4.62 or 4.63 percent.

n.c
Q. And Mr. Salkin discussed talent cost with you. He provided a number of hypothetical scenarios. I
believe he used Exhibit 201-J. And if we look at Page 5 of 201-J, do you see the line item labeled talent
cost?

A. Yes. It's the fifth line item.

so
Q. And this is on the income statement, I believe, as an expense? Is that correct?

A. Here we're looking at cash flow statement, so this is cash flows from operating. And let's see if it

ck
shows up again. It's a wash. It's a non-cash expense, essentially.

Q. Is that because it's on Page 6, I believe, or is that ... I'm sorry. Page 6. Maybe I have the wrong page
number. Or is it on the same page?

lJa
A. Here you're looking at the income statement.

Q. Okay. This is ... I'm sorry. So let me clarify. This is Page 4 of Exhibit 201-J. And on the income
statement, you see talent cost, correct?
ae
A. Right. It shows it as if it is an expense.
ich
Q. I'm sorry. And then ... yes. Correct. And then I had the wrong page numbering first. Now on Page 5
of 201-J, how does the talent cost appear?

A. It shows it as a cash flow in ... as a non- cash expense.


mM

Q. Okay.

A. It's a wash.

Q. Thank you.

Mr. Camp: No further questions, Your Honor.


a

Judge Holmes: Any pointed recross, Mr. Salkin?


Te

Mr. Salkin: Yes. One or two items, if I may.

Judge Holmes: Okay.


w.

RECROSS-EXAMINATION BY MR. SALKIN:

Q. Is it your understanding that Sony is a very broad-based company in the entertainment industry?
ww

A. Sony, the parent company is, yes.


om
Q. All right. And if Sony is able to merge entities, particularly one that has an outside partner with
other entities, it should be able to enjoy reduced cost as a result of combining the operations so that, for
example, you can have maybe one HR department instead of two, one account receivable collection

n.c
department instead of two, and things like that. Is that a natural synergy you would get with a company
like Sony?

A. If it's highly centralized, yes.

so
Q. All right. And might that be the reason that Mr. Dunn explained that expenses could be reduced in
this selling presentation?

A. I don't think that was the reason, but it's a possibility.

ck
Q. All right. And I just want to clarify, you said that talent costs, you both had it as an expense and then
you took it out as an expense. Is that right?

lJa
A. Essentially, that's correct.

Q. So it's ... in effect then, the cash flow then would show nothing for talent cost as a burden going year
to year to year. Is that right?
ae
A. Well, the working hypothesis is that one recovers the advances that one makes, and the net talent
costs works out to be neutral or zero, essentially.
ich
Q. At zero, okay. Thank you.

Judge Holmes: All right. Well, I have some questions ...

Mr. Anson: Yes, sir.


mM

Judge Holmes: ... Mr. Anson.

CROSS-EXAMINATION BY JUDGE HOLMES:

Q. Let me start with your own report. Did you think that the pool of rational investors in your
evaluation of the fair market value of Mr. Jackson's assurance on the ATV was likely to be C
a

corporations, or some other kind of entity?


Te

A. I think it was likely to be both.

Q. Why do you say that?


w.

A. Well, you had some public corporations like Vivendi, but you also had classic large venture
capitalists like Blackstone and KKR who would be likely to put LLCs together of investors.

Q. You say on Page 13 of your report that music publishing generates money, it's fairly consistent, it's
ww

not highly correlated with other assets ... quoting from Ron Burkle that publishing is a great asset. Was
that true in June of 2009?
om
A. Yes, because what we're talking about here is music publishing as opposed to other equity or
investment opportunities.

n.c
Q. Page 19 of your report includes a definition of net publishers share as "gross income, less the
administration fees, royalties due to writers, and direct expenses."

Judge Holmes: Excuse me.

so
A. Bless you. Bless you.

Q. What are the direct expenses that you're using in that definition?

ck
A. They're fairly limited because the songwriters agreements make sure that they're kept quite tight.
They typically do not allow operating expenses to creep in there. Direct expenses include things like
the cost of ... the actual cost of collection, should there be collection costs, the actual cost of
administering the payment system. And that's about it.

lJa
Q. And that's based on your experience in general in the music industry or by looking at Sony
documents in particular? ae
A. In general.

Q. Okay. On Page 20 of your report, you do reference, for instance, BMG Management's partner, KKR,
viewed music publishing as a way to diversify risk. It was "a safe haven for investors during the
ich
financial crisis." What proof is that ... what proof is there of that statement?

A. Are you ...

Q. This is Page 20.


mM

A. Right. Italics?

Q. Middle of the last paragraph.

A. Okay. Right. KKR viewed music publishing as a way to diversify risk. We are looking at ... we are
looking here at a number of referenced documents and referenced books, and I have got to go to the ...
a

Q. Yeah. You refer to an article by somebody named Yinka Gatagotay ?? and Reuters from April of
Te

2009. Are there statistics for this industry that might lead to a more systematic ability to find that as a
fact?

A. I wish I could give you a statistical chart below those. But suffice it to say that during this period,
w.

cash flows out of ... and this period being say beginning of 2008 and running through 2011 or later ...
cash flows out of music publishing were it's certainly far superior to other private equity investments.

Q. All right. Moving to Page 24, in calculating part-year projections for Sony/ATV, the April to June
ww

25th, 2009, you used historical results. Is there seasonality in the music industry, a heavy concentration
of income around Christmas or something like that?
om
A. Yes, there is. You'll find in the first ... first quarter is much stronger than the second, but that's
somewhat due to a lag in reporting. Sales are stronger in the third and fourth quarters by far.

n.c
Q. Okay. Did you take that into account in calculating the 12 months of NPS for Sony because you had
to sort of make estimates for a part quarter ... part second quarter in 2009?

A. I believe we did. I will not swear to that on the stand unless I go back and check my numbers. I
would assume we did. We're careful in our analysis.

so
Q. Okay. We talked about that. Go to Page 26, if you would, under Sony Option Price.

A. Yes, sir.

ck
Q. What personal debt obligations of Michael Jackson was Sony securing?

A. Not entirely clear to us. We did not get any detail. We only ... I only know, based on the inquiries we

lJa
made, that Mr. Jackson had borrowed additional sums and had secured it with his equity.

Q. So ... and that would then affect how the option price worked, of course, would it?
ae
A. Yes.

Q. Okay. Do you assume that any rational investor would purchase the assets of Sony/ATV or purchase
the entire venture?
ich

A. Our assumption is the rational investor would want to purchase the entire venture.

Q. And lose the benefits of the amortization provisions of the benefits?


mM

A. Well, that's a good question. Would they, in fact, lose the amortization benefits? I don't believe they
would.

Q. Did you take into account that amortization benefits in ... created a value for Sony/ATV?

A. No. We assumed that the amortization benefits would continue. They're built in the cash flow
analysis.
a

Q. In your rebuttal report on Sony/ATV ...


Te

A. Yeah. Yes ...

Q. ... Exhibit 696-R ...


w.

A. Mm-hmm.

Q. ... you hypothesized that a rational hypothetical buyer or investor would bring Sony's operating
ww

expenses in line with industrial averages. This is on Page 4. Why do you think Sony didn't do this itself
as a rational profit-maximizing corporation?
om
A. That's a good question and one that I think is easily understood. At this time in its history, it is on
a ... in a growth flow. It is dedicated to growing this business, to ... on its way to making itself the
number one music publisher. It's acquiring. It is doing so at the expense of its bottom line. It is not in

n.c
any sense attempting to maximize its before-tax profits or after tax profits, for that matter. Howard
Stringer, the man who's running it, came to the music business with a dedication to making this number
one, and he's done that job. That, however, results in EBITDA suffering.

Q. And is there a way that a purchaser of Mr. Jackson's share of Sony/ATV, again, on June 25th, 2009,

so
hypothetically, would be able to force Sony out of its growth make money in the future mode and into
the let's make our money right now mode?

A. It would assume that this rational buyer would trigger the buy-sell and end up as a 100 percent

ck
owner and, in that mode, would then, therefore, be able to trim expenses. I think it's clear from Mr.
Dunn's analysis ... putting that aside ... it's clear that these expenses can be trimmed. You can cut back
on acquisitions, and you reduce the effort that you put into catalog or portfolio management.

lJa
Q. In calculating the enterprise value of ... I'm sorry. In calculating the fair market value of Mr.
Jackson's share of Sony/ATV, did you take into account the cost of exercising the buy-sell option?

A. Well, we recognized that the cost of exercising the buy-sell option is going to require a substantial
ae
cash outlay by the rational buyer in the sense of having to pay off the Sony amounts and the debt. Did
we in any way add ... did we present that scenario in our valuation? No, we did not.

Q. Let's see what else I have for you. In Mr. Wallis' rebuttal report, Exhibit 644-P on Page 19, he
ich
criticizes you for your summary of BMG's acquisition of Bug's Music as saying that the NPS in that
deal was substantially lower than the NPS that you used in your calculations. Do you agree or disagree
with his criticism of that specific point?

A. We went through this during deposition. I believe we are correct. He cites a newspaper article that
mM

says, "One person who had seen his financial details said Bug has an NPS of 35 million." Well, I don't
know who that one person was.

Q. And also on that page at the top, there was a somewhat similar criticism of the Evergreen
Copyrights acquisition where Mr. Wallis says that you used an $80 million figure from the New York
Post, but some subsequent report indicates that the deal was finalized at only $50 million, which would
of course affect the NPS multiple as well. Do you accept his criticism of that specific point in your
a

report?
Te

A. No. On that one, we went back and checked our sources, and we believe we are correct.

Q. Why do you believe you are correct?


w.

A. Well, after reading his criticism, we went back to ... let me read his again. We went back to find a
second source, and I believe we did cross- check this and verify an $80 million figure.

Q. In Mr. Wallis' criticism of your DCF projections on Page 28 ...


ww

A. On my 28 or his?
om
Q. This is his Page 28 ...

A. Okay.

n.c
Q. ... 644-P. He says, "Mr. Anson offers no explanation for why he ignored Sony management's
forecasts and, instead, made his own simplistic assessment of the outturn based on historic CAGR,
compound annual growth rate." Why did you use Sony's own management forecasts?

so
A. I believe their growth forecasts were more ambitious than the growth rate that we ended up using.

Q. It included other points of difference, however. Was there a reason you didn't accept any of them?

ck
A. Well, we have to remember ... excuse me ... you have to remember. We did not have access to all of
Sony's detailed financials. We only had summary financials. And so I'm not sure what else he is
referring to. Let me read this again.

lJa
Q. This is Paragraph 8.2 ...

A. 8.2. ae
Q. ... on Page 28 of his rebuttal report, 644- P.

A. Thank you. Beyond the CAGR, which we used a lower running rate than they did, I don't remember
what else he's referring to. I'm sorry, Your Honor.
ich

Q. Do you agree with his statement that you had access to these reports? He says in Paragraph 8.1 at
the top of the page, "Mr. Anson states I was provided with historical financials for Sony/ATV. This
provided sufficient information to conduct an income approach analysis."
mM

A. No, we did not have access to all the information he did. The only access we had to Sony
information is what you find in our summary in Exhibit ... I believe it's 9 ... either Exhibit 9 or 11.
That's the sum total of financial information we got from Sony. Let's take a look at that, if we can,
please. Mr. ... can we look ... and let's get this right. Exhibit ... okay. Let's look at Exhibit 11.

Q. This is Exhibit 11 of 695-R.


a

A. And then let's look at Exhibit 13. Exhibit 13 gives you the sum total of data that we received from
Sony in their financials.
Te

Q. Was this given to you by Petitioners? Or was it derived by you from information given by
Petitioner?
w.

A. This is what we received via Petitioners. I believe that's correct. If I'm speaking out of turn, I would
stand to be corrected. But my best belief is this is the sum total of what ... yes. This is the sum total of
what we were given by Petitioners.
ww

Q. All right. On Page 29 of Mr. Wallis' rebuttal report ... again that's 64 ... 644-P.
om
A. Mm-hmm.

Q. In paragraph 8.8, he criticizes your method of calculating EBITDA margin for music publishing
saying that you should have used EBITDA over revenue instead of the margin that you did use. What

n.c
do you have to say in response to that criticism?

A. It just ?? as an extreme.

Q. What do you mean by that?

so
A. It just ... that's a false argument.

Q. Why is it false?

ck
A. Because ... simply, because writers' deals have changed over time, it doesn't mean that the approach
we take is any less valid.

lJa
Q. Does it suggest, however, that you needed to figure out the age of the agreements in Sony's catalog
versus that of other catalogs on the market?

A. Right. We talked about this earlier today in the cross-examination. We have to assume that all
ae
publishers are going through the same change in contracts as reversion comes up and writers change
their deals. And while I suppose it would be possible to parse the catalog of every publisher, I think that
a on running average you will probably find the proportion of 50 percent and 30 percent and 25 percent
deals is going to be roughly the same across the board.
ich

Q. Okay. On Page 36 of Mr. Wallis' rebuttal report, Paragraph 10.11 ... where did it go ... Mr. Wallis
says, "The statement that the holder of the estate's 50 percent interest has the ability to force the sale of
all interest in Sony/ATV through Section 7.8 of the operating agreement is factually inaccurate." Do
you agree with that?
mM

A. I don't. Let's see what else he says here.

Q. Yeah. The next question will be why don't you agree with that, sir.

A. My reading of it is that either party can trigger the buy-sell provision.


a

Q. What information would a rational investor buying Mr. Jackson's share of Sony/ATV have at the
point of acquiring that share? Would he have access to all the Sony financial information under the
Te

terms of the agreement? Or would he simply have the ability to trigger the buy-sell provisions?

A. He would have full information, as I read the agreement. I think I would hire a good attorney,
however, to read it for me.
w.

Q. But your valuation depends on the ability of a rational hypothetical investor to trigger the buy-sell
provision ASAP after the date of death, correct?
ww

A. Yes.
om
Q. Did you consider the possibility that there would be antitrust obstacles in selling the Sony/ATV
interest?

A. Yes, we did.

n.c
Q. In what way did you?

A. Well, the question would be would this be too large a combination, and ... to have one person own
the entire thing. And the answer is, no, of course not.

so
Q. Why is the answer of course not?

A. I'm sorry. I didn't mean to put it that way. The answer ...

ck
Q. Why is the answer no?

A. The answer is no because there were bigger publishers already in the business. And as the nature of

lJa
the music business is changing and digital formats are coming to the fore, the music industry and the
recording industry association was much more concerned about the growth and power of digital
downloading companies than they were about music publishers.
ae
Q. The ability of a hypothetical rational buyer of Mr. Jackson's share in Sony/ATV to trigger the buy-
sell agreement is also essential to your decision to decline any discount for lack of market ability as
well, correct?
ich
A. Yes.

Q. Same with lack of control?

A. Yes, because the buy-sell does state that the buyer does have the irrevocable right to revoke - - to
mM

invoke the buy-sell and to offer to purchase the other half.

Q. I understand things better.

Judge Holmes: Follow-up questions, Mr. Salkin?

Mr. Salkin: Yes, please.


a

Judge Holmes: Go ahead.


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RECROSS-EXAMINATION BY MR. SALKIN:

Q. In your opinion, I think you have said that the operating expenses were overstated. Is that right?
w.

A. I didn't say they were overstated. I'm sure the income statements are correct.

Judge Holmes: He said inflated.


ww

A. Inflated.
om
Q. Excessive, is that the word?

A. Yes.

n.c
Q. And that the purpose of that was to encourage growth in the company. Is that right?

A. That is partially true.

so
Q. Would that growth have had a material impact on the increase in value between 2009 and 2017 as
Sony rose from number four to number one?

A. It has some effect, yes.

ck
Q. When the Court mentioned Mr. Wallis' report that ... in where they disagreed with the NPS amounts
for Bug, what was the source of your information that was the basis of the disagreement with Mr.
Wallis?

lJa
A. I don't recall.

Q. Okay. And how about with respect to Evergreen? What were the sources of information that caused
you to disagree with Mr. Wallis?
ae
A. I don't recall.
ich
Q. And you mentioned you did not have certain financial information. Could you look at your
Appendix B to your report?

A. Is that the list of documents?


mM

Q. Yes.

A. Yes, sir.

Q. Could you look at items 2 through 10? Just ... do they include financial statements for the years
ending March 31, 2005 through March 31, 2011?
a

A. For the corporation of Sony, yes ... financial.


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Q. You mean Sony ATV, the entity?

A. Let me double-check. Forgive me, I have to put my glasses on. I think I can get away with this, but I
can't anymore. It's a cruel day, Mr. Salkin, when I have to put on my glasses to read the appendix. Yes, I
w.

see that.

Q. Did you have access to those financial statements?


ww

A. Yes. I believe those are Sony financials.


om
Q. Sony or Sony ATV?

A. I believe they're Sony financials. We had some reads on Sony ATV. We had full financials on Sony,
the corporation.

n.c
Q. But when you say financials year end of March 31, 2005, would it be Sony Corporation, the big
massive worldwide company? Is that what you're referring to?

A. I believe so.

so
Q. And not Sony ATV Publishing?

A. We had some refinancials for Sony ATV.

ck
Q. Did you request copies from counsel for the respondent?

A. Yeah.

lJa
Q. Did they give them to you?

A. They gave us all the data that they have, yes.


ae
Q. Does that include financials of Sony ATV for these years?

A. We have for Sony ATV, we have income statement budget for '08, and we have full financials for
ich
Sony for the years shown. And for the balance, that's what we have.

Q. That's all you had to work with?

A. Best to my knowledge, sir.


mM

Q. So you didn't have the Sony ATV statements for these years. Is that correct?

A. I believe that's right.

Q. You heard Mr. Wallis testify that the writer deals with older publishers were more mature and had
terms that were more favorable to the publishing company than what someone like Sony ATV would be
a

able to obtain in the more recent years. Is that correct?


Te

A. The newer ... the newer catalogue, yes.

Q. Did you read the provisions of the 2007 amendment that are cited as Item 3?
w.

A. Amendment ... I'm sorry, amendment to what?

Q. Amendment to the release waiver and amendment agreement of December 7, 2007, which has
material amendments to the operating agreement.
ww

A. I don't recall any longer.


om
Q. Okay. No more questions. Oh, excuse me. Can we wait one more minute? Sorry, Your Honor.

Mr. Anson: Your Honor, if they're not ready, I'd like to go to the bathroom.

n.c
Mr. Salkin: Could we take a break then?

Judge Holmes: Okay. Take a break.

so
Mr. Anson: I mean, really.

Judge Holmes: No more than 10 minutes.

ck
Mr. Salkin: We certainly don't want you to be more uncomfortable. Oh, you have to hurry.

Mr. Anson: Yeah, One or the other three.

lJa
Court Clerk: All rise.

(Recess) ae
Judge Holmes: Mr. Salkin.

Mr. Anson: Excuse me, Your Honor. May I say something before ...
ich
Judge Holmes: Okay.

Mr. Anson: Obviously, I've gotten very tired. Clearly, on this appendix, Mr. Salkin was asking me
numbers four through nine have to be Sony ATV because Sony Corporate parent, those documents are
publically available. I wouldn't list those. So numbers four, five, six ...
mM

Judge Holmes: Okay. Where are you? Which report are you doing?

Mr. Anson: This is my report. It's Page 55.

Judge Holmes: 695-R at Page 55.


a

Mr. Anson: And it's Appendix B, Page 55. And just before the break, I was asked whether these were
Sony ATV or Sony financials. Well, they're certainly not Sony, the parent company, because those are
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publically available. So these certainly aren't Sony ATV financials.

Judge Holmes: There you go.


w.

Mr. Anson: And ... but what I can assure you of, Mr. Salkin and Your Honor, we never got any of the
projections or forward planning documents from Sony ATV. I'm sorry, Your Honor.

Judge Holmes: I understand your position. Go ahead, Mr. Salkin.


ww

Mr. Salkin: Yes. How about from respondent's counsel?


om
A. I'm sorry.

Q. Did you get ... how about from respondent's counsel? You said you did not get them from Sony. Did

n.c
you get them from respondent's counsel or request from respondent's counsel?

A. I meant that inclusively. We did not get them from respondent's counsel. We did ask for anything
like that. We did not get it. The only exception to that is if you go down to Item 12, we did get an
income statement budget for 2008, that was the extent of any sort of planning document that we got

so
from Sony ATV or Sony.

Q. You seem to imply that it was your understanding that your rational buyer could force the sale of the
entire company of Sony ATV. Is that your understanding?

ck
A. Well, the rational buyer could force the buy/sell agreement and end up even owning all of it or none
of it.

lJa
Q. Okay. But that does not include the ability to force Sony to participate in the sale to some outsider.
Is that right?

A. That's true.
ae
Q. Okay. And are you familiar with the provisions of Section 10.4 of the deal with inspection of books
and records? This is part of the operating agreement which is ... I'm not sure what exhibit.
ich
Female: This is the annotated version of the operating agreement.

Mr. Salkin: Oh. This is annotated version of the operating agreement. It's what I believe you said you
reviewed.
mM

Mr. Anson: Yes.

Mr. Camp: I believe the annotated agreement is not in the Stip and this was ... I believe he stated he
reviewed the operating agreement itself.

Judge Holmes: All right.


a

Ms. Strachan: Well, he stated in deposition that he reviewed the annotated agreement.
Te

Judge Holmes: Hold up.

Mr. Camp: Okay. We don't that. Just drop it. No more questions, Your Honor.
w.

Judge Holmes: Follow up questions, Mr. Camp?

Mr. Camp: Nothing further, Your Honor.


ww

Judge Holmes: Thank you very much. You're free to step down for now, Mr. Anson.
om
Mr. Anson: Thank you, Your Honor.

Judge Holmes: Next witness, Ms. Herbert. Mr. Voth.

n.c
Mr. Voth: Respondent calls John Branca. But if we would go off the record for just a couple of
minutes, I would organize several of the exhibits, Your Honor.

Judge Holmes: All right. Off the record.

so
(Recess)

Judge Holmes: We're ready to get back on the record, Mr. Salkin. You have a motion you said you
might want to ...

ck
Mr. Salkin: Yes. I would like to move the admission of the following exhibits: 191-J, 192-J, 199-J, and
200-J, subject to the reservation about post-death documents.

lJa
Judge Holmes: What reservation are you talking about?

Mr. Salkin: The 2016 transactions in effect. ae


Judge Holmes: You're reserving an objection to the exhibit that you're moving for the admission of?

Mr. Salkin: Well, as I understand it, Your Honor, that you're going to make a ruling, probably after
briefing, and if the 2016 transactions are going to be considered, we would like the Court to consider
ich
these exhibits.

Judge Holmes: Okay. Put them up on the screen, Mr. Rosefsky.

Mr. Rosefsky: Yes.


mM

Judge Holmes: 191 first.

Mr. Rosefsky: Oh, okay. I'm going to go ahead and remove that.

Judge Holmes: Well, it's 200. Here's 191. What do you have to say about this, Mr. Camp? You want
them in? You thought they were in?
a

Mr. Camp: We assumed they were in, Your Honor.


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Judge Holmes: Is there anything in the verbal part of the stipulation that says an objection was
reserved? You know, that ...
w.

Mr. Camp: The preamble to the stipulation, I believe, reserves objections for relevance ... or it
excludes all objections except for relevance and materiality. So petitioner has this continuing relevance
objection ...
ww

Judge Holmes: I understand.


om
Mr. Camp: ... which apparently they're objecting to their own document, as you pointed out.

Judge Holmes: I understand. I will admit 191-J. But of course, allow briefing on its relevance.

n.c
Judge Holmes: 192, Mr. Rosefsky. Same for this one. It's admitted. People can talk about it in their
briefs.

Judge Holmes: 199, I believe is the next one. Same for that one.

so
Judge Holmes: And 200. That too is admitted. People can argue about its relevance to the ultimate
issues in their case.

ck
lJa
February 23rd 2017
ae
Judge Holmes: Back on the record. Of course, Mr. Anson, you are still under oath. Mr. Voth, you have
20 minutes for direct.
ich

Mr. Voth: Your Honor, may I approach the Clerk to have some documents marked for identification?

Judge Holmes: Of course.


mM

Court Clerk: Exhibit 709-R is marked for identification. It is the original fair market value expert
report of Mr. Anson for Michael Jackson's name and likeness.

Court Clerk: And Exhibit 710-R is marked for identification. It is the rebuttal report of Mr. Anson for
Michael Jackson's name and likeness.
a

DIRECT EXAMINATION BY MR. VOTH:


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Q. Good afternoon, Mr. Anson.

A. Good afternoon, sir.


w.

Q. Please tell us about the various name and likeness valuations that you have done.

A. Well, over time, we have worked in a variety of living and dead celebrities and personalities. On
deceased celebrities, they have ranged from the very interesting like Dr. Seuss and Marlon Brando; to
ww

some of the artistic names like Andy Warhol and Robert Mapplethorpe, Robert Rauschenbert; scientific
personalities like Jacques Cousteau; historic figures ... Rosa Parks, Frank Lloyd Wright, and Audrey
om
Hepburn; and other celebrities; on the living side, a number of current celebrities and some that have
made news through litigation, including Woody Allen and Yogi Berra.

Q. Do you have any experience valuing trademarks, Mr. Anson?

n.c
A. I do. I think in my original testimony, which seems like a long time ago ... it was last Friday ... I
mentioned that I began my career in licensing and valuing trademarks. And they include things as
diverse as Xerox Corporation; IKEA, depending on how you pronounce it; the NFL, World Cup ... we
valued the 2008, 2012, 2016 trademarks and intellectual property; clients like Xerox, Pinterest ... so a

so
broad range of trademarks.

Q. Were you ever involved with Adidas?

ck
A. Yes. Yes. The Adidas case was a fairly well-known trademark case where we valued their
trademarks and their trade dress in a lawsuit against Payless that ended up in a ... I believe the largest
trademark award, $309 million. Beyond that ... well, a number of others.

lJa
Q. Please describe for us the scope of the post-mortem right of publicity that you considered
appropriate for this case.

A. This is a broad range of rights here beyond just right of publicity. We have talked about this briefly
before, but ... 2695
ae
Mr. Weitzman: I ... Your Honor, I'm just going to object as nonresponsive. The question is directly
related to right of publicity, and it sounded like the answer was going to be something different than
ich
that, which was a ...

Judge Holmes: Yes. Do answer the question, Mr. Anson.

Mr. Voth: Well, the question was what is the scope that he considered appropriate in doing his ...
mM

Judge Holmes: Right.

Mr. Voth: ... valuation for this case.

Judge Holmes: What did you include within the term "right of publicity"?
a

Mr. Anson: Within the term "right of publicity," I include ... the narrowest definition, of course, is what
is covered by a statute or common law rights in the state that a person dies in ... California in this
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instance. But you also look at all of the other rights that surround it that are best described as name and
likeness. And so that would include any U.S. trademarks, any state or common law trademarks,
copyrights, copyrightable material ... excuse me ... licensing rights, endorsement rights, even
franchising rights in some cases. And certainly in a case like Michael Jackson, you look at international
w.

trademarks. You have to remember here that we're looking at international opportunities, and right of
publicity does not extend well beyond the United States. If you look at my recent book entitled Right of
Publicity ... it's actually called Right of Publicity Analysis Valuation of the Law ... we do an analysis of
some ... several major countries. You have to have protection in the form of trademarks and copyrights
ww

outside of this country. I hope I'm being responsive to what you asked me.
om
Mr. Voth: Now, does this diverse range of protections that you described related to an individual's right
of publicity affect value?

A. Well, it does in that the more and broader forms of protection you have, the greater the potential for

n.c
extending and commercializing the name and likeness and right of publicity into services and products.

Q. Is it your opinion that a business person would seek to mitigate risks by obtaining a license for
Michael Jackson's name and likeness, for example?

so
A. I ... anyone who is going to undertake a meaningful ... or wants to undertake a meaningful extension
of the Michael Jackson brand or persona is going to seek a license. I think that's clear. We have heard a
lot of testimony. And those who are trying to truly build a Michael Jackson brand are going to seek a
license.

ck
Q. All right. Let's move on to themed attractions and products. Now, one of Petitioner's experts, Mr.
Roessler, criticized this section by asserting that you are primarily deriving value in this category by
assuming that Neverland Ranch could be turned into a fan destination. Is that what you did in your

lJa
report, Mr. Anson?

A. No. No, and I have to think that Mark ... that Mr. Roessler did not read the report very carefully. I
think Neverland was mentioned twice in my report in a passing reference. We never, as I think you
ae
know, Mr. Voth ... we never attempted to use Neverland Ranch as a basis of any commercialization in
our report.

Q. So what did you intend to ... so describe to us what is included within themed attractions and
ich
products then.

A. We'll get into more detail, I'm sure, during cross, but ...

Q. Just briefly right now.


mM

A. All right. This opportunity ... you know, this category, this range of opportunities includes
everything from videogames to slot machines, which were just mentioned by Mr. Branca, to a themed
hotel possibly, themed restaurants ... God bless you ... possibly casino or casino within a casino, themed
appearances ... I'll use Coachella as an example ... virtual reality products, game devices, Gameboys,
Xbox, et cetera. All of these are themed products and themed attractions. And that comes into this
large ... very large heading of themed attractions and products.
a

Q. Now, you were deposed in this case regarding your name and likeness report. And in your
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deposition, you stated that in 1995 or '96 you have not taken your young son to a Michael Jackson-
themed hotel. Do you recall that?

A. At that date. At that date, I wouldn't have. That's correct.


w.

Q. What about in 2009 or near the time of Michael Jackson's death?

A. Then yes because things had changed dramatically. In '95, there had just been charges and Michael
ww

Jackson had paid out a substantial amount of money to make charges go away, which I think turned out
to be unfounded, by the way. In 2010, or the end of 2009, you have a different situation. Michael
om
Jackson had been accused, tried, and very clearly acquitted ... and acquitted in a very public way. And
in what ... I don't want to use the word joyous, but in a very clear, happy, and well-covered manner.
And then he went into a period of quietude and now was coming back out at the time of his death fairly
... certainly on the upswing ... fairly triumphantly. He just sold out ... what is it ... 51 concerts. Sold a

n.c
half-billion dollars' worth of tickets. Everyone is ready for him to be back. At that point in time,
certainly you would take an eight or nine-year-old son or young person to a hotel- themed or a Michael
Jackson themed ... yes. It's a different time, different circumstances.

Q. All right. Let's move on to Cirque du Soleil. Why did you determine that a Cirque du Soleil Michael

so
Jackson theme show was reasonably foreseeable?

A. Well, pre-death there had been some contact between Cirque du Soleil and the Michael Jackson
organization. We not 15 minutes ago heard about Jack Wishna, who in his time, I understand, at least

ck
reading biographical details, was a man of substance in Las Vegas, had made an overture to Cirque du
Soleil and had conveyed that to the Jackson people. I think more than that though is it's just so logical
when you see the success of the Beatles show, Love, and you understand that Jackson ... Michael
Jackson, perhaps the entertainer of a lifetime ... not perhaps, he is ... it's simply too logical to deny the

lJa
opportunity. And I think it's interesting, too, that Mr. Roesler himself says in his report, it's totally
foreseeable. Now, why he didn't put those projections of income in his report, I don't know. But also,
Mr. Fishman also says it's logical, and I forget his exact words, certainly possible or probable. I mean,
both of the experts on the other side acknowledge that Cirque du Soleil was foreseeable.
ae
Q. But I see that there's only ... is it your understanding there's only a disagreement in terms of the
scope as attributable to a Cirque du Soleil show? Is that the disagreement between the experts?
ich
A. Evidently so because they both say it's probable, foreseeable, likely.

Q. Let's move on to the film. Why did you determine that a Michael Jackson film was reasonably
foreseeable?
mM

A. Well, when a leading entertainer like this dies, whether it's a Ray Charles, a Johnny Cash or ...

Mr. Anson: Bless you, sir.

Judge Holmes: Thank you.

A. ... whoever it may be ... and it's almost inevitable that a biopic will be done. I mean, it's a life
a

achievement movie basically, in whatever form it might be done. It's going to have wide theatrical
distribution, particularly when the death takes place right at the time when a quarter million people and
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hundreds of million were going to see him as a result of his planned concert tour. The other thing that
we know at the time was that we have this rehearsal footage that AEG and Michael Jackson and his
people had planned from the get-go on this '02 concert tour. So we know the footage has been shot.
Now, the rational buyer doesn't know how good it is, but that rational buyer knows it's there and that
w.

rational buyer knows ... has a demand for a movie like this. So it's fairly easy to predict that the movie
will take place.

Q. And did you hear or read about what the chairman of Fox stated regarding his interest in doing a
ww

movie based on not even seeing the footage?


om
A. We did hear that, and we heard testimony that, I think the comment was if you've got the film
footage sufficient to make a movie ... I don't know what his exact word ... the essence was, I'll buy it.
I'll make the movie.

n.c
Q. So in your opinion, woud a hypothetical buyer pay money to acquire this rehearsal footage?

A. Yes.

Q. Now, I'd like to convey to you some hearsay facts that were part of an August 21, 2009 evidentiary

so
hearing where John Branca conveyed the following.

A. I'm sorry, where who?

ck
Q. Where Mr. Branca conveyed the following.

A. Okay.

lJa
Q. "Now, we've been advised that not only was Michael aware that the rehearsals were being recorded,
but that he actually insisted on it, which was his practice since I've known him in January of 1980."

A. Mm-hmm.
ae
Q. "And we were advised by Frank DiLeo that Michael wanted that rehearsal, was planning on
exploiting that rehearsal" ...
ich
Mr. Weitzman: I'm so sorry. Wasn't this excluded?

Mr. Voth: If I may, Your Honor, may I lay a foundation?

Mr. Weitzman: Well ...


mM

Judge Holmes: Yes, he can lay a foundation, Mr. Weitzman.

Mr. Weitzman: Okay.

Judge Holmes: Go ahead and try again, Mr. Voth.


a

Mr. Voth: May I finish reading. And respondent is seeking to elicit the expert's opinion of hearsay
facts, which is permissible under the Federal Rule of Evidence 703.
Te

Judge Holmes: It is. It is.

Mr. Voth: And to try to lay a foundation, respondent's still cognizant that this is inadmissible evidence
w.

with respect to the hearsay facts.

Q. All right. Right before I was interrupted, I was stating, "And we were advised by Frank DiLeo that
Michael wanted that rehearsal, was planning on exploiting that rehearsal footage as part of a making of
ww

the tour program." How does this, if at all, affect your opinion of value?
om
A. All right. I think it just reinforces what I said a moment ago that the rational buyer would know that
the film footage existed and that it was owned and controlled by Michael Jackson or by his estate now,
at this point.

n.c
Q. And what about the intentions of the decedent. How would that, if at all, affect your opinion of
value?

A. If you mean the intentions of Michael Jackson?

so
Q. Right.

A. His intentions were to make a film.

ck
Q. Does that affect your opinion of value?

A. It reinforces the fact that there's going to be a movie made and it's going to make, I think ... if you
take a look at our report here ... it would have made a ... well, in the event This Is It did make a lot of

lJa
money. I mean let's be as direct as we can.

Q. Now, as an expert do you ... is it reasonable for you to rely on hearsay facts in forming your
opinion?

A. Yes.
ae
Q. All right. Let's move on. All right. You mentioned at deposition regarding your name and likeness
ich
report, are there any statements that you made at the deposition that you wish to clarify, Mr. Anson?

A. Thank you. Thank you for asking that question. There is one ...

Mr. Weitzman: Can we have a page and reference number?


mM

Mr. Voth: I don't ...

Mr. Weitzman: I'd like to see it.

Judge Holmes: Well, let's see what he says. Is there a part of your deposition you wish to clarify?
a

Mr. Anson: There is. There is one hyperbolic answer that I would like to clarify. I was asked at one
point, in the heat of the deposition, something to the effect if you don't have name and likeness rights
Te

does that affect your use of music. And I said something to the effect, well, if you announce one his
songs on the radio, you couldn't to use Michael Jackson's name, or something to that effect. Obviously
I'd like to correct that. That answer is wrong.
w.

Mr. Voth: All right. Let's move on. All right. In your report, you relied on certain deals pre-death and
certain information.

...Your Honor, one moment. There's a lot of chatter at petitioners' counsel's ...
ww

Judge Holmes: Quiet, petitioners. Go ahead, Mr. Voth.


om
Mr. Voth: All right. And members of your staff participated in interviews with Tohme Tohme.

A. Right.

n.c
Q. Given his testimony and the subsequent cross-examination, has anything changed with respect to
whether you should or should not rely on information provided by Tohme Tohme?

A. I don't think so. I mean, Tohme Tohme was in deposition, and was giving testimony under oath. I

so
don't know Mr. Tohme ... Mr. Dr. Tohme. I'm going to except his testimony as factual. He talked about
the Nederlander deal, he talked about Cirque du Soleil, he talked about Nike, he talked about the AEG
deal. There's no reason for me not to believe what he says.

ck
Q. And what impact, if any, did Randy Phillips' opinion of Dr. Tohme have on your opinion?

A. Randy Phillips' opinion is high. I ... it doesn't have an effect on me one way or the other. I'm simply
going to read what Mr. Tohme has to say.

lJa
Q. All right. You also relied on the agenda prepared by John Branca eight days before Michael
Jackson's death. Why did you do that? ae
A. Well, Mr. Branca strikes me as a very straightforward person, and he ... and very organized. And that
agenda seemed to be representative of what he wanted to accomplish. There's no reason not to accept
the fact that he came to that meeting ready to implement a program that would get the estate ... and
would get Michael Jackson, not the estate at that point ... get Michael Jackson and his financial affairs
ich
back on track.

Q. All right. Let's move on to the child molestation allegations. Now, in your report, did you consider
the impact of the child molestation allegations in your valuation of Michael Jackson's name and
likeness?
mM

A. Yes. And we talked about this not two minutes ago. But what else can I tell you? I mean, look, think
about this. Over the last two weeks we've heard the head of Bravado come in here and say that those
allegations had no effect on him or his desire to do a deal with Michael Jackson, and we heard Mr.
Nederlander come in here, fly in from New York, to say the same thing.

Female: That's not true.


a

A. It didn't affect him in 2008 when he signed the deal memo. It didn't affect him ... he still wanted to
Te

do it in 2011, when he tried to enforce the ... in 2011 when he tried to enforce the deal memo. And he
still would do the musical today. I think he testified to that on the stand. AEG said the same thing. Andy
Heyward said the same thing. I think the child molestation issue is just, frankly, overblown.
w.

Q. And, in your opinion, what is the impact of death with respect to Michael Jackson?

A. Well, Michael Jackson was on the rise. The impact of death is ... it's interesting. An old friend of
mine, Roger Richman who was Mark Ross' largest competitor, once said to me, the greatest client in
ww

the world is a dead celebrity. They always show up for work, they never have marital problems, they
rehearse extremely well, and their holographic images never change. So in the sense of impact of death
om
in some ways Michael Jackson will forever be a young man with a great talent whose talent never
degraded. And for that reason, we'll always have a marketable name and likeness.

Q. Very briefly, tell us about how you considered the economic environment of 2009 in your report.

n.c
A. Just two things. We've already talked about the economic environment, I think, far too much in my
earlier testimony. The economy was coming back, but there is an important thing to understand. I've
been on the board of directors of both of the licensing industry organizations, both the global LESI and
Lima, both of those boards for more than a decade. In '09, that was a clear upturn in the licensing

so
business along two dimensions. Growth really took off, and royalty rates continued to increase year-
over-year, to this day, by the way. And licensing has continued prosperous since roughly '08, '09, right
up through 2016.

ck
Q. Briefly, can you tell us some names of deceased celebrities that were in the licensing market at the
time of Michael Jackson's death?

A. Yeah. Yes. Excuse me. Of course ... well, of course, Elvis, Andy Warhol, Bob Marley, James Dean,

lJa
John Lennon, Marilyn Monroe, of course, which remains still at the head of the pack in many ways,
Tupac Shakur, others.

Q. Now, Mr. Fishman criticizes your reliance on CKX and asserts that you conducted your analysis on
ae
an investment value basis. What is your response to that?

A. I'm sorry. Can you just repeat that? I want to hear that.
ich
Q. Sure. Mr. Fishman criticizes your reliance on CKX and asserts that you conducted your analysis on
an investment value basis. What is your response?

A. I ... first of all, I don't rely on CKX for anything other than for identifying them as a proxy to use to
establish a discount rate. Beyond that, they would be one of a potential pool of rational buyers. But I'm
mM

not relying on CKX for anything else beyond that. So I don't ... I really don't understand the question
beyond that.

Q. Move on to the concept of bundling. Can you just briefly describe the concept of bundling for us?

A. Okay. We've talked about bundling a little bit the other day. There are perhaps two aspects to it. The
first aspect is, at the beginning of this colloquy we're having right now, I talked about bundling all
a

similar intangibles and IP together. You bundle the right of ... excuse me, sorry. You bundle the right of
publicity with trademarks, with copyrighted material, with common law rights and protection, with
Te

international trademarks. You bundle all of that together and that bundle becomes the name and
likeness bundle of rights. That's one form. The other form of bundling is one that we've also touched on
when we were talking about Mijac, and that is that the most ... the highest and best value will be
obtained here for a rational buyer if that group, that person, that entity has bundled together the music
w.

rights and the name and likeness rights. And I'll use the same example that I used at that time of Mijac,
and that I think John Branca mentioned, and it is the slot machine. The ability to build a ... what is
essentially a beautiful slot machine, by being able to license both the name and likeness and the music
at the same time is an illustration of being able to bundle those rights and maximize value out of both
ww

bundles, out of both sets of assets in one bundle.


om
Q. Now, did petitioners' experts do some type of bundling in their reports?

A. Yes, they do. You'll see that ... I think Mr. Roesler makes a point of saying that at one ... no, I'm not
going to paraphrase him. I'm sorry, I'll let them speak for themselves because I see that Mr. Roesler's

n.c
back in the courtroom.

Q. Is combining the postmortem right of publicity with associated trademarks a form of bundling, in
your opinion?

so
A. It is. I mean, you're taking trademarks, right of publicity, copywrites, and you're putting together ...
putting all that together into a bundle called name and likeness.

Q. Is bundling a new concept in ...

ck
A. Not in intellectual property, at least not in the world that we operate in and work in in transactions.
We've been bundling similar assets for as long as I've been licensing, and I've been licensing 30 years.

lJa
Q. All right. One final question, Mr. Anson, did you do any double counting of the revenue associated
with bundling in your reports?

A. No. No. Briefly I mentioned on Friday that I would explain that today. At one point in our name and
ae
likeness review, which I'm sure we'll review today, under Cirque du Soleil, you'll notice that we had
generating music revenues. We account for those revenues only in the valuation contained in name and
likeness. We do not double count that music revenue under our valuation from Mijac. So we've been
very careful on both the Mijac side and in name and likeness to do no double counting.
ich

Mr. Voth: I have no further questions, Your Honor.

Judge Holmes: Do you have any cross- examination, Mr. Weitzman?


mM

Mr. Weitzman: Your Honor, I do. I'll need a couple of minutes. Well, I just need a couple of minutes.
Would you ... you don't even have to leave the bench. I need to get some ...

Judge Holmes: Okay. We'll go off the record for a couple of minutes while he girds his loins.

(Recess)
a

Judge Holmes: Please be seated. The floor is yours, Mr. Weitzman.


Te

CROSS-EXAMINATION BY MR. WEITZMAN:

Q. Mr. Anson, you were hired and are working for the Internal Revenue in this case, correct?
w.

A. Yes, sir.

Q. And you were asked to do a valuation of three assets of the Estate of Michael Jackson?
ww

A. Yes.
om
Q. And there were a number of assets available when Michael Jackson died, to the best of your
knowledge. Is that correct?

A. I'm sure there were.

n.c
Q. Well, what do you mean, you're sure there were? You knew there were.

A. Well, I'm sure there was ...

so
Q. I didn't ask you even what. I didn't even ask you what they were valued at. I didn't ask you about the
settlement. I just asked you if you knew there were other assets ...

A. There were ...

ck
Q. ... besides the three you were asked to value.

A. Yes, there were other assets.

lJa
Q. Okay. And to the best of your knowledge, were the other assets settled, to use government speak, in
any dispute there may have been with the estate?
ae
A. I assume jewelry, real estate, all of that was settled.

Q. Well, you know they're settled, don't you?


ich
A. I assume they are. I don't know for a fact, sir, no.

Q. You've never been told by anybody that works for the IRS that all other issues were settled except
the three that are in dispute in this lawsuit?
mM

A. No.

Q. And when is it you started working for the government in this case?

A. Nearly two years ago.

Q. And CONSOR valued the estate at $1 billion?


a

A. No.
Te

Q. By the way, did you send Mark Roesler, who you know ... he's sitting back there ... a copy of your
email blast where you're described as the expert of the century?
w.

A. I have no idea.

Q. Could you ... well, who sent these emails out? Did you personally, or did someone else?
ww

A. No. I think ... bless you. I think we answered these questions the other day.
om
Q. No. No. You answer the question now. Who sent the email out, sir? Did you or someone that works
for you?

A. Someone that works in our firm.

n.c
Q. Okay. So there should be in front of you an email.

A. Yes.

so
Q. Correct?

A. Yes.

ck
Mr. Weitzman: Okay. One moment. Okay. Yeah. Thanks. May this be marked next in order, Your
Honor? It's a copy of an email sent to Mr. Roesler.

Court Clerk: Exhibit 711-P is marked for identification.

lJa
Mr. Weitzman: I'm sorry, I mispronounced Mark's name. It's Roesler ??.

Mr. Anson: Oh, thank you.


ae
Mr. Voth: Your Honor, to the extent Mr. Weitzman intends to ask the same line of questioning that Mr.
Salkin already did this past Friday, respondent considers this cumulative and unnecessary.
ich
Judge Holmes: I'm sure he'll get through it quickly. Go ahead, Mr. Weitzman.

Mr. Weitzman: Thank you, Your Honor.

Q. Do you have that email in front of you?


mM

A. Yes.

Q. And is that email sent from your personal email address?

A. Yes.
a

Q. And is it sent to Mr. Roesler at his personal email address?


Te

A. It apparently is.

Q. Well, what does it say?


w.

A. Well, it says Mark@bettipage.com. If you tell me that's his personal email address, I'll accept that.

Q. I'll take your acceptance.


ww

A. Thank you.
om
Q. In the first paragraph it says, the last line, "CONSOR Chairman, Weston Anson, who is the expert of
the century, will be testifying on behalf of the IRS." You didn't write that, did you?

A. No.

n.c
Q. Okay. And then second sentence in the second paragraph it says ... oh wait, I want to read the first
sentence, too. "The big discrepancy in the value of the Jackson Estate will be sure to bring testimony
tailor made for a Hollywood blockbuster." Second sentence, "While CONSOR valued the intellectual
property assets of the Jackson Estate at a total close to $1 billion, the estate initially valued the assets at

so
time of death at a mere $2105." The second sentence certainly is not correct, right?

A. That's true. Yes.

ck
Q. And you sent this out to clients and colleagues in the valuation community?

A. Our office did, yes.

lJa
Q. So you're taking no responsibility for this?

A. Well, of course, my ... I'm chairman of the firm. I have to take responsibility as chairman of the firm.
ae
Q. Kind of the buck stops with you, right?

A. That's, I believe, what Harry Truman said.


ich
Q. Do you agree with that? I mean, Harry Truman's dead. He's not here anymore. You didn't represent
his estate did you?

A. No.
mM

Q. Okay. So the buck kind of stops with you. It's your responsibility, right?

A. Well, it's the responsibility of our chief executive. I'm not the chief executive, but I certainly feel, as
I said the other day, mortification at these words.

Q. I just want to make sure I understand what you're saying. So you're not really responsible for this.
It's kind of like the dog ate my homework.
a

A. No, sir. Not at all. This is a terrible thing that was said about me and information that was not fact-
Te

checked and shouldn't have gone out without fact-checking.

Q. Well, when you say terrible things about you, you're called the expert of the century. Is that not a
nice thing to say about you?
w.

A. No, it's not.

Q. Okay. So you have not referred to this case as a billion dollar case.
ww

A. Would you like to be called the lawyer of the century?


om
Mr. Weitzman: I'll move to strike. I'll tell you what, can we make a deal with Your Honor's
permission, could I ask the questions, and you answer my questions.

n.c
Judge Holmes: That ...

Mr. Anson: I apologize. I apologize.

Mr. Weitzman: Okay.

so
Mr. Anson: I apologize.

Mr. Weitzman: This advertisement or announcement for your firm was done as a marketing tool,

ck
correct?

A. It certainly is an announcement that could be viewed as marketing tool, yes.

lJa
Q. Okay. How would you view it?

A. I'm sorry, I ... ae


Q. How would you view it? Would you view it as a marketing tool?

A. I view it as an information piece.


ich
Q. Okay.

Mr. Voth: Your Honor, Respondent objections to this continuing line of questioning on the same topic
that we were ...
mM

Judge Holmes: I understand. I understand. I think I get your point, Mr. Weitzman.

Mr. Weitzman: So have you used the description, other than here, of the Jackson case as the billion
dollar tax case?

Mr. Voth: Our objection is renewed, Your Honor.


a

Mr. Weitzman: Well, he didn't answer that question.


Te

Judge Holmes: Overruled. Answer the question.

A. I don't believe I have. I don't ... certainly I haven't authorized that.


w.

Q. Okay. And you certainly haven't used it.

A. No, I don't believe I have.


ww

Q. All right. Are there different ways to do valuations?


om
A. Yes. There are methodologies. There are three or four primary methodologies. There are perhaps two
dozen alternative methodologies, some of which are outgrowths of the primary.

Q. And are there different methodologies that you pick for different clients?

n.c
A. No. That's not how you approach it, sir.

Mr. Weitzman: So I wonder if we could play, for the Court, Your Honor, a clip that I have, and we
have a transcript but I would like to play it first and then we'll pass out a transcript because I want to

so
ask some questions, with Your Honors' permission, to see if Mr. Anson recognizes the clip.

Judge Holmes: It's a good way to authenticate things, as you know, Mr. Weitzman. Go ahead.

ck
Mr. Weitzman: Okay. Your Honor, I have a transcript of that clip. We'll keep it handy if ...

Judge Holmes: Please make a copy and give it to the court reporter. The court reporter is directed, if
she can't make out the audio portion ...

lJa
Mr. Camp: Let's have it marked.

Judge Holmes: ... to use the transcript to supplement his report.


ae
Mr. Weitzman: Can we have it marked, and I can hand it ...

Judge Holmes: Indeed. Indeed.


ich

Mr. Weitzman: ... to Your Honor, and to the witness.

Court Clerk: Exhibit 712-P is marked for identification.


mM

Mr. Anson: Yes, sir.

Mr. Weitzman: So the battle has begun?

A. I'm sorry. I don't understand.

Q. Well, why don't you go to the next page and specifically Line 3. See where it says "So the battles
a

begin this week"?


Te

A. Yes.

Q. So the battle has begun, right?


w.

A. In the sense of two competing valuations, yes.

Q. And the competing valuations are you and the Internal Revenue Service and our experts and the
Estate of Michael Jackson, correct?
ww

A. Right. You have two kinds ... you have two points of view.
om
Q. Okay. Now, let's go back to the first page here. And I want to just read the third paragraph on the
page starting with Line 11. "Let me talk about an actual case." By the way, I'm sorry, I have a
preliminary question. That was your voice we heard on the clip, correct?

n.c
A. I'm sure it was.

Q. Well, why don't we play it again and you listen and see if you recognize ...

so
Judge Holmes: No, no.

Mr. Weitzman: ... your voice.

ck
Judge Holmes: He said it was.

Mr. Anson: I'm sure it was.

lJa
Judge Holmes: That's enough. You've authenticated it.

Mr. Weitzman: Okay. It says here, "Let me talk about an actual case I'm sitting today in for the
deposition, taking time out to do this today. Tomorrow in a deposition in what's known as the billion
ae
dollar tax case." You were referring to the tax case involving the Estate of Michael Jackson, weren't
you?

A. Yes. This comes from a headline that was run ...


ich

Q. Just answer that, yes or no, if you could ...

A. Oh.
mM

Q. ... please.

A. Yes, that's correct.

Q. Okay. And then, at Line 16 you say, "Now there's two contexts here. One is tax context, and one is
an estate planning context." That is correct. That's what you said, right?
a

A. That's what it said.


Te

Q. Okay. And then the line below says, "For the first time in the life of our firm we decided to work
with the IRS, and their view is a tax context on essentially what is the maximum value of this asset."
Now, that is what you said, correct?
w.

A. Yes.

Q. Now, maximum value ... and you correct me if I'm wrong, sir ... maximum value means the most
you could get out of a particular asset in terms of valuation, correct?
ww

A. It means the market value without any deductions for distress or liquidation.
om
Q. The words are maximum value here, right?

A. Well, the single word is maximum, but that's what it means. It means market value without

n.c
deduction for liquidation or distress.

Q. So what would be the ... let me just ask it differently. Sorry. So your goal was to analyze this with a
view towards maximum valuation, correct?

so
A. To portray true market value, that's correct.

Q. So your goal was to evaluate the assets that you were asked to evaluate of the Michael Jackson
Estate ...

ck
A. To ...

Q. ... at a maximum value, correct?

lJa
A. I think you said market value.

Q. I ... if I did, I misspoke. I meant maximum of value.


ae
A. Well, our goal is to portray true market value here.

Q. Okay. So when you said maximum value, kind of like you never said billion dollars? It says
ich
maximum value here, doesn't it?

A. No. I never said I didn't say billion dollar. I said that came from a headline that ran ...

Q. No. You didn't say that. If you want to try to justify what you said here, you can give it your best
mM

shot. But you said what you said, isn't that right, sir?

Mr. Voth: Objection. Argumentative.

Judge Holmes: It is.

Mr. Anson: It is ...


a

Judge Holmes: Hold on. Rephrase, Mr. Weitzman.


Te

Mr. Weitzman: Yes, Your Honor. Earlier, I asked you if you ever described this case as the billion
dollar case, and you said no. And you did, didn't you? No, no, don't wag your finger at me, sir. Just
answer my question please.
w.

A. I have ...

Q. Did you describe the Estate of Michael Jackson case as the billion dollar tax case? And that's a yes,
ww

please, or a no, please, answer.


om
A. No. Read the words again.

Q. Okay.

n.c
A. "In what is known as," not in what I describe as, "In what is known as the billion dollar tax case,"
and I'm referring to a headline in the Hollywood Reporter, I believe, that was headlined a billion dollar
tax case. I didn't say that's what I referred to it as. I say, "in what is known as."

Q. So let's ... I just want to see if I get this straight. It's in your commercial that you email out to

so
however many thousands, correct?

A. Um ...

ck
Q. That's a yes.

A. Thank you. Yes.

lJa
Q. Okay. And ...

Mr. Voth: Objection. Asked and answered, Your Honor.


ae
Judge Holmes: I'll give him a little leeway. Go ahead, Mr. Weitzman.

Mr. Weitzman: Thank you, Your Honor.


ich
Q. And it's here in your words in this transcript, correct?

Mr. Voth: Objection. Mischaracterization.

Mr. Anson: That's a mischaracterization.


mM

Judge Holmes: That's actually sustained.

Mr. Weitzman: All right, sir. Could you turn to the second page of ...

Judge Holmes: There we go.


a

Mr. Weitzman: ... and look at Line 3? You with me?


Te

A. I ... yes, I see Line 3.

Q. Okay. See where it says, "So the battle begins this week and if you are looking at a billion dollar
valuation here." That is what it says, isn't it?
w.

A. Those are my words.

Mr. Voth: Objection. Asked and answered, Your Honor.


ww

Judge Holmes: Oh, no, this is a new page.


om
Mr. Voth: Okay. This is a new page.

Mr. Anson: Those are my words.

n.c
Mr. Voth: I thought we had gone through this before.

Judge Holmes: This one is ... he's phrased it conditionally. Go ahead, Mr. Weitzman.

so
Mr. Weitzman: One second.

Q. By the way, what's the effect, as you understand it, if the Internal Revenue Service is to prevail in
this litigation using your valuations? What's the effect on the Estate of Michael Jackson?

ck
A. There would be taxes owed by the estate.

Q. And ...

lJa
Mr. Weitzman: Did you want to object?

Q. Did you ... and what would be the impact for you and your firm if the Internal Revenue Service
prevailed?
ae
A. I have no idea. I've never worked for the Internal Revenue Service before.
ich
Q. Do you think they'd hire you again?

A. They don't have much of a budget, so I'm not sure.

Q. Do you think they have a enough of a budget to afford all of the SoundScans you can get?
mM

Mr. Voth: Objection. Calls for speculation.

Mr. Weitzman: Just asking.

Mr. Anson: I'm not sure what that question was.


a

Judge Holmes: Speculation. Overruled. You can answer the question.


Te

A. To afford to subscribe to SoundScan?

Q. Well, you told us you were a little ...


w.

Judge Holmes: The full subscription.

Mr. Anson: Oh, the full subscription.


ww

Mr. Weitzman: Correct.


om
A. We didn't have enough budget this time, I'll tell you that.

Q. Did you ask them?

n.c
A. Yes.

Q. So ... but they are paying you, aren't they?

A. They are.

so
Q. And they do pay your expenses, don't they?

A. They do.

ck
Q. But they wouldn't pay those expenses?

Mr. Voth: Objection. Relevance, Your Honor.

lJa
Mr. Weitzman: I'm just asking.

Mr. Voth: Where are we going with this?

Judge Holmes: Overruled.


ae
Mr. Anson: It ... I'm not sure what the question is. Are you seriously asking me if they ...
ich

Judge Holmes: Did you ask them for the full SoundScan ...

Mr. Anson: Oh, did we ask them for the full SoundScan. We did at the time. We had a limited budget,
so we selectively bought what we could.
mM

Mr. Weitzman: So you ... do you think you'll work for the IRS again?

A. If the case is a meaningful case, yes.

Q. How about the Whitney Houston case? Would you work on that one?
a

A. I think we would.
Te

Q. I thought you were working on it?

A. We've not yet begun any work on the case.


w.

Q. Sir, haven't you been asked to work on the Whitney Houston case?

A. Yes, we have been asked.


ww

Q. So why wouldn't you tell me that?


om
A. Because we haven't been asked to do any actual work yet.

Q. But you're representing the Internal Revenue Service as an "expert" ...

n.c
Mr. Voth: Objection, Your Honor.

Mr. Weitzman: ... in the Whitney Houston matter, aren't you?

Judge Holmes: Overruled.

so
Mr. Voth: This is subject to certain non-disclosure agreements with the Internal Revenue Service under
RC6103.

ck
Judge Holmes: Oh, this is a judicial proceeding. I'll authorize that.

Mr. Weitzman: Thank you, Your Honor.

lJa
Q. Answer the question, sir.

A. Mr. Weitzman, it depends on the facts ... ae


Q. Answer the question, sir.

Judge Holmes: Are you?


ich
A. It depends on the facts of the case, and I can't yet respond to you, sir, because I don't know all the
facts of the case. They've asked us to work for them. They have ... I don't know if they've given us a
retainer. I don't do the billing. I would be happy to work on the Whitney Houston case if the facts are
such that we can help them.
mM

Q. Okay. So how does that work? How do you find out if the facts are such as you can help them?

A. It's a right of publicity case.

Q. Have you been involved in right of publicity cases with well-known entertainers with the IRS
before?
a

A. Yes. And we will do everything we can in the preliminary stages to help them.
Te

Q. Okay.

A. But if you're asking if we can be of ... if we can take the case all the way to trial, I don't know until
we do the preliminary work. Just as on this case, we did preliminary work first.
w.

Mr. Weitzman: Your Honor, can I have the transcription ... I guess we can't move the clip into
evidence, but the transcription of the clip moved into evidence, please?
ww

Mr. Voth: If I may inquire as to what exactly was the prior inconsistent statement as the basis for
which ?? ?
om
Judge Holmes: Oh, he said he didn't talk about this being a billion dollar tax case, so it's not quite a
contradiction but it's in the ballpark. More importantly he's going after interest in his testimony, and
that's entirely kosher. Seven twelve is ... dash P is in, and again the reporter is directed to use this rather

n.c
than put in gobbledygook if he couldn't make out the audio portion of the recording.

Judge Holmes: Go ahead, Mr. Weitzman.

Mr. Weitzman: Thank you, Your Honor.

so
Q. The scope of right of publicity, that's Civil Code 3344.1, California?

A. I believe so.

ck
Q. But you're familiar with it, aren't you?

A. Yes.

lJa
Q. And that code section you quote in your report several places, correct?

A. I think we do.
ae
Q. And I might have missed it, but are there any quotes or inclusion of the exemption, I think it's at
Paragraph 2? You know what I'm talking about, don't you?
ich
A. Yes.

Q. Are those included in your report anywhere?

A. I don't know that we quote them.


mM

Q. Okay. And is it your opinion that the exemptions don't apply, as written, to the Michael Jackson
case?

A. I don't think we have exemptions that apply, no.

Q. Okay. I think I misplaced my section because I wanted to go over it with you. Excuse me. Well, I'll
a

see if I can just wing it. Could you tell me why you don't think the exemption applies to the assets you
are evaluating in the Michael Jackson case?
Te

Judge Holmes: Which exemptions, Mr. Weitzman?

Mr. Weitzman: The name and likeness.


w.

Judge Holmes: No, no, but which exemptions to the name and likeness definition?

Mr. Weitzman: Oh, I'm sorry. It's ... I think it's 33 ... now you're testing my memory, this is risky, 3344
ww

...
om
Judge Holmes: Forty-four dot one.

Mr. Weitzman: Point one, I think it's A2.

n.c
Judge Holmes: Ah.

Mr. Voth: Respondent objects to the extent it calls for a legal conclusion, but as we did with
petitioners' exert to the extent that this has to do with his understanding and how it affected value
respondent ...

so
Judge Holmes: That's precisely what I'll allow the testimony in for.

Mr. Weitzman: That is precisely all I'm asking.

ck
A. I'm not sure what the question is. It's 3344.1 something. Is that what you're asking me?

Q. Well, you got that from me. I just told you.

lJa
A. Right. But what is it you're asking me, sir, I'm sorry.

Q. Do you think that exemption provision does not apply to the Estate of Michael Jackson and the
assets you're valuing?
ae
A. I think that ...
ich
Q. And that's the name and likeness assets.

A. Right. I understand. I think the assets that we're valuing on the commercialization opportunities that
we've laid out are outside the exemptions.
mM

Q. So I'm actually not quite sure what it is you're saying. What commercialization? First of all, let's go
over your commercializations, as you use it, for a moment. There's, I think, five different areas of name
and likeness that you have given opinions on, correct?

A. Yes.

Q. And themed attractions and products is one of them, correct?


a

A. Yes.
Te

Q. And I think the number ... do you know what the number you valued themed attraction and products
at?
w.

A. Roughly 80 ...

Q. Eighty-six wasn't it?


ww

A. Yes.
om
Q. Okay. So help me with this, please, serious question. What would the $86 million be for? What's it
about?

A. It's a present value of future revenue streams that would flow as a result of commercial activities

n.c
under the heading of themed attractions and themed products.

Q. So I'm not sure you answered my question, but it's $86 million, correct?

A. Yes.

so
Q. And who's going to pay that $86 million to whom in your analysis?

A. That's a capitalization of the value of the asset themed attractions and themed products, and that's a

ck
subset of the overall asset group called name and likeness.

Q. So I've heard you talk about this rational 2738 or irrational investor depending on one's point of
view. That person is going to pay $86 million for name and likeness that attaches to themed attractions

lJa
and product. Is that your testimony?

A. No. ae
Q. Okay. So the $86 million is a valuation. It's not a price someone would pay for this supposed asset?

A. It's part of the overall valuation of Michael Jackson's name and likeness which totals just over $161
million.
ich

Q. I thought you had five sections, and you broke out for each section a number. Did I miss something?

A. No. I think you got it, Mr. Weitzman.


mM

Q. Okay. So if I got it, tell me what that $86 million is going to buy me.

A. It alone won't buy you anything. It'll ... it represents one of the five elements of name and likeness,
when taken together, have a total value of $161 million.

Q. Okay. So that ...


a

A. One sixty one point three.


Te

Q. Okay. So that $86 million is going to be - - is going to buy me part of a Broadway musical, a film,
Cirque du Soleil, branded merchandise. Is that right?

A. Yes.
w.

Q. Okay. And then let's just put that over here for a moment. Then you have a little category here that
says branded merchandise. That isn't anything under themed attractions and products, correct?
ww

A. That's right.
om
Q. Okay. And so what's our number on branded merchandise?

A. It's roughly $14.5 million.

n.c
Q. So that $14.5 milloin, is it a similar concept? That $14 million buys me branded merchandise and
part of themed attractions, and part of Cirque du Soleil, and part of a film, and part of a Broadway
musical. Is that right?

A. In total at 161.3, all of those are included.

so
Q. And Cirque du Soleil, it's the same thing? I'm going to write a check for how much money for
Cirque du Soleil?

ck
A. You're not going to write a check for Cirque du Soleil, sir.

Q. So what, is it $38 million?

lJa
A. Roughly.

Q. And what does that mean, $38 million? ae


A. It means ...

Q. When I ... what am I getting for that number?


ich
A. For that number you're getting the rights to pay $161.3 million for all of the rights to name and
likeness, and one element of that is called Cirque du Soleil and other circus shows I suppose. And
that ...

Q. And the right ...


mM

A. And that ...

Q. ... I'm sorry. I could not hear. You said and circus shows?

A. You can disregard that.


a

Q. Oh.
Te

A. And other Cirque shows. That 31, 38.1 million represents what we believe to be the net present
value of future revenues coming out of Cirque du Soleil type shows.

Q. All right. By the way, did you say earlier that Mr. Roesler was wrong, you never considered
w.

Neverland in part of your analysis of themed attractions and products?

A. It's not included anywhere in our analysis of themed attractions and products. There's no commercial
attribution at all.
ww

Q. Yeah. Could you go to Page 29 ...


om
A. Sixty.

Q. ... the bottom of the page of your original report, your expert report, dated ...

n.c
A. It's mentioned there and again on Page 60.

Q. You want to go where I asked you to go?

so
A. Oh, I'm sorry.

Q. That's all right. Are you on Page 29?

ck
A. I'm on 28.

Q. Okay. One more page will get you to 29.

lJa
A. Oh, here we are.

Q. Now, if you go to the bottom of the page, last paragraph in big, bold letters it says "Themed
attractions and products." You see that?

A. Yes. Yes, I do.


ae
Q. Okay. And then I want to read this sentence and ask you ... this paragraph and ask you a couple of
ich
questions. "One of the factors that motivated Michael Jackson leading up to his performances in
London was his desire to purchase the Las Vegas-based Spanish Gate Drive estate, built by Jefri
Bokiah, Prince of Brunei. "He talked about it constantly more than making a comeback or anything
else," Tohme recalled. It was his goal, his reward and he was determined to reach it. Michael had a
vision and he wanted to make it a residence, but also a museum, all the stuff he was buying and he was
mM

criticized in the media for it, but he wanted to have a place like Graceland that would be a monument to
him while he was alive and after he died." You or someone on your behalf put that in this report,
correct?

A. Yeah. I wrote that.

Q. You wrote it personally?


a

A. Yeah, I think so.


Te

Q. Okay. Well, why?

A. I think it's well written.


w.

Q. Well, I don't agree with you.

Judge Holmes: Just ask ...


ww

Mr. Weitzman:
om
Q. Tell me why you put it there.

Judge Holmes: ... questions, Mr. Weitzman.

n.c
Mr. Weitzman: Sorry. Sorry, Your Honor.

Q. Tell me why you put it in there.

so
A. Because it's factual.

Q. What's factual about it?

ck
A. Well, as far as we know, one of the things he was striving for was some day to buy another estate,
but it was clear that Neverland could never be, forgive the pun, Neverland could never be
commercialized and that's the point I'm trying to make here.

lJa
Q. So you ...

A. If you read the top of Page 30. ae


Q. Would you do me a favor, just turn the page, and I want to read the first sentence on the next page.

A. I believe that's what I just said.


ich
Q. Yeah, but I'm asking the questions. So the first sentence reads, "Neverland Ranch provided an
alternative option to develop a tourist attraction." That is what I guess you wrote, correct?

A. Yes.
mM

Q. Did you not mean it when you wrote it?

A. Well, as you go on to read the rest of this section, you'll find that Neverland ... in the rest of this
report, you'll find that Neverland is not a practical alternative.

Q. Did you write that sentence, sir?


a

A. Yes.
Te

Q. When you wrote it, did you mean what you wrote?

A. Yes, of course.
w.

Q. So you wrote Neverland was an alternative option to develop a tourist attraction. What tourist
attraction was Neverland going to host as an alternative option?

A. Well, as we go on ... unfortunately, Neverland, as we go on to discuss, buried in the report, it's both
ww

encumbered and encapsulated within a district that cannot be developed.


om
Q. So did you learn that after you wrote this?

A. I don't remember the order in which I wrote this part.

n.c
Q. Well, the truth is, sir, you knew Neverland was not something you could develop when you wrote
this. Is that correct?

A. I knew it during the writing of the report, yes.

so
Q. Why did you include that if you knew that it wasn't a option?

A. I don't know why I left that sentence in.

ck
Q. And we don't know what else in your report that you left in that you knew wasn't accurate, correct.

Mr. Voth: Objection. Argumentative.

lJa
Judge Holmes: Sustained.

Q. So this is the top of Page 30. Now ... and just kind of go to the next paragraph here. Can we go to
the Jackson's relationship with Tom Barrack? I'll read this to you, sir. "Jackson's relationship with Tom
ae
Barrack provided another connection to Las Vegas-based entertainment. Colony Capital owned the Las
Vegas Hilton, the same hotel where Elvis had staged his famous 1969 comeback and performed for
another seven years after that. Colony also held a 75 percent stake in the Station casinos that dominate
the local market in Las Vegas." Did you write that?
ich

A. Yes.

Q. So how does that paragraph relate to themed attractions and products?


mM

A. This just is an indication that hotels were part of the possible way to have a themed attraction inside
of a hotel.

Q. A themed attraction inside of a hotel. Is that what you said?

A. Yes.
a

Q. So including that paragraph in there you were trying to let the reader know that ... what ... explain
again, how did it relate to something that a client of yours ... because I assume you're the advisor of this
Te

rational investor ... is going to pay $86 million for.

A. Well, these three paragraphs taken in total talk first about hotel opportunities, they talk about the
Grouse Lodge, they talk about the opportunities in the Middle East and they talk about hotels in Las
w.

Vegas. We're trying to, very briefly, lay out some of the background for themed attractions.

Q. And by themed attraction are you suggesting that we were going to create a Michael Jackson hotel?
ww

A. We might at some point, yes.


om
Q. But did you talk to anybody who would be interested in creating a Michael Jackson hotel?

A. I personally did not.

n.c
Q. You said that the first paragraph contained facts. That is, the first paragraph in this section, Page 29,
one of the factors that motivated Michael Jackson ... go back to that just for a moment. So the facts that
it contained were based on what? Actually, let me ask this question, I'm sorry, Mr. Anson. You didn't
talk to Prince Jefri, did you?

so
A. No. No, I didn't.

Q. And you didn't talk to Michael Jackson, did you?

ck
A. No, I didn't.

Q. No. So you talked to Tohme?

lJa
A. We did. We interviewed Tohme.

Q. No, I didn't say we, did you talk to Tohme?ae


A. I did not talk to Tohme.

Q. You wrote this, though, right?


ich
A. I did.

Q. Okay. So is the only contact that the gentleman that worked for you had with Mr. Tohme, as far as
you know, were two telephone conversations?
mM

A. Yes.

Q. And both those telephone conversations were with Mr. Tohme, his lawyer, and representatives of the
Internal Revenue Service and your guys on the phone, right?

A. Yes.
a

Q. Okay. And did ... you didn't hear the conversation, did you?
Te

A. I sat in on one conversation, but only for about 10 minutes.

Q. And in that conversation you didn't get to meet or see Mr. Tohme, correct?
w.

A. Correct.

Q. Now, you are aware ... well, maybe you're not. Were you aware that Mr. Tohme lied under oath
about his background?
ww

A. Yes. I was here for that testimony.


om
Q. And ... you were, okay. And were you aware that Mr. Tohme had withheld money from the Estate of
Michael Jackson until the middle of July ...

n.c
Mr. Weitzman: You want to make an objection, go ahead.

Mr. Voth: Objection. Assumes facts not in evidence, Your Honor.

Mr. Weitzman: Well, he admitted it, Mr. Tohme.

so
Ms. Herbert: Mischaracterization.

Mr. Voth: Mischaracterization.

ck
Judge Holmes: Overruled. Overruled.

Mr. Voth: Yeah, I think Mr. Tohme ...

lJa
Judge Holmes: Mr. Branca definitely said that.

Mr. Weitzman: I think Mr. Tohme said that.


ae
Mr. Voth: If I may, Your Honor, that's his opinion.

Judge Holmes: He had some reason for it, as I recall, but ...
ich

Mr. Weitzman: Yeah.

Mr. Voth: Objection ...


mM

Judge Holmes: Overruled. Overruled. Answer the question, Mr. Anson.

A. I understand that Mr. Tohme gave some money back to the estate, yes.

Q. And you're basing, basically your analysis of an $86 million valuation on information given to you
by Tohme Tohme?
a

A. No.
Te

Q. Did you talk to Tom Barrett?

A. No.
w.

Q. Did you talk to Bob Sillerman?

A. No.
ww

Q. Did you talk to Prince Al-Waleed bin Talal?


om
A. I couldn't reach him by phone.

Q. Did you talk to him?

n.c
A. I'm sorry, what?

Judge Holmes: Answer the question.

A. No. No, I didn't.

so
Q. Okay. So the analysis provided in themed attractions and products deals almost ... I shouldn't say
almost ... deals entirely with information supposedly given to you for 10 minutes and the two young
men that worked for you by Tohme Tohme, correct?

ck
A. Not at all.

Q. Okay. Tell me anything else in this section that came from someone other than Tohme or yourself.

lJa
A. Well, of course, some of it comes from myself and from myself. I mean, this is what we do for a
living is help clients identify opportunities. You're focused, I think, primarily on the, for some reason,
the Neverland Ranch on the physical plant. What themed attractions and products really speaks to is a
ae
number of different opportunities. And if I can take you to that part of the report.

Q. Well, why don't you just tell me. You're under oath. You can testify. Just tell me.
ich
A. Well, I don't want you to miss anything.

Q. I'm not.

A. So let's just turn for a moment to the right page.


mM

Q. You want to read something to me?

A. Yeah. I'd like you to go to Page 55 of the report.

Q. Sure.
a

A. And ...
Te

Q. But are you answering a particular question?

A. I think you asked me what was included in themed attractions and products.
w.

Q. I just want to make sure I understand. So you can't tell me. You've got to read something to me, just
so I understand.

Mr. Voth: Objection. Argumentative, Your Honor. Can we keep this ...
ww

Judge Holmes: Sustained.


om
Mr. Voth: ... professional, please?

Judge Holmes: Not a question. Not a question. He actually asked you did anything from the themed

n.c
attractions and the products portion of your report, 709-R, get told to you by someone other than Mr.
Tohme or learned by you other than directly.

Mr. Anson: And then, I guess, I'm not quite understanding the question, sir. I wanted to respond ... do
you want me to read out to Mr. Weitzman or do you want me to try to respond to it?

so
Judge Holmes: I want you to try to respond.

Mr. Anson: Okay. In my company ... in my business, what we do for clients is to puzzle through what

ck
is possible. How can a brand be extended using assets that they have. And in themed attractions and
products, Michael Jackson name and likeness can be used in this category to do everything from hotels,
which we've talked about, of course, to restaurants, to themed park within a park ... excuse me ... to
videogames, which we talked about, I think, a little bit, to themed websites, haunted houses ... he loved

lJa
haunted houses, of course ... museums, virtual reality, holographic appearance events. All this can be
built ... all of this is part of themed attractions and products. It's not simply limited to a physical ... a
single physical presence, such as Graceland, and that's really what I'm trying to get across to you here.
ae
Q. So ... and you've valued those concepts at $86 million, correct?

A. We did.
ich
Q. And ... just want to see if I can get it again. So you're suggesting that the rational investor would
invest $161 million in Mr. Jackson's themed ... in Mr. Jackson's name and likeness and that $86 million
of $161 million would be earmarked to create a resort or a hotel or commercial development or casinos
or restaurants, correct?
mM

A. No. No. You ... I don't think I ... I don't think you're quite grasping the concept.

Q. I probably am not. Would ... could you ...

Judge Holmes: Just answer. Answer the question.

Mr. Weitzman: Sorry.


a

A. I'm not being critical, Mr. Weitzman. I didn't mean it that way.
Te

Q. I honestly didn't take it as criticism.

Judge Holmes: I did. Just ... he asks the questions; you answer. He pitches; you catch.
w.

A. You have to view this holistically. The overall category of name and likeness is a $160 million asset.
For example, I think we valued the film at roughly $35 million ... just to use a rough ... let's use round
numbers for right now ... and 38 million for Cirque du Soleil, and 38 million for the film. Both of those
ww

assets are obviously worth more than we have here as a value. The film turned in cash greater than that.
Cirque du Soleil continues to generate cash at a greater level than that. What we have to think about in
om
2009, as we're standing here on June the 26th and valuing this, we're looking at the holistic value, all
the assets. And we're having to, rather than assign a single number, we're trying to portray to the
rational buyer here are five segments we're breaking it into, and here's a rough estimate for each of
those five segments. And don't try to ... in my view ... my advice ... don't try to look at each segment

n.c
individually. I'll take you through them. Think of the whole asset. That whole asset, name and likeness,
is worth $160-plus million.

Q. First of all, there's no certainty in any of these numbers, is there?

so
A. No.

Q. So this is a well-educated best guess, correct?

ck
A. I don't want to call my work a guess, sir.

Q. I know you don't. But it is a well-educated best guess, isn't it?

lJa
Mr. Voth: Objection. Asked and answered.

Judge Holmes: Sustained. Is it a well-educated estimate?


ae
Mr. Anson: It is a well-educated, well-thought out estimate. Thank you, Your Honor.

Mr. Weitzman: I want to get a thesaurus and make sure estimate and best guess are the same.
ich
Judge Holmes: Question, Mr. Weitzman.

Mr. Weitzman: Yes, Your Honor. What, are they coming out of the woodwork? Sorry.

Q. So what is this ... my word now ... best estimate of? In other words, what are you estimating?
mM

A. We're providing to you our view of what a rational investor with all the knowledge available to them
in the middle of the year 2009, and looking at the market place ... we're providing to you a view of
what the rational investor would think they could generate in cash flows over the next 10 years, plus
residuals and give you a present value of what that - -

Q. By the way, if you're wrong ...


a

A. ... dollar figure is.


Te

Q. ... your best estimate turns out not to work out, what happens to the investor?

A. Well, there are two ... three outcomes. We are right on the money, in which case the investor thinks
w.

that we're geniuses.

Mr. Weitzman: Yeah. I would move to strike. That's nonresponsive.


ww

Mr. Anson: Well, no. I'm ...


om
Judge Holmes: Overruled.

A. I am being responsive. We come out ... he's comes out ahead or she comes out ahead of the game,
which is very good, or they come out at a shortfall. In the event there's a shortfall, it is a result of a)

n.c
either our inaccurately identifying cash flows or the events not unfolding the way we have projected
they will be. So the ... I guess the short answer to your question is we could estimate as best we can, but
time and circumstance can overcome us.

Q. Are you saying to me that maybe it'll work and maybe it won't?

so
A. I'm not being that raw.

Q. I'm sorry. Please repeat what it is you said.

ck
A. No. It's not quite as ... it's not quite that simple, sir. We use the best possible valuation techniques
with the best possible analysis. And we've been doing this ... I've been in the licensing business for 30
years. I've been in the valuation business for 25.

lJa
Q. So I guess what you're telling all of us and His Honor is that you ... if you think it's an advisable
investment, there's no way it won't work. Is that what you're saying?
ae
A. There's ... death and taxes is the only assertion.

Mr. Voth: Objection. Mischaracterization, Your Honor.


ich
Mr. Weitzman: Well ...

Judge Holmes: Sustained on that one, but answer the question.

A. I can't tell you that, Mr. Weitzman.


mM

Q. Okay. I know you can't.

Judge Holmes: Just the questions, Mr. Weitzman.

Mr. Weitzman: Let's take the Broadway play. You were here when Mr. Neder ... we'll, I don't know
actually.
a

A. Yes.
Te

Q. Well, yeah, you were. You were here when Mr. Nederlander testified? Do you recall him describing
the Broadway play as one that involved music and not name and likeness?
w.

A. I remember very well. I know the details of that deal memo quite well.

Q. So if it didn't involve name and likeness, why is it in your name and likeness valuation?
ww

A. Because it does involve name and likeness. The deal memo is very specific about the need to use the
Michael Jackson name and imagery in the promotion of the play.
om
Q. Was Michael Jackson's image or name going to be used in connection with the proposed play?

A. As I read the deal memo, yes.

n.c
Q. And putting that aside for a moment ... I'll get the agreement at the break ... is a Broadway play kind
of a sure investment?

A. No.

so
Q. Are you smiling because I'm going to talk about your investment in a Broadway play?

A. I'm smiling because it's not a sure investment.

ck
Q. It's not a ... it's a risky investment, isn't it?

A. Some are riskier than others.

lJa
Q. Well, you invested in a Dr. Zhivago Broadway play, didn't you?

A. Yes, I did, sir.


ae
Q. And you didn't do very well on that investment, did you?

A. No, sir. It did not last very long.


ich

Mr. Voth: Objection. Beyond the scope of his report as to what he personally did. It's collateral.

Judge Holmes: Well, now he's not asking to admit proof of extremes into evidence. Overruled.
mM

A. I might add that we ...

Judge Holmes: Oh, no question pending.

Mr. Weitzman: You're getting like me, Mr. Anson.

Judge Holmes: No question.


a

Mr. Weitzman: By the way, the ... I just want to go back to this Whitney Houston matter that you've
Te

been retained in. Have you written an IP valuation at this point in the case?

A. No. Absolutely not. I think ...


w.

Mr. Voth: Objection, Your Honor. That's a ... that would be a 6103 violation for someone who's under
contract with the IRS. And it's completely unrelated to this case. And even ... I understand we're here in
tax court, but there is a lot of people that are here ... sitting here that are with the public.
ww

Judge Holmes: Judicial proceeding which are public in America. You can answer the question.
om
A. No.

Q. So you're testifying under oath that you or your firm ... the firm which you know about ... did not
prepare any valuation in the Whitney Houston matter.

n.c
A. That's correct.

Q. Okay. The ... let's go to the next item, the branded merchandise. You were here during a lot of this
trial, and present then when various witnesses testified that since 1993 Michael Jackson has been

so
unable to get any meaningful merchandise deals, correct? Kind of the traditional name and likeness
deals. You've heard that testimony, correct?

A. Yeah. I've heard ... I have heard some testimony, yes, Mr. Weitzman.

ck
Q. And did you not accept that testimony?

A. I don't understand that question. What do you mean by accept it?

lJa
Q. Did you believe it?

A. I heard the word, and I'm sure they're not lying.


ae
Q. Okay. So the branded merchandise here is valued at what?

A. $14.5 million.
ich

Q. And the $14.5 million would include, in your opinion, what type of merchandise deal?

A. It would include branded merchandise for general retail sales, as well as some promotional products
but primarily, branded merchandise for sale through general retail as we knew it in 19 ...
mM

Q. 2009.

A. I'm sorry, thank you, 2009.

Q. Sure. So in ... and I believe you testified this on direct that the child allegation that you indicate, I
think, you never believed ... and neither do I, by the way ... that those had been put behind us. So is it
a

your testimony that you would have told ... because I'm assuming you're the advisor ... that you would
have told your rational investor in 2009 here's what the value is of branded merchandise, those child
Te

allegations are way behind, and we're not going to have to worry about those again. Is that basically
what you're saying?

A. Well, I think they've been reduced to a minimum, yes.


w.

Q. And you were here when Mr. Branca testified about the estate losing the Bass shoes endorsement
and name and likeness deal because of the three lawsuits filed by three individuals against the estate
charging Michael Jackson with child molestation.
ww

A. I didn't hear that, but if ... I hear you say it's, so let's assume that it's true. I wasn't - - I just wasn't
om
here, sir.

Q. Okay. So hypothetically, if in 2009 you knew that there might be allegations post-death, you would
not have advised someone that these allegations were behind Mr. Jackson, would you?

n.c
A. No. I didn't say they were entirely behind him. I said they're substantially minimized, and I would
recommend that they go after a branded merchandise program doing a couple very specific things to
make it successful.

so
Q. What would they have to do?

A. Well, one ... this sounds horrible ... one unfortunate thing is with Michael Jackson dead, he would no
longer interfere in the design of the product, and you could design mainstream products that would

ck
almost certainly sell to his reinvigorated fan base.

Mr. Weitzman: Can we take an afternoon recess, Your Honor, please.

lJa
Judge Holmes: Oh.

Mr. Anson: Oh. Are you ready? ae


Mr. Weitzman: No. I'm exhausted, Mr. Anson. I need a recess.

Judge Holmes: We have older lawyers here.


ich

(Recess)

Q. Okay. So to the best of your knowledge, your firm has submitted an IP valuation in the Whitney
mM

Houston case.

A. We submitted a preliminary report over a year and a half ago.

Q. Okay.

Mr. Weitzman: May I have a moment, Your Honor.


a

Judge Holmes: You may.


Te

Mr. Weitzman: All right. So let's go to your report. I'm going to take you to Page ... hang on a
minute ... Page 31.
w.

A. I want to get my glasses.

Q. Thirty-one. I'm talking about the original report, sir.


ww

A. Yes, sir.
om
Q. Are you there, sir?

A. Yes.

n.c
Q. Okay. So Cirque du Soleil you valued at ... let me get the exact number ... $18 million, correct?

A. Yes.

Q. And again, this would be the value ... a part value of an overall number you would suggest or advise

so
your rational investor that you're representing would be a reasonable investment to make ... to buying
Michael Jackson's name and likeness, correct?

A. This would be part of the total value of the name and likeness.

ck
Q. Right. So on Cirque du Soleil, the very first sentence you have is, "In February 2009, Michael
Jackson was engaged in negotiations to develop one or more Cirque du Soleil shows." Where did you
get that information from?

lJa
A. In early 2009, Jack Wishna ...

Q. I'm sorry, did you talk to Jack Wishna?

A. No. I did not.


ae
Q. Okay. So go ahead, sorry.
ich

A. Mm-hmm.

Q. In early 2009, Jack Wishna ...


mM

A. Had an email to Tohme Tohme. And on the top of Page 32, there's a quote, "The meeting with the
head of Cirque du Soleil went very well. We have a real opportunity to make this a record-making deal
with Michael." And then the quote goes on from there.

Q. Okay. So you got this ... copy of this email or read it from who? Where'd you get the copy from?

A. The source material is cited at Doc ... at 88 ... at 188, and it's Doc 243. I'd have to look over the doc
a

list for you.


Te

Q. Did you get the document from the Internal Revenue Service? It's marked 673-R.

A. Yes, sir.
w.

Q. You don't have it in front of you, do you?

A. I don't have it in front of me. I do not.


ww

Mr. Weitzman: Do we have that document, 673-R. It says 673-R on it. If I'm not correct, let me know.
om
Mr. Camp: Let me see if I can put it up..

Mr. Weitzman: Put it up.

n.c
Mr. Camp: Hopefully.

Mr. Weitzman:

Q. Okay. Is that the email you're referring to? Did you -

so
A. Yes.

Q. ... read this before today? Have you seen this before today?

ck
A. Yes. Yes, to both questions.

Q. Okay.

lJa
A. Yes, it's a document. Yes, I saw it. Yes, I read it.

Q. So did you ... but you never talked directly to Ms. Wishna about the contents of the document,
correct?
ae
Mr. Voth: Objection. Asked and answered, Your Honor.
ich
Judge Holmes: Sustained. You didn't have a s with him, did you?

Mr. Anson: No. He's passed away.

Judge Holmes: Yeah.


mM

Mr. Weitzman: And you got this document from the government. Is that correct?

A. Yes.

Q. And did you talk to Mr. Tohme about this document?


a

A. I did not.
Te

Q. Did anybody working for you talk to Mr. Tohme about this document?

A. Yes. I believe we did.


w.

Q. Who?

A. Jeff Anderson and David Noble.


ww

Q. And it's your understanding they talked to Tohme about this document.
om
A. To verify the existence of this document, I believe so.

Q. Okay. They're both in the courtroom today. Is that correct?

n.c
A. Yes.

Q. Okay.

Mr. Weitzman: Your Honor, I'm wondering if the Court would consider ordering both to come back

so
tomorrow as potential witnesses. They're right there in the second row.

Judge Holmes: Who are they?

ck
Mr. Anson: Jeff Anderson, David Noble are sitting to my left in the benches in the back. Jeff Anderson
is the head of our valuation practice. David Noble is our senior economist.

Judge Holmes: Could you identify yourself whoever you are?

lJa
Mr. Anderson: Yeah. I'm Jeff Anderson.

Judge Holmes: Okay, those two gentleman. Yes, do show up tomorrow morning.

Mr. Weitzman: Thank you, Your Honor.


ae
Judge Holmes: They will.
ich

Mr. Weitzman: Okay.

Q. As you sit there, sir, do you know whether or not Jack Wishna had a meeting with the heads of
Cirque du Soleil?
mM

A. I can't verify that he did. I can only tell you what's in this email.

Q. Okay. So would it be fair to say that you don't know if he ever had a meeting with Cirque.

A. I cannot verify that.


a

Q. Okay. Because you don't know whether he had a meeting, correct?


Te

Mr. Voth: Objection. Asked and answered, and the witness already testified that he ...

Judge Holmes: Overruled. Overruled. He can answer.


w.

A. I don't know, sir.

Q. You don't know if he had a meeting or not.


ww

A. That's right.
om
Q. Okay. And do you know whether the Internal Revenue Service talked to or communicated with
Cirque about whether or not they had a meeting with Jack Wishna?

A. Did the Internal Revenue ... I'm sorry, please ask the question again.

n.c
Q. Sure. Do you know whether or not the Internal Revenue Service spoke to Cirque du Soleil to
determine whether or not they had ... they being Cirque ... a meeting with Jack Wishna?

A. I don't know if they were ever able to determine whether he had a meeting or not.

so
Q. My question was, do you know whether or not the Internal Revenue Service had a communication
with Cirque as to whether or not they had a meeting with Jack Wishna?

ck
A. I don't recall.

Q. I'm going to ask it one more time.

lJa
A. I don't recall.

Q. So you don't know whether they told you or not?


ae
A. No. I don't recall.

Mr. Voth: Objection. Asked and answered. He stated he doesn't recall.


ich
Judge Holmes: Sustained.

Mr. Weitzman: Would it change your opinion at all about whether Mr. Jackson was engaged in
negotiations to develop one or more Cirque du Soleil shows as you indicate in the first paragraph of
your report at Page 31, if you knew that Mr. Jackson, in fact, was never in negotiations with Cirque du
mM

Soleil?

A. It ... we do know this, that ...

Q. Would it change your opinion ...

Mr. Voth: Objection, Your Honor. He's formulating his answer. May he be allowed to ...
a

Judge Holmes: Sustained. You can answer, Mr. Anson.


Te

A. We do know that prior to death there was interest expressed by Cirque du Soleil in having a Michael
Jackson attraction. Can I ...
w.

Q. How do you know that?

Mr. Voth: Objection, Your Honor. The witness was still answering the question.
ww

Judge Holmes: Sustained. Finish answering your question.


om
A. We know that in late summer there was some contact between Cirque du Soleil and the Michael
Jackson people. We don't ... we cannot confirm firsthand that Jack Wishna had a direct meeting. We
only know that there was some communication. I cannot confirm a meeting to you.

n.c
Q. Now, your report says, "In February 2009, Michael Jackson was engaged in negotiations to develop
one or more Cirque du Soleil shows." I know this is a tried and true question, but I did read that correct,
right?

A. Yes.

so
Q. What information ... or is it the Jack Wishna email ... do you have that Michael Jackson was
engaged in negotiations to develop one or more Cirque du Soleil shows?

ck
A. We have Mr. Tohme's testimony.

Q. And is it ... first of all, testimony ... are you saying that Tohme Tohme testified that he, Tohme
Tohme, was in negotiations with Cirque du Soleil to develop two shows? I mean, you have two shows,

lJa
one or more, that'd be two or more.

A. I'm sorry, one or more would be one. ae


Q. Okay.

A. Tohme Tohme, in his deposition, makes clear that he believed that there were discussions held to
have a Cirque du Soleil show. That, combined with this email, tells us that discussions have been held,
ich
at least preliminarily, to have a Cirque du Soleil show.

Q. Now, if I told you that there were no discussions between Cirque du Soleil and Michael Jackson,
would that change the opinion you wrote about Cirque du Soleil?
mM

A. Well, I'm not implying that Michael Jackson sat down with Cirque du Soleil himself.

Q. If I told you that Cirque du Soleil ...

Mr. Voth: Objection. I think the witness is still trying to finish his answer.

Judge Holmes: Really?


a

Mr. Anson: Yes, sir.


Te

Judge Holmes: Okay.

Mr. Anson: Thank you.


w.

Judge Holmes: You can finish your answer.

Mr. Anson: I'm done.


ww

Mr. Weitzman: Well, they're just throwing out non-responsive rhetoric, but ...
om
Judge Holmes: Well ...

Mr. Weitzman: ... if the Court wants to allow, okay.

n.c
Judge Holmes: Hold on, Mr. Weitzman.

Mr. Anson: I simply wanted ...

so
Judge Holmes: Mr. Weitzman's question was if it turns out to be factually not the case, that Mr. Tohme
and Mr. Jackson did not meet with Cirque du Soleil ... neither of them met with Cirque du Soleil - -
would that alter your conclusion in this part of your report?

ck
Mr. Anson: I would modify it in this way. I would not be able to ... I would not have made the
conclusion that they were in negotiation. I would have, however, concluded that Cirque du Soleil
would have been a viable option and an obvious one given that Cirque du Soleil had had such great
success with the Beatles show.

lJa
Mr. Weitzman: Were you aware that the Internal Revenue Service had communications with Cirque
that indicated they were not in negotiations or had any discussions with anyone in the Michael Jackson
camp?
ae
A. I honestly don't recall. You asked me that ...

Q. I didn't ask whether you recall. Would it change your opinion ...
ich

A. Oh, sorry.

Q. ... if I told you that the Internal Revenue Service had communications from Cirque in which they,
Cirque, told the Internal Revenue Service they were not in any negotiations with Tohme Tohme or
mM

Michael Jackson?

A. No. What I'm trying to do here ...

Q. Okay. You've answered the question ...

Mr. Anson: Okay. Sorry.


a

Mr. Voth: Now, hold on.


Te

Judge Holmes: Hold on, hold on, hold on. He didn't answer the question. He didn't finish his answer,
but the question does demand a yes or no answer, Mr. Anson.
w.

Mr. Anson: No.

Judge Holmes: There you go.


ww

Mr. Weitzman: Okay. Your Honor, if I might, I'd like to have marked for identification purposes ...
questions sent to Cirque du Soleil and answers provided to Cirque du Soleil via email exchange
om
between Mr. Voth and Cirque du Soleil or their attorney.

Judge Holmes: Have ... approach and have it marked next in line.

n.c
Mr. Weitzman: Thank you. We'll do it tomorrow morning.

Judge Holmes: All right.

Mr. Weitzman: By the way, you said that Mr. Tohme's deposition had disclosed to you basically that

so
he had discussions with someone connected with Cirque. Is that correct?

A. He discusses the fact that Cirque du Soleil was one of the projects that was in process when he was
handling the affairs of Michael Jackson before Michael Jackson passed away.

ck
Q. And you mention his deposition ...

A. I believe it's his deposition.

lJa
Q. Okay. You are aware that your report was written in October. Mr. Tohme's deposition was four
months later in January of 2017. ae
A. Right. And relevant ...

Q. So when you wrote the report ...


ich
Mr. Voth: Objection, Your Honor, there was ... there's a question. The witness was answering. He
started with right.

Judge Holmes: That was his answer, wasn't it?


mM

Mr. Weitzman: Right.

Judge Holmes: Yeah. So Mr. Weitzman then gets to ask the next question.

Mr. Weitzman: My next question was, were you ... your report is written in October of 2016. Were
you aware that Mr. Tohme's deposition was in January of 2017, three and a half months after you wrote
the report?
a

A. Yes.
Te

Q. Okay. Now, looking in your report again, back at Page 31 ... you there? The bottom of the page it
says, "In February 2009, email to Dr. Tohme" ... "In a February 2009 email to Dr. Tohme, Jack Wishna,
president and CEO of CPAmerica described the initial meeting as follows." Before we get to the next
w.

page, I noticed there's a footnote here, 186. Do you know what that refers to? It's on the page.

A. It's a description of CPAmerica. There's a quote at the bottom of the page.


ww

Q. You see Footnote 186 before you ... right?


om
A. Yes, that's what I was saying.

Q. Okay. So can you read that to us?

n.c
A. It's says, "CPAmerica, as a member of Crowe Horwath International, is one of the largest
associations of independently owned and managed CPA and consulting firms in the world based on
annual revenue of member firms."

Q. Okay. And that was included in the footnote for what purposes?

so
A. Just to give a frame of reference as to what CPAmerica is.

Q. And to let us know that Jack Wishna was a real guy.

ck
A. Yes.

Q. Okay. And obviously, I guess, because he was associated with the Crowe Horwath, that gave him, in

lJa
your eyes, some credibility.

A. Well, there's also Footnote 187. ae


Q. Right now, I'm working on Footnote 186. So can you answer that question, please, sir?

A. Well, I read it in conjunction with Footnote 187.


ich
Q. I want to ask you about Footnote 186.

Mr. Weitzman: Your Honor, could the witness be ordered to answer questions as I pose them related to
...
mM

Judge Holmes: I think that's appropriate.

Mr. Weitzman: Okay.

Judge Holmes: Please, Mr. Anson, focus on the question at hand.

Mr. Anson: Yes, Your Honor.


a

A. I'm sorry, Mr. Weitzman.


Te

Q. Weitzman, yeah. The information in Footnote 186, did that provide you with ... this is my word
now ... comfort that Wishna was a solid guy, reliable guy, just that footnote in itself?
w.

A. Well, it gives a partial answer as to who he was.

Q. Okay.
ww

Mr. Weitzman: Can you get on the Jack Wishna Wikipedia page? Give him a second. You there?
Could you scroll down to the ... hold it ... sorry ... top.
om
Q. See where it says, Mr. Anson, second sentence, "He was the president and CEO of CPAmerica." See
that?

n.c
A. Yes.

Q. And it's got a Footnote 1, correct?

A. Yes.

so
Mr. Weitzman: Could scroll down to Footnote 1 for me, Josh. Would you highlight that for me.

Mr. Rosefsky: Not on the internet.

ck
Mr. Weitzman: Okay. Fair enough.

Q. So the footnote reads, "Not to be confused with a CPA firm CPAmerica International." Would that

lJa
indicate to you, sir, that the CPAmerica that Jack Wishna had incorporated was not associated with
Crowe Horwath?

A. Yes.
ae
Q. And did you or anybody with your firm contact Crowe Horwath to confirm that Wishna was not
associated with them?
ich
A. No.

Q. Now, if I were to represent to you that Jack Wishna had no connection with Crowe Horwath, would
that impact your assessment of Mr. Wishna's credibility?
mM

A. I would have to look further.

Q. How much further would you have to look, sir?

A. To the next footnote.

Q. Okay. Let's talk about the next footnote, sir. You've been anxious to talk about that.
a

Mr. Weitzman: Can we go back to that. Going back to that? Okay. Thanks.
Te

Q. Okay. So ... okay. Footnote 187, and I think it's contained on two pages. You there?

A. Yes.
w.

Q. There you go, 187. Mr. Anson, you're there, correct?

A. Yes.
ww

Q. So it reads, "Wishna was the founder of the entertainment and resort consulting firm CPAmerica,
om
which had offices in New York, Florida, and Las Vegas." First of all, this quote is taken from his
obituary, wasn't it?

A. I'd have to see what the Document 296 ... because I'd have to check Document 296, sir.

n.c
Q. Well, we can do that together. That's the John Katsilometes on passing obituary in the Las Vegas
Sun?

A. Thank you. You're already under some ...

so
Q. I am.

A. Okay.

ck
Q. I'm so much younger. I just go faster than you.

A. Right. Thank you very much.

lJa
Q. We're going to be out of here in a minute.

A. Mm-hmm.

Q. Tonight.
ae
A. That's fine.
ich

Q. So it's from the obituary, correct?

A. Yes, sir.
mM

Q. Okay. And so it says that this consulting firm has offices in New York, Florida, and Las Vegas.
Would it be fair to say that, as you sit there now, you have no information as to whether or not there
were offices in New York, Florida, and Las Vegas ... well, pardon me, Las Vegas you know ... in New
York and Florida of Mr. Wishna's company?

A. It would be too late to check.


a

Q. Would it be fair to say that you have no information that Mr. Wishna had offices in New York and
Florida?
Te

A. No.

Q. It would not be fair?


w.

A. I'm sorry.

Q. So give me the ... I'm sorry.


ww

A. I apologize. I'm trying to agree with you.


om
Q. Let's agree we agree on that question. And just ...

A. Yeah.

n.c
Q. Okay. So the next sentence reads, "Over the years, Wishna was friendly, and conducted business
with many famous figures in Las Vegas and beyond, including Michael Jackson, Donald Trump, Wayne
Newton, and Tony Orlando." As you sit there today, sir, would it be fair to say that you do not know
whether Wishna was friendly or conducted business with Michael Jackson, President Trump, Wayne

so
Newton, or Tony Orlando?

Mr. Voth: All right. If I may, are we asking if the witness' personal knowledge or what is ...

ck
Mr. Weitzman: I am.

Judge Holmes: Yes, yes, yes, yes.

lJa
Mr. Voth: Oh, okay.

A. I have no personal knowledge of that. ae


Q. And you have some hearsay, which you haven't done any due diligence to confirm, correct?

Mr. Voth: Objection. Argumentative.


ich
Judge Holmes: Overruled.

A. I have hearsay.

Q. And you haven't done any due diligence to confirm it, correct?
mM

Mr. Voth: Objection. Asked and answered.

Judge Holmes: Not quite. Overruled.

A. I have not done any phone calls or other due diligence.


a

Judge Holmes: Did you just rely on the blog from the Las Vegas Sun website for this?
Te

Mr. Anson: We looked at that, and we also looked at the Rock City.com blog.

Judge Holmes: You looked at two blogs on the internet.


w.

Mr. Weitzman: I have no further questions this evening.

Judge Holmes: This evening. Okay. Housekeeping for tomorrow. How much you want ...
ww

Mr. Weitzman: Your Honor, I have two things. One, I wanted to ... well, I hadn't shown it to Mr. ...
om
Judge Holmes: Yeah. Do it tomorrow morning.

Male: You want to just ... look at the ?? exhibit today that we hadn't put in yet?

n.c
Court Clerk: Do you want ... do you want me to move into evidence ...

Mr. Weitzman: Whatever you think. Tell me. I'm easy, and I can move ... yeah, just so we can put it.
What's the ...

so
Court Clerk: ... into evidence ...

Judge Holmes: While they are consulting, Mr. Toscher, what's the agenda for tomorrow?

ck
Mr. Toscher: The agenda for tomorrow is to, excuse me, Your honor ...

Judge Holmes: Yes.

lJa
Mr. Toscher: ... finish up ...

Mr. Weitzman: I can help you. ae


Judge Holmes: Okay.

Mr. Weitzman: Going to finish up Mr. Anson.


ich
Judge Holmes: Do you expect that to be about an hour or so?

Mr. Weitzman: I actually think so. I'm going to get some pushback from his own lawyers, but I'm
going to try.
mM

Judge Holmes: Yeah. And we may have a conference before that, obviously, in chambers.

Mr. Weitzman: Correct. Correct.

Judge Holmes: So we'll deal with that.

Mr. Weitzman: And then I want to ask the Court's permission, and asking also the government through
a

Your Honor, to permit a telephone examination of Daniel Lamarre, who is the CEO of Cirque du Soleil,
who will confirm, a) that he was the person who provided the answers in written form through consult
Te

to Mr. Voth, and also, I have the transmittal emails from Mr. Voth and from Cirque's attorney.

Judge Holmes: Perhaps you can reach a stipulation with the government when we close for the
evening.
w.

Mr. Weitzman: You know what, I probably should have thought of that. I didn't.

Judge Holmes: Work on that.


ww

Mr. Weitzman: And then there'll be ... sorry ... and then there'll be some additional rebuttal from Mr.
om
Roesler, I believe, here today and maybe Mr. Branca, maybe he'll be here tomorrow. And I ...

Mr. Toscher: Mr. Wallett.

n.c
Ms. Herbert: Mr. Dunn and Mr. Wallett.

Mr. Weitzman: Oh, I'm sorry, and Mr. Dunn will be here for ... I don't think it will be that long
testimony either.

so
Ms. Herbert: And Mr. Wallett is there, too.

Mr. Weitzman: And Mr. Wallett.

ck
Judge Holmes: Okay. The two associates of Mr. Anson should be here tomorrow as well ...

Mr. Weitzman: Correct.

lJa
Judge Holmes: ... just in case. It's just case.

Mr. Toscher: Who is the last one, Wallis or Wallett?


ae
Ms. Herbert: Andrew Wallett. Andrew Wallett.

Mr. Toscher: Who is that?


ich
Female: Who is that?

Mr. Weitzman: He's a rebuttal witness.

Ms. Herbert: He's a rebuttal witness.


mM

Female: And who is he?

Mr. Toscher: Do you want me to say?

Ms. Herbert: He's the conservator of Britney Spears' estate.


a

Judge Holmes: She has a conservator?


Te

Mr. Toscher: Unfortunately, she does, but he's involved with the transaction, which they gave the
unauthorized final pick, Your Honor. So yes, she does have a conservator.

Judge Holmes: The things I learn.


w.

Ms. Herbert: It's Hollywood.

Mr. Toscher: It's ... really. It's ...


ww

Judge Holmes: It's different out here.


om
Mr. Toscher: It's serious finance, you know.

Judge Holmes: I understand. And you had listed him as a witness, so that's kosher. I understand.

n.c
Mr. Toscher: He's truly a rebuttal witness.

Judge Holmes: Oh, well, rebuttal witnesses are excluded anyway for the rule of exclusion.

so
Mr. Toscher: Right. So You Honor, would it be appropriate in light of what went on here that Mr.
Anson, Mr. Noble and Mr. ...

Mr. Weitzman: Anderson.

ck
Mr. Toscher: ... Anderson be put under the rules so they don't discuss anything.

Judge Holmes: No, they're experts.

lJa
Mr. Toscher: Okay.

Judge Holmes: That'll be fine.

Mr. Toscher: Okay.


ae
Judge Holmes: Actually, are they?
ich

Mr. Toscher: I think it's very important that he not speak about those things.

Judge Holmes: Don't speak about those things, gentlemen. They probably don't know anything about
them, and that's the way it should remain tonight.
mM

Mr. Toscher: Your Honor, I think that's it for our potential rebuttal. I guess, does the government have
anymore case?

Judge Holmes: Yes. I offer as the government to ...

Female: We have none.


a

Judge Holmes: ... call somebody. Ms. Wilder might want to consult with them. She looks very eager.
Te

Judge Holmes: While she is consulting, I propose we commence at 9:00 a.m. in the chambers
conference. Good. There's agreement on that.
w.

Mr. Voth: One moment, Your Honor.

Judge Holmes: Almost.


ww

Mr. Voth: May we have a moment, Your Honor?


om
Judge Holmes: Sure.

Ms. Herbert: Your Honor.

n.c
Judge Holmes: Yes.

Ms. Herbert: The government may call in rebuttal Tohme Tohme, Randy Phillips and Mr. Anson.

Judge Holmes: Okay. I assume that those will be pointed and concise rebuttals. What was the other

so
one, Tohme Tohme?

Ms. Herbert: Tohme Tohme, Randy Phillips.

ck
Judge Holmes: Phillips.

Ms. Herbert: And Wes Anson.

lJa
Judge Holmes: Yes, of course. Silent mode, people. Silent mode on the cell phones. Mr. Toscher,
you're standing.

Mr. Toscher: I'm ... yes, I am, Your Honor. I just wanted ... one question, are you calling them in your
case in chief or in your case ...
ae
Judge Holmes: This is rebuttal.
ich
Mr. Toscher: ... or in the rebuttal?

Mr. Voth: No, solely.

Judge Holmes: Solely rebuttal.


mM

Mr. Voth: Solely for rebuttal.

Mr. Toscher: Solely for rebuttal.

Judge Holmes: That has been established. All right. We adjourn for the evening.
a

(Adjorned)
Te
w.

February 24th 2017


ww
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The Clerk: Court is in session.

Judge Holmes: Please be seated. Mr. Weitzman, what do you have to say?

n.c
Mr. Weitzman: I think we're working on some stipulations, but I believe we're not ready as yet,
correct? So we'll move on to examination.

Judge Holmes: Okay. You wanted Mr. Anson, I believe?

so
Mr. Weitzman: I think we'll put Mr. Anson back on the record with respect to the discussions we had
this morning. I don't think it needs to be done at this moment...

Judge Holmes: Well...

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Mr. Weitzman: ...if Your Honor agrees. So if Mr. Anson is prepared, we can resume.

Judge Holmes: You are still under oath, Mr. Anson.

lJa
Mr. Anson: Yes. Good morning, Your Honor.

RECROSS-EXAMINATION BY MR. WEITZMAN:

A. Good morning, Mr. Weitzman.


ae
Q. Mr. Anson. The... yesterday there was some discussion about the Nederlander deal, the Broadway
ich
play proposal. You're familiar with the deal memorandum, are you not?

A. Yes, sir.

Q. That is a deal that does not involve the purchase or licensing of any name and likeness or rights of
mM

publicity, correct?

A. It does to the extent that it uses the name Michael Jackson in the promotion of the play.

Q. By promotion of the play, you mean in the program that you get at the play? Or on posters? Is that
what you're talking about?
a

A. The advertising and... yes, advertising promotion of the play and the program itself.
Te

Q. I don't know what Exhibit that is.

Mr. Camp: Exhibit 19.


w.

Mr. Weitzman: 19. Could we have 19, whatever the letter, is put up on the screen? That's it. Bingo.
Could we go to the first paragraph where it says "Materials"?

Q. You with me, Mr. Anson?


ww

A. Yes, sir.
om
Q. So the materials contemplated by this deal memorandum that Mr. Nederlander talked about are all
deal... are all rights given to musical compositions, correct?

n.c
A. Yes.

Q. If you need to take a minute to read it, please read it.

A. Yes, in this paragraph.

so
Q. So this paragraph is not what you were referring when, in your opinion, name and likeness was part
of the rights granted to Mr. Nederlander, correct?

ck
A. Yes.

Q. And then if we go to Page... I think it is 6... 6 of the agreement, there's a subheading there about
halfway down the page with the word Credit correct? Yes?

lJa
A. Yes.

Q. And the first paragraph under Credit reads, "Billing shall be determined once the book writer has
ae
been engaged, provided that billing will be accorded below the title of the play in first position
substantially as follows: Music and Lyrics by Michael Jackson." Now, that's not what you meant by
right of publicity or name and likeness, is it?
ich
A. That's right.

Q. Okay. I mean, you're a Broadway play aficionado. What does a book writer do in a Broadway play?

A. Writes the libretto, the plot, if you will.


mM

Q. And then if we go down to the last paragraph under Credits, it reads, "Michael Jackson shall also
receive a biography in the program for the play, the size of which shall be mutually agreed and the
content of which shall be subject to his prior approval, and shall expressly include the monitor, the
King of Pop." That is also not what you're referring to as name and likeness, correct?

A. Let's see. And just to read on...


a

Q. Well, no. How about answering my question?


Te

A. Specific to that sentence.

Q. Yes.
w.

A. That's correct.

Q. Okay. And the next sentence reads, "All press releases for the production shall also refer to Michael
ww

Jackson as the King of Pop." Is that a sentence you interpret to refer to as name and likeness use or
right of publicity?
om
A. Yes.

Q. So in your opinion, is that the person that contributes to the music and lyrics of a Broadway play,

n.c
who happens to also be known as the King of Pop, when that person is given a credit for his or her
participation in the play, you refer to that as right of publicity or name and likeness, a separate asset
from all of the rights granted to the licensee?

Mr. Voth: Objection. Mischaracterization, Your Honor.

so
Judge Holmes: Overruled.

A. I'm referring to the fact that all press releases, which includes in theaters to be called ?? marketing,

ck
shall refer to Michael Jackson as the King of Pop. That's using his name and likeness. And by
extension, all merchandise sold in the theater would be the use of his name and likeness.

Q. I'm sorry. What merchandise? Are you talking about merchandise that has a picture of Michael

lJa
Jackson on it?

A. And the... in the theater the merchandise that is sold... the t-shirts and the mugs, and et cetera... that's
use of his name and likeness.
ae
Q. Are you representing to the Court that in this document it gives Michael Jackson or his
representative or his estate the right to collect part of the merchandise?
ich
A. I'm representing that this is a deal memo that, by implication, would lead to a contract that includes
the merchandise and the use of the name and likeness.

Q. Well, first of all, you don't have a clue if that's what it would lead to, do you?
mM

Mr. Voth: Objection. Argumentative.

Judge Holmes: Overruled.

A. Actually, I do because I look at a lot of these contracts.

Q. I'm going to ask a really kind of direct question. Did you talk to Mr. Nederlander about whether or
a

not Mr. Jackson was going to do any promotion for the play or whether he had any part of the
merchandise that would be sold at the theater?
Te

Mr. Voth: Objection. Compound, Your Honor.

Judge Holmes: Overruled.


w.

A. There are two questions there. I did talk directly to Mr. Nederlander. I think the first question was...
you asked was whether Mr. Jackson was going to do any promotions for the play... was the first
question?
ww

Q. That was the first question.


om
A. I don't believe that Mr. Jackson made any commitment to promote the play. As to the second
question, as to merchandise, it was Mr. Nederlander's full intention that there would be full range of
merchandise in that theater using the name and likeness of Michael Jackson, the King of Pop.

n.c
Q. And my question to you is did Mr. Nederlander tell you that this deal or any deal he was going to
make with Michael Jackson was going to include Michael Jackson getting a piece of the merchandise
sales?

so
A. He was not going to be paid a separate amount for the merchandise sales, to the best of my
knowledge, nor does Mr. Nederlander remember specifically, as he testified here in Court. He doesn't
remember the details that... of... the fine details of the deal. I can only tell you what he told me in our
interview with him in New York.

ck
Q. And if he doesn't remember the fine details of the deal, you certainly don't know what they are. Isn't
that correct?

lJa
A. No, but I'm familiar enough with...

Q. I don't care what you're familiar with. ae


Judge Holmes: Let him answer.

Mr. Weitzman: I want to know...


ich
Mr. Voth: Objection. Argumentative.

Judge Holmes: Let him answer, Mr. Weitzman.

Mr. Weitzman: Your Honor?


mM

Judge Holmes: Yeah.

Mr. Weitzman: I'm going to move to strike anything after no as being nonresponsive. It's
nonresponsive.

Mr. Voth: Your Honor, Respondent objects.


a

Mr. Weitzman: I asked him a very direct question.


Te

Judge Holmes: Ask the question again, and we'll let him answer.

Mr. Weitzman: Yes.


w.

Q. Is it fair to say that you don't know whether or not a deal was going to be made with Mr. Jackson to
share in merchandise revenues?
ww

A. We don't know. He died. We don't know. But I will tell you based on past...
om
Q. I'm not... I'm really not looking for anything else from you on this subject, sir.

Judge Holmes: Stop answering then, and you can answer... ask your next question, Mr. Weitzman.

n.c
Q. So this deal memorandum appears to be a deal in which if the option is exercised and the money is
paid, which we know it was not according to Mr. Nederlander, they... Nederlander would have certain
rights to musical compositions, correct?

A. That's correct.

so
Q. And by the way, if Mr. Nederlander entered into this deal with Mr. Jackson and someone else like...
I don't know... Wes Anson and his client owned the name and likeness, could they stop this play from
taking place?

ck
Mr. Voth: Objection. Calls for a legal conclusion.

Mr. Weitzman: Well, it's a hypothetical from an "expert".

lJa
Judge Holmes: Overruled.

A. I believe that if this had gone forward into a final deal, that, yes, the owners of the name and
ae
likeness could certainly have stepped in and made a very good case to stop the play.

Q. And that's not withstanding California Civil Code Section 3341?


ich
A. You asked my opinion, sir.

Q. I'm sorry. Did you respond to my question, or did you want to volunteer something?

A. I thought I answered your question already.


mM

Q. So 33.41 does not apply in this situation?

A. 3341 covers right of publicity in a narrow sense. Name and likeness is a broader subject matter.

Q. Okay.
a

Mr. Weitzman: Could we put 3341 up on the... I don't know the exhibit number. Do we have that
marked as a separate exhibit? Sorry.
Te

A. I think you mean 3344?

Q. I do.
w.

Mr. Voth: Your Honor, just for clarification, as we went through this with Petitioner's experts,
Respondent take the position that we're pulling up a statute solely to assist in understanding how the
expert interpreted the statute for purposes of reaching a value...
ww

Judge Holmes: Or if he considered it in reaching a value.


om
Mr. Voth: ...or if he considered it...

Judge Holmes: Yeah. No, I understand...

n.c
Mr. Voth: ...then Respondent has no objection to that line of questioning.

Judge Holmes: Go ahead, Mr. Weitzman.

so
Q. By the way, are you familiar with the Berry Gordy play that was on Broadway involving Motown?

A. I'm sorry. I was coughing. I missed that.

ck
Q. Are you familiar with the Berry Gordy play that was on Broadway recently dealing with Motown...
kind of his story about Motown?

A. No. I did not see it.

lJa
Q. Are you familiar with it?

A. No.
ae
Q. Were you aware that there was a character that played Michael Jackson in the play?

A. No.
ich

Mr. Voth: Objection, Your Honor. The witness already testified he lacks personal knowledge about that
particular play.

Judge Holmes: He did. That one is sustained. He's completely ignorant...


mM

Mr. Weitzman: So...

Judge Holmes: ...Mr. Weitzman.

Mr. Weitzman: ...I would just like to ask a hypothetical of this expert witness.
a

Judge Holmes: Sure.


Te

Q. Mr. Anson, assume with me for a moment that there was a play on Broadway that depicted part of
Berry Gordy's life and his experiences at Motown. And in the cast, there was a young performer who
played a young Michael Jackson. Is it your opinion that the estate of Michael Jackson could have
prevented Mr. Gordy from using that character in his play?
w.

A. Of course not.

Q. And is the reason they couldn't prevent it, in part, because of California Civil Code 3344 at all?
ww

A. I'm not going to tell you what legal code. I'm simply going to tell you that you're free to portray a
om
character on screen or on stage.

Q. If you're free to portray a character on the screen or on stage, although I'm not quite sure I
understand what you mean, how could we stop the company that made the deal, Nederlander, with the

n.c
estate of Michael Jackson from using his name and likeness if we own the name and likeness? How
would you do that?

A. Well, it's... excuse me... as long as the Nederlander organization did not use any of the name and
likeness assets, including federal or state trademarks or copyrighted material or any of the

so
accompanying assets, then they might very well be able to mount that play.

Q. Okay. So maybe we're in agreement. Maybe. So the use of Michael Jackson's name and likeness in a
play in which someone has separately from the owner of name and likeness the right to music or video,

ck
in that case, you believe that the producer could put on that play and wouldn't need to get a separate
license for name and likeness. Would that be correct?

Mr. Voth: Objection. Mischaracterization as to what the witness has testified, Your Honor.

lJa
Judge Holmes: Overruled.

A. I think you're asking me is there a basic First Amendment right of free speech to portray a character
in a fictionalized manner.
ae
Q. No. I think that's what you would like to answer, but that is not the question at all.
ich
A. Then I don't understand your question.

Q. Okay. I thought you told me that the owner of name and likeness could not prevent Mr. Nederlander
from using... or Berry Gordy, the producer of his play if it wasn't Berry, in particular... from using
Michael Jackson's name and likeness unless they have violated other copyrights or trademarks that
mM

were not particularly name and likeness. Is that... did I misunderstand what you said?

A. Okay. I'm going to try to parcel that question. I think what you're asking me is this. Can someone
put on a Michael Jackson play that uses just the name Michael Jackson as long as they're not using any
of the trademarks or copyrighted materials or other protected imagery or assets of his name and
likeness, bundle of rights? As long as they're not doing that and they just want to have a character, they
can go ahead and do that.
a

Q. I'm not sure what you mean when you say bundled rights. If you only own the name and likeness
Te

and someone owns the music and someone else owns the video, can someone take that video and that
music and display it describing it as Michael Jackson's music and video without having name and
likeness rights?
w.

A. Yes, as long as that video... that hypothetical video that you're describing to me... does not violate or
use without permission any of the trademarks or copyrights or other rights of publicity of Michael
Jackson, then you're fine to do that. However, the caveat is that video mustn't violate Michael Jackson's
right of publicity or other name and likeness assets.
ww

Q. I honestly don't understand what you mean. So now here's the hypothetical. The hypothetical is I
om
own... let me start with the hypothetical is you, Wes Anson, and your rational investor that you're
advising to spend this $161 million owns name and likeness. You with me so far?

A. Yes.

n.c
Q. Okay. And I, Howard, also advised some clients, although I'm certainly not in your business... I
advised some clients that we have an opportunity to buy Michael Jackson's recorded songs, the masters.
We're going to... I have got John Branca charged me probably $2 billion, and I get the music, okay?
And then, because I have a friend at Sony/ATV, I get the compositions. So I own the music; I own the

so
compositions. And I have got a contact at AEG, or wherever, and I get some footage. So I own all those
things. You have your assets that you own, the name and likeness, right of publicity that you can make
t- shirts and do whatever you want to do. And I own footage and music and compositions. So I have
better context than you, okay? So now can I use that video and those recordings of Michael's voice and

ck
the compositions that Michael wrote, and can I put on a Broadway play?

A. As long as Michael Jackson has signed off all of his rights and the intellectual property contained in
that videotape, then God bless you. But unless I know that that has happened, I wouldn't encourage you

lJa
to move ahead with that project.

Q. Okay. I want to see if I can summarize what you said. If you own all those other rights, Mr.
Weitzman... by you, it means... do you want to... you with me?

A. I'm sorry. What?


ae
Q. That's okay. I noticed you were... I don't know if you were looking around the room for signals or
ich
what.

A. I'm... Q. It's okay. A. I'm looking at my counsel.

Q. Okay. And your counsel would be the four people at the table? A. Right here.
mM

Q. Okay. So you own the name and likeness. By you... on behalf of your client.

A. I represent the name and likeness. That was the...

Q. And I got this large group of heavy-duty investors, and they got all these other rights. So as I
understand what you're saying to me, Howard, good luck. Go put on your play and best of the box
a

office and get me some tickets if possible, right?


Te

A. So we're back to the... we're not doing the video now? We're doing the play now?

Q. Well, we're doing the play now. Sure.


w.

A. Okay. All right.

Q. I mean, it's the same thing, isn't it?


ww

A. It's a new hypothetical, please.


om
Q. But is the answer the same? I can do it if I own the rights to the music, for example?

A. Yes.

n.c
Q. And the compositions?

A. Yes.

Q. Okay. And what would be your ability to stop me from doing that? That is your ability as the...

so
A. Right.

Q. ...owner of the name and likeness, if you wanted to?

ck
A. No. I understand your question.

Q. Okay.

lJa
A. As long as you own the music and all of the rights connected to it and as long as you're not using
any of the rights of publicity of Mr. Jackson or any of his associated trademarks or copyrighted
materials and you're not impinging on his name and likeness rights, then, by all means, you can move
ahead.
ae
Q. And so I could use Michael Jackson's name to describe the material in the play. It could be Michael
Jackson's Thriller-enhanced, you know, play or whatever words I want to use, correct?
ich

A. You could do that.

Q. So what rights of publicity could I not use?


mM

A. You could not use his... any of his trademarked materials.

Q. And I'm sorry for interrupting, but I would like you to tell me what trademark materials I couldn't
use or maybe ask a different... are you talking about trademarks like the silhouette, the signature, things
like that?

A. Yes.
a

Q. Okay. So are there any other trademarks that you can think of that, if I use, you could prevent me
Te

from using?

A. Beyond the registered trademarks, you would also be cautious, of course, about any copyrighted
materials, particularly photographic. But of course you pointed out there are common law trade...
w.

photographs that you could buy.

Q. Or I could buy them from someone other than you all that owns the photographs, right? A. You
could do that.
ww

Q. Okay. And if I owned photographs separate from name and likeness, if at some point Michael
om
Jackson or his estate thereafter had sold me copyrights to photographs, then I, Howard and his clients,
could go to that person, which would be you and your client, buy the photos. And we could use those in
advertisements or in the back of the stage of the play, something like that, correct?

n.c
A. Hypothetically, yes.

Q. Okay. And so what other rights of publicity are you... did you think I could not use that fall into the
name and likeness right of publicity bucket that your client paid $161 million for?

so
A. Well, certainly you would not be able to, in this hypothetical play of yours, be able to do any sort of
tie-ins or promotions. And that, of course, is a relatively large source of ancillary income with a
successful play.

ck
Q. Okay. I'm not sure what you mean, though. I could certainly sell ads in the program, correct?

A. Yes, but that's a minor form of income. Yes, you could. I'm sorry. I apologize. Yes.

lJa
Q. Okay. So I could create merchandise about the play and even have a picture of Michael Jackson if it
was a copyrighted photo that I owned and not your client, correct?

A. Yes, I think so.

Q. Okay.
ae
A. Hypothetically.
ich

Q. And I could use the image of the play, however... I don't even know what it means... but an image of
the characters in the play, an image of the play for various endorsements if I could get that kind of a
gig, couldn't I?
mM

A. You would come very close to violating the right of publicity there.

Q. What if I did it and didn't use Michael in it?

A. You could try.

Mr. Weitzman: May I have a moment, Your Honor?


a

Judge Holmes: You may.


Te

Mr. Weitzman: So... I could use Michael's name as a character in the play, couldn't I?
w.

A. In the play, yes, of course.

Q. Okay.
ww

Mr. Weitzman: So could you put that exhibit on?


om
Q. So this is, as I know you now probably know, an advertisement for the Motown play about Berry
Gordy's experience at Motown. And the subject portrayed is a young child playing the role of a young
Michael Jackson. Would you agree with that, that that's what it appears to be?

n.c
A. I accept your presentation.

Q. Okay. And the way that is portrayed with the young child and the name Michael, would it be fair to
say that anyone that would look at the ad... or almost everyone because there could be someone that
wouldn't get it...

so
A. Of course.

Q. ...almost everyone would know that that child was the child playing the role of Michael Jackson at a

ck
young age.

A. Yes.

lJa
Q. And that use of the name is one that you couldn't stop in your hypothetical position as the owner of
owning the name and likeness, correct?

A. I couldn't disagree with you more. If that were my client, I would have my lawyers all over that.
ae
That's such a violation of right of publicity. You can't do that.

Q. Really?
ich
A. You cannot imply that Michael Jackson... the young Michael Jackson's endorsing this.

Q. Okay.

A. And that's up to...


mM

Q. Wait. Is that an endorsement? Or is that a... is that the name of the character in the play, sir?

A. Well, it depends on which lawyer you hire, Mr. Weitzman.

Q. Really? You...
a

A. Excuse me.
Te

Q. You got water?

A. Yeah. Thank you.


w.

Q. Now, California Civil Code 3344.1...

Mr. Weitzman: ...can you put that up there again for a moment?
ww

Q. And by the way, while we're putting this up there, are you telling me that if you hire Lawyer A., you
could probably get that removed from any advertisements about the Motown play?
om
A. Well, you would have a very good chance of exerting right of publicity here. I mean, that is an
implied endorsement by a young Michael Jackson. I think you recognize that, don't you, sir?

n.c
Q. Not at all.

A. All right. Well...

Q. I don't see it as an endorsement at all, sir.

so
Judge Holmes: Just ask a question, and just answer a question.

Mr. Anson: I'm sorry. A little role reversal for a moment. Sorry.

ck
Mr. Weitzman: Okay. So you are familiar with, correct?

A. Yes.

lJa
Q. 3344.

A. Right.
ae
Q. And I think I asked you earlier whether or not you referenced in your reports on name and likeness
3344.1(a) on Paragraph B...
ich
Lacey: 2.

Mr. Weitzman: ...Paragraph 2, rather...


Thank you, Lacey ?? .
mM

Q. ...Paragraph 2, which has been referred to as the exemption paragraph. You're familiar with it,
correct?

A. Yes.

Q. And it reads as follows. "For purposes of this subdivision, a play, book, magazine, newspaper,
musical composition, audiovisual work, radio or television program, single and original work of art,
a

work of political or newsworthy value, or an advertisement or commercial announcement for any of


these works"... that's my emphasis... for any of these works "shall not be considered a product, article
Te

of merchandise, good, or service"... and that's referring to the items described in (a)(1)... "if it is
fictional or nonfictional entertainment or a dramatic, literary, or musical work." Because lawyers like to
say this, I did read that correctly, right?
w.

A. Yes, sir.

Q. And clearly, the Michael item that we saw - - that is, the young actor Michael in Motown... was a
display used for, if we take your approach, an advertisement or political announcement for a play,
ww

correct?
om
A. Yes.

Q. And therefore would be exempt from 3344.1 under this paragraph, correct?

n.c
Mr. Voth: Objection. Calls for a legal conclusion.

Mr. Weitzman: No. I'm just asking for his understanding.

Judge Holmes: Oh, that... oh, for his understanding. More importantly, did you use... well, is that your

so
understanding?

Mr. Anson: I understand the clause, Your Honor, yes.

ck
Judge Holmes: But was that your understanding when you prepared your valuation of the name and
likeness?

Mr. Anson: Yes. Yes. Yes. And if we were talking... there are two questions, I think, pending... one

lJa
about this ad and one about the valuation or just about the ad.

Mr. Weitzman: Well, right now we're talking about the ad. So I can set up my phrase... my questions
regarding valuation.
ae
A. Right. If this were just any ad, then we would fall under this Paragraph 2 exemption because
Michael Jackson has broader rights than just the California right of publicity. Again, I'm not a lawyer.
Sometimes people think I play one on television or something. But looking just as a business person
ich
that does a lot of this sort of work commercially, I would go to my client and I... if he were alive... I
would go to John Branca. And I would say, John, this is an endorsement. They're using Michael
Jackson's right of publicity to top this show. I would give serious thought to serving a notice and say,
folks at Motown the musical, stop this. You're leveraging off of Michael Jackson's fame and fortune.
Don't do that. And you have a very good case here from a business point of view. That's my answer to
mM

this question.

Q. By the way, if you didn't do well, as you notice in the paragraph just above 2, your client would
have to pay attorney's fees, correct?

A. I believe that's true.


a

Q. Yeah.
Te

A. I haven't read this in a long time.

Yes. That's true.


w.

Q. So Michael Jackson, who we know lived and died in California, he has different rights than are
indicated in the statute. And you would say to your $161 million investor, listen, if that happens, we're
going to get a lawyer, and let's take a run at it. And if we lose, all it will cost you is you got to pay his
attorney's fees and me. But let... and by me, I mean the lawyer you all hire, plus me, the lawyer on the
ww

other side. Is that what you're saying?


om
A. Mr. Weitzman, what I'm saying is that I would counsel my client to enforce his rights. How far you
might take a lawyer beyond a letter of notice is another question. Now, I think you asked me the
question... second question...

n.c
Judge Holmes: No, wait, wait. Let him ask the next question.

Mr. Anson: Oh, sorry.

Mr. Weitzman: So when a film... an audiovisual work, a film, is made using footage and music of

so
Michael Jackson's and it's a film about Michael Jackson, can't that film be made and released without
having to license Michael Jackson's name and likeness?

A. That's a very broad hypothetical. Just as with the play example, if you're licensing... if you're using

ck
rights beyond just his name and you're using the rest of his rights... copyrights, trademarks, et cetera,
then it doesn't fall... does not fall within the exemption. The play doesn't fall within the exemption, and
the movie doesn't fall within the exemption.

lJa
Q. So you keep defaulting back to that. I want... and so let's set some guidelines. You only own name
and likeness...

A. Right.

Q. ...on our hypotheticals.


ae
A. All right.
ich

Q. And by the way, getting back to the valuation for a moment... not that I want to divert to the issues...
getting back to the valuation for a moment, the $161 million that your client is paying for those five
kind of segmented projects don't include rights to music or rights to compositions or other intellectual
property rights, correct?
mM

A. Correct.

Mr. Voth: Just clarification, Your Honor. When Mr. Weitzman says you own the name and likeness, I
just want to ensure that all parties are on the same page as to whether he's referring to Mr. Weitzman's
interpretation of name and likeness or the witness's interpretation of name and likeness and how that
would impact the hypothetical posed by Mr. Weitzman.
a

Judge Holmes: I don't understand the objection.


Te

Mr. Weitzman: I don't either. You don't understand... oh, sorry.

Mr. Voth: Well, it's... I think it's important to clarify for purposes of the hypothetical what is the scope
w.

of the name and likeness in order to pose the proper hypothetical because if Mr. Weitzman is working
under a certain assumption as to what constitutes name and likeness, Mr. Anson is working under a
different assumption, we might... the record might not be clear in terms of what his answer is.
ww

Mr. Weitzman: So if I might, Your Honor, I don't know...


om
Judge Holmes: Try to clear...

Mr. Weitzman: I don't know if Mr. Voth is sending some message to Mr. Anson, but Mr. Anson is
answering...

n.c
Mr. Anson: No.

Mr. Weitzman: ...the questions...

so
Mr. Anson: No, he's not.

Mr. Weitzman: ...as he sees fit.

ck
Mr. Anson: He's not sending me a message.

Mr. Voth: No, that was just...

lJa
Mr. Weitzman: I got it.

Mr. Voth: No. Just for the record... ae


Judge Holmes: No. Now stop.

Mr. Voth: ...just for...


ich
Judge Holmes: Mr. Weitzman...

Mr. Voth: ...that was...

Judge Holmes: ...ask your next question.


mM

Mr. Anson: Too much criminal law, Mr. Weitzman.

Judge Holmes: Shh.

Mr. Anson: Oh, sorry.


a

Judge Holmes: Ask your next question, Mr. Weitzman.


Te

Mr. Voth: Just for the... if I may, just for the record, Your Honor?

Judge Holmes: Yes.


w.

Mr. Voth: That was just... the term name and likeness, as has been used by the different parties, is
vague to Respondent. And what Respondent has done with Petitioner's experts is explain... here's how I
understand name and likeness to ensure we're on the same page for purposes of this hypothetical. That's
all I was seeking with respect to clarification.
ww

Judge Holmes: And Mr. Weitzman is seeking to show that name and likeness might have a different
om
meaning under, you know, the law.

Mr. Voth: Exactly.

n.c
Judge Holmes: So...

Mr. Weitzman: Sometimes the law gets in the way. You know what I mean?

A. And there are no secret messages either.

so
Q. Okay. So the name and likeness, the rational investor, be it the government or being it some
individual, paid $161 million for doesn't include music rights, correct?

ck
A. Correct.

Q. Doesn't include compositions or masters, correct?

lJa
A. Correct.

Q. What other intellectual property rights would name and likeness, in your opinion, include for your
$161 million investor?

A. This reports stands alone as it is.


ae
Q. What other rights would include... excluding all the musical intellectual properties, the masters and
ich
the composition, what other copyrights would it include?

A. Well, I think at the... now I'm... perhaps I'm not understanding your question. At the very beginning,
we had some questions about what name and likeness includes. We talked about right of publicity. We
talked about federal trademarks. We stopped... we talked about common law trademarks. We talked
mM

about international trademarks. We talked about copyrighted materials, the rights to those copyrights.
We talked about the licensing rights and endorsement rights. We talked about all of that. That is all
included in name and likeness, that whole bundle of rights. That is the subject of this report. This report
stands alone.

Q. So I... honestly, I don't understand what you said. So let me break it down more. We have excluded
from what your rational investor purchased. We have exclude the masters and compositions, correct?
a

A. That's correct.
Te

Q. No publishing, no recordings, right?

A. No music publishing, no recordings.


w.

Q. Okay. It doesn't include footage, does it?

A. No.
ww

Q. Okay. So it doesn't include... by footage, I mean videos or film or any of that. That's owned
om
separately. Okay. It doesn't include photograph, does it?

A. It includes for 70 years the rights to promote and use all of the name and likeness assets of Michael
Jackson...

n.c
Q. Okay. And so...

A. ...and beyond for the life of trademarks renewable.

so
Q. ...other than Michael's name and Michael's image, for commercial purposes, what else would it
include?

A. Nothing, sir.

ck
Q. Okay. So when you valued name and likeness or the rights of publicity, you used what method?
Actually, let me stop. Sorry. Just move that aside. You criticized Mr. Roessler... I'm remembering, but
you're going to tell me what... I don't remember exactly. You criticized Mr. Roessler for using some

lJa
methodology for right of publicity. And I'm thinking, but I'm probably going to get corrected. It was
income revenue or income stream? Income revenue, income stream? You know what I'm talking about?
You think I'm playing with you? ae
A. I do, actually.

Q. You would be right.


ich
A. If you're really struggling, the criticism heavily... I think criticism here is that Mr. Roessler does a
backward-looking model where he looks only at historical...

Q. Historical.
mM

A. ...activity and historical revenues. He does no forward-looking revenue modeling in spite of the fact
that he says, for example, that Cirque du Soleil was foreseeable. I mean, he sees the potential. He sees
it's going to happen, and yet he does not account for the revenue. And that is a primary criticism of his
report.

Q. By the way, could you show me where Mr. Roessler said that the Cirque revenues were foreseeable
as opposed to some other descriptor?
a

A. I would have to reread his entire report for you, but I would be happy to do if we've got the time.
Te

Q. Well, we have the time, but I'm thinking it's not the best use of our time.

A. But I'm not making it up, sir.


w.

Q. Okay. We'll actually do that brief search for you, and...

A. Thank you.
ww

Q. ...have it back at the end of some break or...


om
A. Thank you.

Q. ...lunch if we go that far. So when you indicate that he used historic values, can you tell me what

n.c
that means? What does it mean?

A. Yes. His... all of his calculations, if you... if that's how you view them, are based on revenues that
happened in the past before...

so
Mr. Anson: Bless you.

A. ...before Mr. Jackson passed away. The first principle of value in valuations, regardless of where
your training came from, is to look at the future economic benefit. That phrase "future economic

ck
benefit" is a guiding principle of valuation.

Q. So the better method for valuing right of publicity deals with looking... trying to assess what the
value might be for the future, but you don't use historical performances. Is that correct? That is, you

lJa
don't use historical performances as a measure. There's a better way to do it, as I understand what
you're saying.

A. Whether one looks at right of publicity or Mijac or even real estate, one takes into account what
future potential revenue opportunities are.
ae
Q. And sales in the past, which I think is... now I'm remembering. Sales in the past, as Mr. Roessler did
for name and likeness, you don't believe is an appropriate thing to consider.
ich

A. Well, let me give you an example.

Q. Sure.
mM

A. Take a very nice building that up until today has only been occupied on the ground floor, but it's a
10-story building. Imagine that's Mr. Jackson's use of his name and likeness. He's only occupied the
ground floor for the last 10 years. What you have to do is ask yourself can we fill the other nine floors
in the near future and over an extended period of time. And if so, how much rent will we get for those
other nine floors? And will this happen starting next year, one year, two years? And we project the rent
we're going to get for those other nine floors based on the marketplace. That's what I mean by forward-
looking establishment of value. You...
a

Q. And that forward-looking establishment of value is what you believe is the better method to use for
Te

valuing rights of publicity, and that's the basis of your criticism of Mr. Roessler.

A. It's the basic method of valuing an asset.


w.

Q. Well, I'm sorry. You said the best method of valuing assets?

A. It's the best method of valuing an asset is to take a forward-looking perspective.


ww

Q. And would that include that it's the best method for valuing rights of publicity?
om
A. Yes.

Q. Okay. And that's not what you call using income stream because income stream refers to the past,
correct?

n.c
A. Well, you don't want to confuse the two things.

Q. Okay.

so
A. An income stream can be a forward-looking income stream. It is also an income stream in the past.
What I'm saying simply is that Mr. Roessler seems to cut off his analysis because he looks only at past
income streams and looks only at income streams generated... palpable income streams generated only
by clients for which he's worked.

ck
Q. So...

A. And he bases his analysis only on those two things.

lJa
Q. So in valuate... in valuing rights of publicity, would you look... or did you consider here historical
results or revenues... ae
A. No. Here we took...

Q. ...for Mr. Jackson?


ich
A. Here we took a forward-looking perspective.

Q. No... okay. So I was reading... sorry for doing this... reading a book about valuing stuff like publicity
rights, and it talked about the best method for the value of publicity rights are to use some history
projections. Is that... you don't agree with that.
mM

A. Well, certainly, you know, you can take historical and project forward if you think that is the best
method. But you have to take a forward- looking perspective. That's the most important thing. And you
can't be constrained for... by... you can't be constrained by conditions where nothing has occurred in the
past.

Mr. Weitzman: Can I have just a moment?


a

Judge Holmes: Certainly.


Te

Mr. Weitzman: Can I have something marked next in order?

Judge Holmes: Of course.


w.

Mr. Weitzman: Thanks. Don't know where we are at this point.

Judge Holmes: That's what Ms. Wood can tell you.


ww

Mr. Anson: Your Honor, could I ask my counsel for another bottle of water?
om
Judge Holmes: Oh, please.

Mr. Anson: I know...

n.c
Judge Holmes: Hydrate.

Mr. Anson: ...I brought another bottle.

so
Judge Holmes: We all need hydration today.

Mr. Anson: It's right there.

ck
The Clerk: Exhibit 713-P is marked for identification.

Mr. Anson: Thanks a lot.

lJa
The Clerk: It is the... it is up on the screen about Michael and Motown musical.

Mr. Toscher: Can I ask the Clerk what number?ae


The Clerk: 713-P.

Mr. Toscher: Thank you.


ich
Mr. Weitzman: So the book that I'm reading from is called Right of Publicity. Are you familiar with
the book? A. It looks familiar, yes.

Q. Yeah. It's written by Weston Anson.


mM

A. Yes. Yes.

Q. Recognized expert in the field of valuation.

Mr. Weitzman: And if we could put up Page 139. That doesn't look like Page 139 to me. We'll get back
there.
a

Mr. Weitzman: Your Honor, may we have a moment?


Te

Judge Holmes: Off the record.

Judge Holmes: Okay. Action.


w.

Mr. Weitzman: Action.

Q. As I ???? reading was a book that you wrote. And so I'm referring you to Page 139 of your book,
which you probably don't even need to see because I'm sure you have it memorized, dealing with a case
ww

study involving Marlon Brando, a name that you're familiar with.


om
A. Yes.

Q. And a former client of mine, as you know.

n.c
A. I did not know that.

Q. So...

The Clerk: Exhibit...

so
Mr. Weitzman: Pardon me?

The Clerk: I'm sorry. Exhibit 714-P is marked for identification, and it's the page in the book you're

ck
referring to.

Mr. Weitzman: Exhibit 714 is what I want to refer you to, and I want to start with the paragraph...
second paragraph. But actually, where it says, "Our core task," do you see that?

lJa
A. Yes.

Q. Okay. So... and I want to read it. It says, "Our core task on this assignment was to determine a
ae
method to estimate the fair market value of the intangible publicity rights for the estate as of the date of
death of Brando, July 1st, 2004, and to estimate said value based on that method." Does that paragraph
basically indicate that your responsibility in the estate of Marlon Brando was to do, in that situation,
what you were asked to do in the estate of Michael Jackson for name of... or rights of publicity?
ich

A. Yes.

Q. Okay. And so the next paragraph reads, more for color and background than anything else, "As a
superior and well-recognized screen actor, Brando might have had the potential ability to earn a
mM

continual stream of secondary income by licensing his name, voice, or likeness to endorse products
broadly associated with his performances. "However, he did not exploit this avenue up until the
completion of his 36th movie, The Island of Dr. Moreau, in 1996. As a general rule, Brando movies
simply could not provide a vehicle ??? a screen persona, such as Bela Lugosi's Dracula, that might have
had wide commercial application to a line of goods. "Brando never chose to endorse any product using
his screen personality, in marked contrast to the heirs of James Dean. In a brilliant career, but wrecked
personal life, Brando's reputation as a tormented and tragic genius has not been conducive to general
a

commercial acceptance by a national audience on network television or in print media." I'm not going
to ask you the classic lawyer question because we both read it together. But what was your purpose in...
Te

if you can recall because it's been a few years since you wrote this book, what was your purpose in
providing that information?

A. To basically say that Brando was not able to establish much of a persona in terms of future
w.

merchandise-ability or extendibility.

Q. Okay. And then if we can go down to the next... by the way, did you ever meet Mr. Brando when he
was alive?
ww

A. No, I did not.


om
Q. Okay. The next sentence, which is where... right there. "When valuing intangible assets in general,
and the publicity rights of a celebrity in particular, it is prudent to consider the different valuation
methodologies in light of the information available and the current situation in order to determine the

n.c
best method or methods of ascertaining the fair market value of the intangible assets in question." You
wrote that as well, right?

A. Yes.

so
Q. And the next paragraph, the best method... this is the part I was reading... "The best method for
valuing publicity rights with some history of use is the income approach. The income approach is based
on determining the future income stream attributable to the asset under consideration. 'The value of the
asset is calculated by taking the net present value of the revenue stream associated with the use of the

ck
asset. This method utilizes a forecast of revenue based on factors such as historical results, industry
trends, and the competitive environment." You wrote that as well, correct?

A. Yes, sir.

lJa
Q. Is that the method you used in valuing the rights of publicity assets for the estate of Michael
Jackson? ae
A. For some of the assets we used the income approach.

Q. Did you use it for Cirque du Soleil?


ich
A. Yes. We used comparables and derived income from comparables.

Mr. Weitzman: May I have a moment?

Judge Holmes: You may.


mM

Mr. Weitzman: So did you use this approach for valuing the rights of publicity?

A. I missed the end of that. The rights of... did...

Q. Did you use this method in valuing the rights of publicity for the estate of Michael Jackson?
a

A. Well, you have to look at each individually as we go down through...


Te

Judge Holmes: Please answer yes or no.

A. Yeah... well, in some I used the comparables method; in some I used the straight income approach,
sir. So on the Brando merchandise, I used comparables, and then from the comparables, established the
w.

revenues from that. On the play, we used an income approach based on the deal memo that was
presented to us and established the revenue levels from that. On Cirque du Soleil, we had comparables,
and from those comparables we projected income. The short answer is, yes, we're establishing value
based on projected income, but we also use comparables wherever possible.
ww

Q. I'm not sure I understand what you said. I know you criticized Mr. Roessler for using the historic
om
results when he was valuing right of publicity. So my question is did you use the method of considering
factors based on historical results, industry trends, and the competitive environment in valuing Mr.
Jackson's assets for right of publicity?

n.c
A. For each segment, we tried to use comparable transactions wherever possible, which is the market
method. And then based on those comparables, we established income levels and projected income.
Yes.

Q. So the answer is, no, you didn't use the method involving historical results, industry trends, and

so
competitive environment.

A. No, because in this case we projected out income based on comparables. It's called the market
method combined with the income method.

ck
Q. So...

A. Let me just take you through one example, if I can.

lJa
Mr. Weitzman: Actually, I'm going to wait and talk to my lawyer and get right back to you.

Q. Let me ask it differently. Did you use the same method in valuing right of publicity for the Michael
ae
Jackson estate that you used in valuing rights of publicity for the estate of Marlon Brando?

A. Essentially, yes.
ich
Q. Essentially, yes?

A. Yes. I'm simply trying to give you a little more detail.

Q. Yeah, I'll have the experts go over the detail. So more specifically, did you use historical revenues in
mM

valuing Michael Jackson's assets at the time of death?

A. No.

Q. So you kind of fudged on that one. Is that correct?

A. We used comparable transactions to establish future revenues.


a

Q. So when it says, "The best method for valuing publicity rights with some history of use is the
Te

income approach," you didn't really use that approach for the estate of Michael Jackson, correct?

A. Well, you have to read the...


w.

Mr. Voth: Objection. Asked and answered.

Mr. Anson: Right.


ww

Judge Holmes: Overruled.


om
A. The best method for valuing publicity of rights "with some history of use," is the income approach.
You have name and likeness assets here that had been lying dormant because Mr. Jackson had been out
of the country for some time.

n.c
Q. Kind of like Mr. Brando not wanting to participate in name and likeness for a period of time?

A. No. That's not the occasion. Mr. Brando had been participating at a moderate level before his death.

Q. Let me ask you a question. If you had used the historical approach on name and likeness... that is,

so
look at the revenues that Mr. Jackson had received over the past 10 years of his life... would that have
resulted in a less valuation... that is, less of a number valuation... than using your methods... that is, the
methods you ended up using?

ck
A. Well, you can't use... first of all, in the last five years, Mr. Jackson had not been active in name and
likeness. And so therefore, you don't have... you can't go back three or five years, so you can't start
from a historical base. You have to use a market approach and build your income projections based on
market comparables.

lJa
Q. Let me ask you a question. If you went back 10 years or 15 years, there would be a market for you
to review as to the historical results, correct? A. But that wouldn't be sound valuation practice. You
would not go back 10 or 15 years. That would be like going back 10 years to get a market comparable
ae
for your house. And Mr. Weitzman, you wouldn't want to do that because it would grossly undervalue
your house. Q. Depending on the purpose and where I lived, I guess.

A. If you want an accurate valuation, you don't go back 10 years.


ich

Q. So you did not use historical revenues. What it sounds like to me... you try and correct me if I'm
wrong...

A. I will.
mM

Q. ...you basically used... trying to remember the word now... the best estimate... best estimate... rather
than relying on historical results, correct?

A. No. I never used the phrase "best estimate."


a

Q. I know you didn't, but that was suggested best phrase from me.
Te

A. No. I said I used market comparables. And based on market comparables, we then established an
income approach and projected income.

Q. So when you say market comparable, is that... are you comparing other personalities with Mr.
w.

Jackson?

A. Yes. If you go back earlier in the book, we can turn to the page where market... the market approach
is described to you.
ww

Q. Tell me what celebrities you were using, what market comparables.


om
A. You don't necessarily use other celebrities. In the example of the film...

Q. Wait. Wait. Wait. Wait. I'm not understanding...

n.c
A. I was just...

Q. So...

so
A. ...about to explain to you.

Q. Yeah.

ck
A. In the example of the film, you look at 13 other films that are similar...

Q. I...

lJa
A. ...and establish revenue levels. Based on those revenue levels...

Q. I mean, if you want a filibuster, that's okay. I have the time, and I'll wait for you to finish.
Otherwise, I do have a question.
ae
A. I'm trying to give you a complete answer. In order to establish market comparables...

Q. There's no question pending. I'm going to ask you a question, please.


ich

A. I'm sorry.

Q. Did you compare Michael Jackson with any other celebrities, like Marlon Brando, in valuing rights
of publicity?
mM

A. Well, in each case, we looked at comparables. So for example...

Q. Wait. Just yes or no?

A. Yes.
a

Q. Okay. And give me a name or two of who you compared Michael Jackson with in valuing his rights
of publicity.
Te

A. Well, in each segment they're different. So for example, in the case of the film, as I started to explain
a moment ago, we compared to 13 other biopics ranging...
w.

Q. I'm not asking you about biopics, sir.

A. Sir, I'm in the middle of an answer. Please.


ww

Q. Yeah, but you're not...


om
Judge Holmes: Okay. Which... actually, it's unclear to me. Which of the five categories that Mr. Anson
was looking at are you referring to now?

Mr. Weitzman: I don't think the five categories indicate what someone's rights of publicity are... how

n.c
they're valued. So I disagree with that, and I want to know what measurement he used to come up with
$161 million right of publicity, which, by the way, as we know, has been defined as tchotchkes and t-
shirts and caps.

Judge Holmes: Well, by you.

so
Mr. Weitzman: Well, that is correct.

Judge Holmes: For him, it includes master recordings and copyrights.

ck
CROSS-EXAMINATION BY Judge Holmes:

Q. Apart from the Elvisland portion of your report, you looked at historical results of biopics?

lJa
A. Yes, sir.

Q. And historical results of merchandise agreements with other celebrities?

A. Yes, sir.
ae
Q. And historical results of other Broadway jukebox musicals?
ich

A. Yes, sir.

Q. But you didn't use the historical results of Michael Jackson.


mM

A. And... because for 10 years, he had not had any historical results.

Q. Oh, but historical results were low.

A. But in the previous five years, Your Honor, he had been in hibernation. He had not had any
activities, and you can't use... good valuation practice says that you cannot go back more than three to
five years or your data is flawed. And again, I use the example of... a simple example because we have
a

used it before... of a house. You don't go back more than five years to look at comparable data...
Te

Judge Holmes: I think what he said is he looked... he used historical results, just not historical results
of the decedent.

Mr. Weitzman: Well, that's preposterous. Sorry. I mean, it just makes no sense.
w.

Mr. Anson: It's not preposterous...

Judge Holmes: Well, now.


ww

Mr. Anson: ...Mr. Weitzman.


om
Judge Holmes: You can explore that with further questions.

Mr. Weitzman: I'm going to.

n.c
RECROSS-EXAMINATION BY MR. WEITZMAN:

Q. Do you believe that Michael Jackson would not have lent his persona to endorse or accept payment
to use his name and likeness on some commercial endeavor if he could have done that in the years

so
2000 to 2009?

A. I believe that he was about to, and he was about to embark on it based on testimony from Mr. Tohme
and the plans that Mr. Branca laid out. But...

ck
Q. Now, you have sat here for most of the trial, and you have heard people tell you... not you
personally, but tell the global you that Mr. Jackson... they used various words... was toxic in the
commercial business, that he couldn't get a tour sponsor, that he couldn't get any merchandise deals,

lJa
that nobody wanted him to endorse their product. And are you telling us you have ignored all of that
testimony, sir?

A. Well, I have heard other testimony that is not the same. I have heard Mr. Kane say that you couldn't
ae
get Michael Jackson to listen to his financial affairs. They had no interest.

Q. Did Mr. Kane ever testify that he talked to Mr. Jackson about a commercial endorsement, use of his
name and likeness? Did he say that? The answer is no. I'm going to give you the answer.
ich

Judge Holmes: Wait. Wait. Wait. Wait. Wait. Wait. Wait.

Mr. Anson: I... he...


mM

Judge Holmes: You can't give the answer to your own questions, Mr. Weitzman.

Mr. Weitzman: Okay.

Judge Holmes: Did he ever say that, Mr. Anson?

Mr. Anson: He said that he could not get Michael to sit down and talk about financial things at all. He
a

tried on many occasions. I'm sorry, Mr. Weitzman.


Te

Mr. Weitzman: What does that have to do with what we're talking about, seriously? Mr. Kane was the
business manager, correct?

A. That's right.
w.

Q. Okay. And is it your impression the business manager is talking to Mr. Jackson about potential name
and likeness deals he has lined up and he wants them to sign up and get the money?
ww

A. I assume...
om
Q. Is that your impression?

A. I assume so. That was the only manager he had at the time.

n.c
Q. Oh, because I thought you mentioned Mr. Tohme.

A. That Mr....

Q. Did you mention Mr. Tohme?

so
A. I did mention Mr. Tohme.

Q. Okay.

ck
A. And...

Q. What was your understanding of Mr. Tohme's job with Mr. Jackson?

lJa
A. He was, for lack of a better word, his general manager.

Q. General manager. Okay. By the way, do you represent other clients in the entertainment business?
ae
A. Very few. We try not to... we not... try not to.

Q. I can understand that. So do you deal with...


ich

Judge Holmes: Just ask questions, Mr. Weitzman.

Q. Do you deal with business managers or agents or managers for talent?


mM

A. I have in the past.

Q. Okay. Do you understand there to be different responsibilities for agents, managers, and business
managers?

A. I do.
a

Q. And were you here when Mr. Kane, the business manager, was testifying about Mr. Jackson's dire
financial condition?
Te

A. Yes.

Q. And were you here when Mr. Kane was testifying about Mr. Jackson's dire financial condition and
w.

trying to get him to focus on those issues?

A. Yes.
ww

Q. And did you hear Mr. Kane ever talk about rights of publicity and trying to get deals up for
endorsement or use of Michael's name and likeness?
om
A. Only that Mr. Kane could not get him to focus on any deals.

Q. Okay. So the answer to my question is no. Is that correct?

n.c
A. I don't think Mr. Kane knows the term right of publicity.

Mr. Weitzman: Your Honor, rather than...

so
Judge Holmes: Please answer the way... please just answer the question.

Mr. Anson: I don't know. I apologize, Your Honor. I...

ck
Judge Holmes: Okay. I don't know is an acceptable answer.

Mr. Anson: No. No. And I apologize, Your Honor.

lJa
Judge Holmes: No is also an acceptable answer.

Mr. Weitzman: By the way, what was the value of Mr. Brando's name and likeness?
ae
A. I don't recall... something in the neighborhood I think of $10 million... 5... between 5 and 10 million.
Let's look to the end of this exercise, and let's find out together. Can you help me by jumping ahead
here, Mr. Weitzman?
ich
Judge Holmes: Oh, look at Page 144, bottom right-hand corner of the table.

Mr. Weitzman: Or he could look at Page 143 of his report.

Judge Holmes: Oh.


mM

A. At the time, it was 1,400,000, based on his accepting another 4 or 5 assignments before the end of
his useful marketing period was up.

Q. And by the way, that is less than 5 or 10 million, right?

A. Yes, it is.
a

Q. And so if you had used the method that you indicate in your book to value Mr. Jackson's name and
Te

likeness, would that number have been less than $162 million?

A. If I had used this method to value Mr. Jackson?


w.

Q. Yes.

A. We wouldn't be looking at these sorts of 10-second walk-on or voiceover parts for Mr. Jackson.
ww

Q. Really hard for you to answer my question.


om
A. I apologize.

Q. I'm going to ask it again.

n.c
A. I apologize. No.

Q. No, you don't have to apologize. I'm kind of used to it. It's kind of the drill.

A. I'm sorry.

so
Q. It's all right.

A. I'm sorry.

ck
Judge Holmes: Ask questions, Mr. Weitzman.

Mr. Weitzman: Sorry, Your Honor.

lJa
Q. So if you used the best method described in your book, Right of Publicity, on Page 139, which says
the best method for valuing publicity rights with some history of use is the income approach. If you use
the income approach to Mr. Jackson's last 5 years, 10 years of his life, the valuation would be less than
$160 million, correct?
ae
A. No. I used the best method.
ich
Q. Did you use the income approach to value his name and likeness, Mr. Anson?

A. I used the market comparables method, which is the best method in this case. You have to...

Q. It's the best method because the government asked you to get maximum value. And so the method
mM

you used for Marlon Brando and the method you wrote was the best method was one you couldn't use
here because you couldn't achieve your goal, correct?

Mr. Voth: Objection. Just for the record, the government didn't ask him to...

Mr. Anson: Incorrect.


a

Mr. Voth: ...seek maximum value.


Te

Judge Holmes: Okay. We'll delete the prologue. Pitch from the stretch.

Mr. Anson: Incorrect, Mr....


w.

Mr. Weitzman: See, I was used to being a starter. Sorry.

Judge Holmes: If you were...


ww

A. Incorrect, Mr. Weitzman. Let me just read this again as an answer. "When valuing tangible assets in
general, and publicity rights of a celebrity in particular, prudent to consider the different valuation
om
methodologies in light of the information available and the current situation." It changes from situation
to situation, in other words, Mr. Weitzman.

Q. Well, particularly when you're working for the Internal Revenue Service, right?

n.c
Judge Holmes: Ask questions.

Mr. Voth: Objection.

so
Mr. Anson: That's not a question, Mr. Weitzman. That's an insult.

Mr. Weitzman: It's a shame, Mr. Anson.

ck
Judge Holmes: Answer questions.

Mr. Weitzman: It's a shame. I'm going to ask you one more time, sir. If you had used the method that
you wrote in your book as written, wouldn't that have resulted in a lesser valuation of Michael

lJa
Jackson's name and likeness than $161 million?

Mr. Voth: Objection. Asked and answered. ae


Judge Holmes: One more time. A concise answer this time, Mr. Anson.

A. If you had used an income approach based on past history of the prior three years, then you would
have ended up with a much lower valuation.
ich

Q. And sir, were you instructed not to use that methodology?

A. We weren't instructed to use any one particular methodology or approach.


mM

Q. And why is it you thought it was best to come up with a higher number and not use that
methodology?

A. That's a two-part question. First, we weren't instructed to come up with any number. And second, as
it says in that paragraph on the screen, the best method is that which employs the data available and, in
this case, a market approach. And by the way, the market approach is a preferred approach in all
valuations when useable.
a

Q. Oh, so when you wrote that, that was not accurate? I'm not... just tell me what I'm missing.
Te

A. What you're missing...

Q. Yeah.
w.

A. ...is the best method for valuing intellectual property is that which fits the situation. If you'll go back
to this page, I'll read it to you again, but I'm not going to waste our time. When possible, you use
market comparables. And market comparables is what we...
ww

Q. But you didn't say that there, right?


om
A. I say it right here. Let me read it to you again.

Q. No, I'm just reading this paragraph. You didn't say it in dealing with Mr....

n.c
A. "When valuing intangible assets, it is prudent to consider the different valuation methodologies in
light of the information available and the current situation to determine the best method for ascertaining
the fair market value of intangible assets in question."

so
Judge Holmes: Right. But then the next sentence is, "The best method for valuing publicity rights with
some history of use is the income method."

Mr. Anson: Right. That's correct.

ck
Judge Holmes: Did Mr. Jackson have some history of use of exploiting his name and likeness rights?

Mr. Anson: And Your Honor, not in the prior three to five years.

lJa
Mr. Weitzman: I think you kind of answered the question, which was yes... you forgot that part... but
not very much in the last three to five years. Now Mr. Anson, there was some minimal revenue from
name and likeness that Mr. Jackson earned in the last three to five years of his life, correct?

A. If there was, I don't recall.


ae
Q. Well, let's say you... hypothetically, if you would have earned $20,000, would you then have used
ich
the income approach?

A. No.

Q. If you would have earned $100,000, would you have used the income approach?
mM

A. No.

Q. And how about $1 million? Would you use the income approach?

A. No because you... what you're striving to get at is a market value.


a

Judge Holmes: So to get the market value depends on whether the reluctance of the celebrity involved
to exploit his right of publicity is exogenous or endogenous, by which I mean is it something that the
Te

celebrity has as a quirk of his personality... Woody Allen?

Mr. Anson: Mm-hmm.


w.

Judge Holmes: Or is it something that is outside his personality, like widely known allegations of
pederasty?

Mr. Anson: Those are both... those are good examples.


ww

Judge Holmes: Which... actually, maybe not. But...


om
Mr. Anson: They're both known examples.

Judge Holmes: At one time for Woody Allen. And then which do you... which of those categories do

n.c
you put Michael Jackson in?

Mr. Anson: I put him in the category of coming from a... I suppose both he's come out of a period of
being a hermit. He's come out of a period of... based on the research, come out of a period of being
deeply hurt by the accusations and has now just sold something on the order of over three-quarters of a

so
million tickets and is again, according to Tohme Tohme and John Branca, about to be reenergized. Do I
believe he can do Cirque du Soleil? Yes. Do I believe he can do the movie? Yes. Do I believe he can do
some branded merchandise? Yes. Do we over emphasize those things? No. Can he do some themed
products and venues? Yes. Do I want to depend on historical revenues? No.

ck
Judge Holmes: See what you can do.

Mr. Weitzman: Well, I'm not... I'll... I have something to say.

lJa
Judge Holmes: To ask.

Mr. Weitzman: I didn't...


ae
Q. So you are aware, sir, are you not... at least after sitting through this proceeding and all the massive
due diligence studying you did about Michael Jackson and his life and his background, you are aware
that at least for 15 years in 1993, 16 years until the day he died, there was a sharp reduction in his
ich
ability to get endorsement or name and likeness deals, correct?

A. I know there was a sharp reduction. Yes.

Q. Okay. And when Michael... sorry... passed away... when he passed away, he passed away not having
mM

worked for a number of years, correct?

A. Yes.

Q. And at the time he passed away, he had only one potential name and likeness deal, and that was the
one with Bravado, assuming the tour happened, correct?
a

A. Assuming... and I missed the last word... assuming...


Te

Q. Assuming the tour happened.

A. Assuming the tour happened and assuming that the other things that Mr. Tohme talked about did not
come to fruition.
w.

Q. Oh, Mr. Anson, like what? What did Mr. Tohme talk about that didn't come to fruition?

A. Well, obviously, he spoke about the Nederlander play. He spoke about the Nike footwear deal. I'm
ww

sorry, Mr. Weitzman. I apologize.


om
Q. You don't have to apologize. I think it's a joke, but you can go ahead.

A. I'll end my answer there.

n.c
Mr. Voth: Objection, Your Honor. That's - -

Judge Holmes: Sustained. Sustained. Sustained.

Q. So you talked to the Nike people?

so
A. No.

Q. Wait. You didn't do your due diligence to see if, in fact, the Nike deal was Nike or someone that

ck
wasn't associated with Nike?

A. I did not talk to Nike.

lJa
Q. Did you talk to the people that Mr. Tohme supposedly talked to?

A. I did not. ae
Q. Did you read the article where those people were sued by Nike for infringing on their Moonwalk
product?

A. I saw the article, yes.


ich

Q. Did no follow-up to see whether or not those people that tried to rip off Nike were the people, in
fact, that Mr. Tohme talked with?

A. No.
mM

Judge Holmes: Just one more thing, Mr. Anson. If you did... had... you mentioned a world in which
you didn't believe anything Dr. Tohme... Mr. Tohme told you. Would your results have been different?

Mr. Anson: The only... I don't think they would be appreciably different. We did not include the Nike
project as part of our projections. In terms of branded merchandise, we assumed that we would be able
to... a rational buyer would be able to license a general line of merchandise without focus in footwear.
a

The only other thing that Tohme Tohme pointed out to us was something that we knew of, which was
the Nederlander deal memo.
Te

Mr. Weitzman: And the Nederlander deal memo did not include name and likeness, correct?

Mr. Voth: Objection. Asked and answered.


w.

Mr. Anson: I disagree with you, Mr. Weitzman.

Mr. Weitzman: Well...


ww

Judge Holmes: He says he did include the name and likeness.


om
Mr. Weitzman: I thought I almost...

Judge Holmes: If it didn't include the name and likeness, would your results have been different?

n.c
Mr. Anson: If it did not?

Judge Holmes: Yes.

so
Mr. Anson: Then we might have changed our conclusions...

Judge Holmes: Would you have changed your conclusions?

ck
Mr. Anson: Well, think of it this way. If you're going to do a Michael Jackson play on Broadway, your
chances of being successful are going to be vastly enhanced if you can use the Michael Jackson name
and likeness right of publicity. The extra five points, you have to pay him for that... or 5.19, you have to
pay him... well worth the money. And so I would think about it, but I would probably still include the

lJa
play.

Mr. Weitzman: This is not a play about Michael Jackson though, right?
ae
A. It was a play that could have... it was a play that was focused on Michael Jackson...

Q. Mr. Anson, this was the play...


ich
Mr. Voth: Objection, Your Honor. Can the witness finish his answer?

Q. ...about Thriller, wasn't it?

A. It was... that could have been called...


mM

Judge Holmes: Objection sustained. Be quiet. Answer the question.

A. Yes. It was a play called Thriller that used songs not just from Michael Jackson. But it could have
been called Beat It or Billy Jean.

Q. But that wasn't the deal, was it?


a

A. No.
Te

Q. What are you talking about? The deal involved Thriller, and it involved compositions from Thriller
and other compositions written by other people besides Michael Jackson. Did you read anywhere in
that deal memo that there was an idea other than using Thriller as the basis to create a Broadway
w.

musical?

A. No.
ww

Q. Well, what are you talking about? Why you say that? Why do you say it could be Beat It or Billy
Jean?
om
A. It's a...

Q. Tell me why you say that.

n.c
Judge Holmes: Let him answer.

A. It is an alternative approach had this deal memo had not come to fruition.

so
Q. Sir, how important is it for you to get these numbers as high as they are?

Mr. Voth: Objection. Argumentative.

ck
Judge Holmes: Sustained.

Mr. Weitzman: You know what? Can we take our morning break?

lJa
Judge Holmes: We just did.

Mr. Weitzman: Oh, I didn't... I never left the room. Sorry. I will move on. I'll continue. That was the
morning break. Okay.

Judge Holmes: It was a long break.


ae
Q. Could you go to Page 50 of your original approach... original report? So... sorry. With me?
ich

A. Yes, sir.

Q. Okay, sir. Under... I got to count... 8A, income approach, reads as follows. "The income approach
calculates the present value of future income streams specifically attributable to the intellectual
mM

property asset. This method utilizes forecasted financial results based on factors such as historical
financial results, appropriate discount rates, industry trends, and the competitive environment. The
income approach was relied upon in my analysis." Is that what that says?

A. Yes.

Q. Okay. And then cost approach. There's a description if you go back to the last sentence. It says, "For
a

these reasons, the cost approach does not provide an accurate measure of value for Michael Jackson's
name and likeness." So we have eliminated cost approach in your analysis, correct?
Te

A. That's correct.

Q. And then market approach down below. And you explain market approach, which reads, "The
w.

market approach values intellectual properties by comparing the subject asset to publicly available
transactions involving similar assets with similar uses. This provides a reasonable indication of value if
an active market exists that can provide examples of recent arm's length transactions with adequate
information regarding the terms and conditions. "Transactions involving intellectual properties can
ww

involve the purchase or transfer of the assets separate from a business or a license to use the asset.
There are very few, if any, directly comparable assets to Michael Jackson's name and likeness. As such,
om
my analysis does not incorporate a traditional market approach valuation." Did I read that right?

A. Yes.

n.c
Q. So the market approach you told us about obviously, in your own words, is not a traditional market
approach valuation, correct?

A. We use market comparables.

so
Q. Okay. That's not market approach? That's different?

A. A pure market approach would be where you would take, for example, four other celebrities... if
you're interested, Mr. Weitzman.

ck
Q. Honestly, it's hard for me to listen to you do this. I'm being very honest.

Judge Holmes: Hold on, Mr. Weitzman.

lJa
Mr. Weitzman: Okay.

Judge Holmes: I'm interested.


ae
Mr. Anson: You would have a list of four or five celebrities. You would have their annual income. And
you would plot out... or their total value, one or the other, and you would plot out Michael Jackson
compared to those four or five other celebrities. We don't have the luxury of having that kind of data
ich
except on a very limited basis. And we do show that limited basis data for Elvis Presley, Mohammed
Ali, and one or two other anecdotal examples.

Judge Holmes: So would it be fair to characterize your approach as the income approach but using
comparables?
mM

Mr. Anson: That's correct. That's correct.

Mr. Weitzman: So did you consider... oh wait... the last just to complete it, the last sentence D says...
it's a little different to what you said earlier... "I have chosen to employ the income approach (for Mr.
Weitzman, not the market comparable approach) for my valuation of Michael Jackson's name and
likeness." I did read that correctly, didn't I?
a

A. Of course you did.


Te

Q. Okay. So that's not exactly what you said earlier today. Wouldn't that be accurate?

A. You're right.
w.

Q. And by the way, did you use Mr. Jackson's historic revenue numbers in valuing his right of
publicity?
ww

Mr. Voth: Objection. Asked and answered, Your Honor. We've been down...
om
Judge Holmes: Oh, that one is sustained. We know he used the income approach. He just didn't use
Mr. Jackson's income.

Mr. Weitzman: Then if it's not the income approach, how... as he described it, but...

n.c
Judge Holmes: No, we now know what he did.

Mr. Weitzman: Okay.

so
Q. And what comparable celebrities did you use for this, my word now, modified income approach?

A. For the income approach, you look at comparable transactions in order to establish revenues upon
which to base an income level. I can take you, for example, and I think an easy one for you to follow,

ck
perhaps, because you're in the entertainment business...

Q. Yeah, but you have got to keep it simple.

lJa
A. ...I'm going to... and I will keep it simple for you... would be the movie that... or we can go to Cirque
du Soleil, whichever one you prefer.

Q. See, too complicated for me. Is there a celebrity that you compared Michael Jackson's situation with
using your modified income approach?
ae
Mr. Voth: Objection. Asked and answered.
ich
Mr. Anson: Just a moment ago...

Judge Holmes: On the movie question...

Mr. Anson: Right. Why don't we go to the movie?


mM

Judge Holmes: Look, you used the various biopics. They were biopics of other people. Many of them
were biopics of living people.

Mr. Anson: Thank you, Your Honor.

Judge Holmes: You... right?


a

Mr. Anson: Thank you. These...


Te

Judge Holmes: Am I there?

Mr. Anson: Thank you, Your Honor. Why don't we go to the movie example, Mr....
w.

Mr. Weitzman: Why are we talking about biopics?

Mr. Anson: Why don't we go...


ww

Judge Holmes: He talked about them in coming up with the income streams for Mr. Jackson over at
om
Mr. Jackson's, but were other people's that he then used to compare to create an income stream for Mr.
Jackson.

Mr. Weitzman: But there's no biopic involving Mr. Jackson.

n.c
Judge Holmes: Well, this is...

Mr. Anson: This is how you...

so
Judge Holmes: This is... remember, we're not using historical results. We're using future.

Mr. Weitzman: Well, there is a future film that is post-death that involved Mr. Jackson. It's not a
biopic.

ck
Judge Holmes: Yeah, but... the one with the White guy?

Mr. Weitzman: No. There was a kind of a documentary film called This Is It.

lJa
Judge Holmes: Oh, oh. It's that one, not a biopic.

Mr. Weitzman: And that wasn't a biopic, but it did, fortunately for the estate, pretty good.

Mr. Anson: Is there a question?


ae
Judge Holmes: No, actually there wasn't. It was an odd dialogue. Go ahead, Mr. Weitzman.
ich

Mr. Weitzman: Okay. So at Page 143 of your...

Mr. Voth: Can I seek clarification as to page of what? Is Mr. Weitzman referring to his original report?
mM

Mr. Weitzman: 143 of the book, yes.

Mr. Voth: Okay. Thank you, Mr. Weitzman.

Mr. Weitzman: Sorry.

Judge Holmes: 714-P, 143. Go ahead, Mr. Weitzman.


a

Q. Okay. You there?


Te

A. I'm just reading it on the screen now.

Q. No problem. I'm going to ask you particularly about the second paragraph after the chart.
w.

A. Yes.

Q. Okay.
ww

A. Excuse me.
om
Q. So that paragraph reads, "From the different factors considered, the expected publicity rights income
can be calculated and then discounted back to the valuation date, July 1st, 2004, by applying the
selected discount rate of 14.7 percent," correct?

n.c
A. Yes.

Q. And how did you arrive at that percentage?

A. I don't recall.

so
Q. Do you remember what discount rate you used in doing the valuation for Michael Jackson?

A. Let's go to the right page. I think it's about Page 50... let me look in the index, and let's get us to the

ck
right page.

Mr. Weitzman: What page is that on?

lJa
Mr. Toscher: 52.

Mr. Weitzman: Five-two? ae


Mr. Toscher: Five-two.

Mr. Weitzman: Thank you.


ich
A. And the discount rate used here is 14 percent, I believe. And it's summarized in Exhibit 7, I believe.

Mr. Weitzman:

A. Probably it's better if we go to the exhibit. It's a little more clarity there for you. So I recommend we
mM

put Exhibit 7 on the screen. Exhibit 6 is very long. There you have it.

Q. So this is Exhibit 7, and it shows that the discount you used was 11 percent, correct?

A. The discount rate is 11. The cost equity is 14.

Q. Okay. So why 11 here and 14.7 for Mr. Brando?


a

A. Well, I don't recall. First of all, they're five years apart. Mr. Brando's an individual living a rather
Te

hand-to-mouth existence on an island in the South Pacific, and I cannot tell you what the cost of capital
is on... in the South Pacific.

Q. Okay. Can I ask you a question?


w.

A. You asked me questions all morning. Why are you asking my permission now?

Q. Well...
ww

Judge Holmes: Well, he's being courteous.


om
Q. ...kind of a gentlemanly thing to do.

A. Thank you.

n.c
Q. My pleasure.

Judge Holmes: But do ask a question.

so
Q. Mr. Brando lived in a house off of Mulholland. Why did you say he lived in the South Pacific?

A. I don't recall where he lived. It was 5, now 10 years ago. But he was living in the South Pacific, and
that's where he was getting his equity, I assume. You have to tell me, Mr. Weitzman. You knew him.

ck
Q. Yeah. House off of Mulholland in Los Angeles.

A. Well that was his cost of equity, I assume.

lJa
Q. Is that your explanation?

A. No. It's not my explanation because I don't recall.


ae
Q. So... okay. That's a more acceptable answer. 11 percent versus the 14.7 percent, you don't remember
why the difference. Is that correct?
ich
A. Yes.

Q. Okay. Now... okay. The film number... that is, the number that you attributed to the value as part of
the $161 million... the film number was how much?
mM

A. I believe it's 38.8. Let me...

Q. Okay.

A. ...get to my...

Q. And this is obviously a film that would be made without Mr. Jackson, correct?
a

A. Yes. Mr. Jackson is dead at this point.


Te

Q. So you have advised your client to spend $161 million, and you have told them, look, we're... I have
all these ways I think we can make money. Trust me. I assume what you say to your client. And part of
that 161 will make $38 million off of film. Is that basically what you're saying?
w.

A. That is the projection.

Q. That's the projection. But I mean, aren't you suggesting to the client that for $161 million investment
ww

in name and likeness, somehow we're going to end up making hopefully $38 million or more off some
type of Michael Jackson-related film? Would that be accurate?
om
A. Yeah.

Mr. Anson: By the way, Your Honor, I need to make a comment. On Page 73... the footnotes on Page

n.c
73 cite to Document 134. That's a typo. That should be Document 122. You see Footnotes 392 - -

Judge Holmes: Oh, is this for an exhibit?

Mr. Anson: Just on Page 73 at the bottom of the page... 73 of my report... we're talking about footnotes

so
392, 393, 394, and 395. It shows Document 134.

Judge Holmes: Uh-huh.

ck
Mr. Anson: That actually should be Document 122.

Judge Holmes: I'll note that for the record.

lJa
Mr. Anson: Thank you, sir.

A. I'm sorry for interrupting you, Mr. Weitzman.


ae
Q. No, no, no. I'm all cool, as they say. Now, as you tell... by the way, you were advising this rational
investor at or about the time Michael Jackson passed away, correct?

A. Shortly thereafter.
ich

Q. Okay. But by shortly thereafter, tell me what you mean by shortly thereafter. What's the time period?

A. I'm not sure what the definition by law is, but...


mM

Q. I just want...

A. ...excuse me...

Q. ...your idea.

A. Presumably, I'm doing this valuation the morning after his death, basically.
a

Q. And so the morning after his death, you would have advised... because I understand that's how the
Te

process works in theory... you advise your rational investor that you estimate... because I can't use the
word guess... so you estimate that he'll make $38 million off some type of film as part of his name and
likeness investment, correct?
w.

A. Yes.

Q. And would you tell your rational investor - - or what would you tell your rational investor when he
says to you, really? What kind of film will that be? What would you tell him?
ww

A. Well, first I would assume that he would have done... she would have done her homework as did we
om
and would have known, of course, of the existence of the rehearsal film footage, knowing of the deal
between AEG and Michael Jackson...

Q. So can I just stop you there, please, sir? First of all, this is somebody who would have learned this in

n.c
24 hours between the time Michael Jackson died and he or she got to you for this advice?

A. Under these strange valuation rules of the Tax Court, I'm to assume that I'm... I have... that we have
all of this knowledge.

so
Q. Okay. And so are you implying that there was some agreement between AEG and Michael Jackson
that mentioned video footage and that there was rehearsal footage that was being filmed?

A. I'm implying that very thing. That...

ck
Q. Okay.

A. ...AEG was committed to filming the rehearsals from the beginning of planning for the tour right up

lJa
through the first performance, I believe.

Q. And would you also tell your rational investor that, by the way, AEG owns this copyright to this
footage, so we have to go deal with them and see if we can get it?

A. That's not true.


ae
Q. Well, how would you get the footage?
ich

A. The copyright was owned by the artist, and secured... AEG had security rights in it until such time as
their advance is paid off. But the artist has the ownership and copyright is my understanding.

Q. You are aware, are you not, that AEG filed the copyright registrations on the footage a day or two
mM

after Mr. Jackson died?

A. I can file a copyright in the footage. You can file a copyright in the footage. Your... my mother could
file a copyright in the footage. I mean...

Q. She has a good lawyer, your mother, right?


a

A. No. If she doesn't, I'll have her call you. But anyone can file a copyright in a piece of art. It's really
not a meaningful step.
Te

Q. I see. And the fact that AEG filed the copyrights and took the position it was the owner of the
footage, is that something you would tell your rational investor along that, I guess, your advice that...
would be... let me see if I can paraphrase it... but don't worry about, it's not very meaningful, and we'll
w.

get good lawyers and get the footage for you?

A. I believe the terms of the contract call for the footage to belong to the artist. That's Michael Jackson.
ww

Q. Well, let's just... let's gloss over the people who said they owned it and who negotiated for part
ownership in it and go to Michael Jackson. You negotiate with the estate for use of the footage?
om
A. Well, you're acquiring these rights, name and likeness rights. And so you would, with the estate,
hold a... I suppose a bidding session and take this footage to the major studios, much as Mr. Branca did.
Now...

n.c
Q. But what if we would... what if the estate didn't want to be in business with you? They got the
footage. They got the music. They got the masters. They got the composition. And John Branca says to
his lawyer, and then I say to you, you know what, we're... thank you, but we don't really need to be in
business with you. We're going to go do this with other studios. We don't want a share in any of this.

so
What would you all do?

A. Well, they could try that. They certainly could try that.

ck
Q. Might even be successful at it, huh?

A. Probably not.

lJa
Q. That's what lawsuits are all about.

Mr. Voth: Objection, Your Honor. ae


Judge Holmes: Ask a question, Mr. Weitzman. And the question should not be isn't that what law
schools are for.

Q. But there would be a chance that they would be successful and you wouldn't be successful under
ich
California Civil Code 3344.1(a)(2), correct?

A. Are you asking me to give you a probability assessment? Is that what you're asking me?

Q. I want... just want you to answer the question. You just give it your best shot.
mM

A. I would say that...

Mr. Voth: Your Honor, as long as this goes to his value conclusion, then that would be permissible. But
if it's...

Judge Holmes: Did you assume that those rights carried with... the rights of publicity carried with
a

them the ability to veto a film about Michael Jackson?


Te

Mr. Anson: Yes.

Mr. Weitzman: So just so I understand it, I want to try to paraphrase what I believe you are saying.
You believe if you own name and likeness only and I want to do... I being myself and my clients... want
w.

to do a film be it a biopic or something such as what's done in This Is It, we have to license from you
name and likeness rights to be able to do this film and show it in a theater?

A. If you want to have an enormously successful film around the world, you certainly do. If you want
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to have a second-rate film that grosses $20 million, be my guest. But if you want to gross $300-$400
million, you certainly want to do business with the owner of the name and likeness rights.
om
Q. Now you know... let me ask you a question. If the name was Britney Spears and not Michael
Jackson, would your feeling be the same?

n.c
A. I don't understand that. I... what are you asking me?

Q. Same facts except with... no, no, no. Same facts. You own the Britney Spears name and likeness and
I... you know, my clients and I own everything else, just like with Michael Jackson. Could you stop that
film from being made and shown?

so
A. Could I stop it?

Mr. Voth: Calls for a legal conclusion, but...

ck
Judge Holmes: He's asking if his analysis would be the same. So I'll let that one in.

A. Yeah. I assume so. I mean, that's pretty hypothetical.

lJa
Mr. Weitzman: Your Honor, if I could... I just want to show a clip of a trailer of a film.

Judge Holmes: What movie is it?

Mr. Weitzman: Britney Spears movie.


ae
Mr. Anson: Is it good?
ich

Judge Holmes: Who paid for a Britney Spears movie? Do you know, Mr. Weitzman?

Mr. Weitzman: Your Honor, it's a trailer for a Britney Spears movie.
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Judge Holmes: All right. It's Hollywood. Oh, Britney Ever After, of course.

Mr. Anson: Premiers in LMN. My, my.

Mr. Weitzman: So putting aside the potential box office or not of that film...

A. Yes. Let's do put that aside.


a

Q. ...just saying, do you believe, given the same hypothetical, except exchanging Michael's name for
Te

Britney Spears name, that is a film if you didn't want it shown for whatever reason, as the owner of the
name and likeness, you could prevent it from being shown.

A. I don't know. Based on that 20 seconds, I can't... I really can't answer that question.
w.

Q. Well, it certainly had Britney Spears name and likeness in there, didn't it?

Mr. Voth: Objection. Asked and answered. He said he couldn't based on the 20 second.
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Judge Holmes: No, hold on. Hold on. Overruled.


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A. Your Honor... or I'm sorry, Mr. Weitzman.

Q. Yeah. Don't... let...

n.c
A. This is between you and I, isn't it?

Q. Got it.

so
A. Yeah. Mr. Weitzman, based on that 20 seconds, I can't answer that question. I don't know...

Judge Holmes: Oh, please don't make us watch the entire movie. I'm here for the King of Pop, not the
Joker of Pop.

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Ms. Cohen: I take offense to that. Sorry, I represent the conservator.

Judge Holmes: Oh.

lJa
Mr. Anson: Oh, my gosh.

A. Hypothetically, you...

Q. Hypothetically.
ae
A. Hypothetically, you can make a movie without the name and likeness, hypothetically.
ich

Q. So hypothetically, you'd be making a Michael Jackson movie without the name Michael.

A. Yes. But again, my answer is if you want to gross 20 million, that's one thing. If you want to gross
400 million, you need the name and likeness.
mM

Q. Well, are you saying that because if This Is It was to be made without licensing name and likeness
from Mr. Anson and his rational investor, the movie couldn't be promoted using Michael Jackson's
name to describe the product?

A. Well, I'm saying, if you want to promote this movie and get maximum box office around the world,
you're going to want to use all of the name and likeness assets that are available to you. And if you're a
a

rational business person, you're going to want to do a deal.


Te

Q. So if my choice is I don't want to use you, I'm just left to my own devices, you don't think I'll be as
successful as if the person in on the name and likeness was involved. Is that what you're saying?

A. Yes. You know that's true.


w.

Q. Well, I didn't know it.

Judge Holmes: So it is a marginal impact now, rather than an absolute impact. No veto, but just its
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ammunition in and margin overturn.


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Mr. Weitzman: I think that's what it says. But that...

Mr. Anson: And so...

n.c
Judge Holmes: As a matter of fact, a third person on it.

Mr. Anson: Right. And that's why, Your Honor, we have in here only 38 million, as opposed to the
substantially more money that the state actually took in from the film.

so
Mr. Weitzman: So explain to me how, if I put together Branca and myself and the many others that
worked on the This Is It show... film, put that film together as is... or as was and is, and we go out there,
and we don't have you, Mr. Anson, your client, Michael Jackson's, name and likeness, why would it not
be as successful if it's footage of Michael Jackson rehearsing This Is It, and it's got the use of his music,

ck
and includes some of his master recordings and interviews, dancers and people that participated in the
rehearsal, why would it not just do great?

Mr. Voth: Objection. Vague.

lJa
Judge Holmes: Sustained. What would be the mechanism by which the marginal return on a movie
would be made greater by the inclusion of name and likeness.
ae
Mr. Anson: Well, your margin return comes through through marketing and advertising. And one of
the biggest parts of a successful movie, as you take a careful look at the breakdown and costs, it is in
the advertising and promotion.
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Judge Holmes: So is it your understanding of the rules in this area for valuing name and likeness, that
a movie which features a musical performer and has releases from master recordings and song rights,
but not name and likeness, would not be able to be advertised.

Mr. Anson: Would not be able to use the Michael Jackson trademarks, signature and et cetera that
mM

would make it that much more successful at the box office.

Judge Holmes: So it would be able to use outtakes, like we saw with the movie about Ms. Spears.

Mr. Anson: It would.

Judge Holmes: The pop star of the millenium.


a

Mr. Anson: It would.


Te

Judge Holmes: Pretty sure ??? knows that. But not her actual name and likeness, other than an actor.

Mr. Anson: That's right. And that is why, again, in our attribution of value, there's only 38 million and
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not the much larger amount the estate has earned overall from the This Is It movie.

Judge Holmes: You understand, Mr. Weitzman, what the position of these... of the respondent is on
this point now.
ww

Mr. Weitzman: I think I do. I may try to get a little clearer on it, but not at this moment. So I want to
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kind of fast forward and 38 million, and then... I want to take a break because I want to shorten this
down.

Judge Holmes: If we took a break, could it be more concise. Could we wrap up more quickly?

n.c
Mr. Weitzman: No. I can make that representation. But I want to ask one serious question.

Q. So the $38 million, you just told me that was a reduced number of what you would expect to make
from the film, where do you get that $38 million?

so
A. Well, let's turn to the actual exhibit, if we can. And...

Q. Talking about Page 70-something.

ck
A. I'm at Page 72. And we can go to a summary. I'm trying to debate whether to take you to the one
summary exhibit where all this is laid out for you.

lJa
Q. Well, you just... the easiest you can make it for me is the best.

A. Well, I think, perhaps Page 79, because this will illustrate a couple things for you.
ae
Q. Well, this just looks like a modified statement.

A. It is. And what this tells you is that all we're attributing to name and likeness is a small licensing fee
and part of the producer's revenue.
ich

Q. So where you say "small licensing fee," where is the small licensing fee?

A. We go to the very bottom.


mM

Q. Mm-hmm.

A. But before we get there, I have to keep you at the top of this. And if we go down to the eighth line,
where we see advertising, costs and overhead, you see those total nearly $60 million... $54,780,000,
plus $5,478,000, that is where the use of name and likeness comes into play. That, plus the video
marketing, costs, and then in the foreign marketing costs. So you're spending about $70 million here in
marketing. That's when name and likeness comes into play heavily in promoting a film like this.
a

Q. Why would we need name and likeness to promote this film?


Te

A. Well, if you want to be able to use, you know, the iconic Michael Jackson trademarks, and...

Q. I'm just... but how about we agree I don't need any trademarks. What I need is some of the film from
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the movie using the trailer, like Michael Jackson. I could do that, couldn't I?

A. You could not do just that, no.


ww

Q. Wait, wait. I just want to... I own the footage. We make the movie. We want to show in the
advertisement part of the film. We've used Michael Jackson's name. But you're taking the position we
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can't let anybody know what's in the film. Is that your position?

A. No. I didn't say that.

n.c
Q. But then can't I show little clips of the film?

A. As long as you show nothing but clips, you're fine.

Q. Okay. Wouldn't the clips include Michael Jackson's This Is It rehearsal tour?

so
A. You know, Mr. Weitzman, we could sit here and have a debate on advertising.

Q. We are.

ck
A. I'm not trying... I'm not... I guess we are.

Q. Okay.

lJa
A. I guess we are.

Judge Holmes: But answer the question.


ae
A. The... my answer to you is yes, you could attempt to do that, but you won't maximize box office.

Q. Okay. But that is a disagreement we have, correct?


ich

Mr. Voth: Objection, Your Honor.

Mr. Weitzman: I want to get...


mM

Judge Holmes: Sustained. Again from the stretch.

Mr. Weitzman: I want to get down...

Judge Holmes: From the stretch. From the stretch.

Q. I want to get down to the questions I asked, which are the licensing fee for a name and likeness.
a

A. Right. Right. I'm just... we're at Page...


Te

Q. Oh, Page 79.

A. Page 79. And you had it just a minute ago. You had the right page up there. So at the very bottom,
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you see three numbers. So we've assumed a relatively modest licensing fee for name and likeness of
$10 million. Typically, in a film like this, the total licensing fee will be in the range of... and there's
comparables in this report you can look at... the range of licensing fee will be... licensing fees will be in
the range of $40 million to... and up... 60's... at 60 million. So we've allocated 10 million as a licensing
ww

fee for name and likeness, and then the net profit to producer... this is after other producers' fees have
been taken out... net profit to producer of 143,783,000. Twenty-five percent of that is 35,945,000. And
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that takes it down to 45,945,000.

Q. So where it says total estate compensation 45 million...

n.c
A. Right. Then you have to turn now to the next page...

Q. Oh.

A. ...to get to a net present value.

so
Q. And that's present value for the estate.

A. For those two numbers.

ck
Q. But no, but is it for the estate, or if for your...

A. This is for... this is for the...

lJa
Q. ...for your rational investor?

A. For the rational investor's name and likeness interest.

Q. But that's not the estate though, correct?


ae
A. That's what I just said. It's for the name and likeness. So if you'll turn the page with me. There you
ich
go, Page 80, Figure 50. You'll see the two amounts, the licensing fee paid at the commencement of the
project sometime in the middle of 2010, and then the payment of the producer's... one for the producer's
profit, but assume it's a lump sum, paid at 2011 with a net present value. The addition of those two
together gives you the number of 38,101,000.
mM

Q. So who pays you the $10 million?

A. The producers of the film.

Q. Not the estate of Michael Jackson.

A. No, unless they choose to do the producer - - the studio...


a

Q. Okay. Studio.
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A. ...will give the...

Q. The studio is going to pay you 10 million for name and likeness for a film that they don't have to
w.

pay you, but you think it would be in their best interest to pay you because it would achieve a better
marketing opportunity, and therefore, a higher growth.

Mr. Voth: Objection. Argumentative and vague.


ww

Judge Holmes: It's a summary question.


om
Mr. Weitzman: That was as pleasant as I could have asked.

Mr. Anson: Yes.

n.c
Q. Okay. And then the 35 million, that's a back end?

A. Yes.

so
Q. And what is that... what is the back end for?

A. That is a one quarter of the producer's profits. The balance of the licensing fee that's...

ck
Q. I'm sorry, 25 percent.

A. Of the producer's profits. The balance would be going to the estate.

lJa
Q. Well, does this assume the estate is the producer?

A. It assumes that these are net producers profits, and I assume the estate would be the producer. This
can be anyone that you wish, Mr. Weitzman.
ae
Q. I rather it be me if I could do the movie the way I wanted it.

Mr. Voth: Objection, Your Honor.


ich

Mr. Weitzman: So...

Judge Holmes: Sustained.


mM

Mr. Weitzman: So...

Judge Holmes: The question is not dreams, Mr. Weitzman.

Mr. Weitzman: The 25 percent is what you believe someone would pay the person who owns the
name and likeness as a share of the adjusted gross for the picture.
a

A. Yes.
Te

Mr. Weitzman: I propose a lunch break for anyone that wants one, which would be me for sure.

Judge Holmes: Very well.


w.

Mr. Weitzman: Thank you, Your Honor.

Judge Holmes: How much more time do you think this interrogation will last?
ww

Mr. Weitzman: Well, it... gives us until 2:00. I'll be done before 3:00. Oh wait.
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Mr. Anson: How many more days is this trial going?

Judge Holmes: No. It's...

n.c
Mr. Weitzman: I want to... can I take a witness out of order when we get back? You have to leave,
right?

Mr. Anson: Your Honor, is this trial ending today?

so
Judge Holmes: Oh, it certainly is. The question is when today.

Mr. Weitzman: So and, Your Honor, one other housecleaning thing... housekeeping, gee, not
housecleaning, housekeeping. I want to inquire through the Court and with counsel about the

ck
stipulation we discussed regarding Daniel Lamarre. There's a three hour difference, and you need to tell
me whether to...

Mr. Toscher: We'll give him the stipulation. We have a draft. I don't think we gave it to him during the

lJa
trial.

Mr. Weitzman: Because... sorry. ae


Mr. Toscher: Because...

Judge Holmes: Well...


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Mr. Toscher: Is it already over there?

Mr. Weitzman: No. I have not received what ???.

Mr. Toscher: You guys will look at it at lunch.


mM

Judge Holmes: Okay.

Mr. Weitzman: Never mind.

Judge Holmes: We'll be back at 1:45.


a

Mr. Weitzman: We'll be back.


Te

The Clerk: All rise.

(Lunch)
w.

The Clerk: Court is in session.

Judge Holmes: Please be seated. Mr. Weitzman, wrap up.


ww

Mr. Weitzman: Your Honor, is the wrap up the easy part?


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Judge Holmes: Yes.

Mr. Weitzman: Because following timing issues, Daniel Lamarre is available in Montreal. I don't
know if you have the ability to hook him up by phone. It's 10 after 2:00.

n.c
Judge Holmes: You can't stipulate to whether...

Mr. Weitzman: But we just talk to...

so
Judge Holmes: Mm-hmm.

Mr. Weitzman: The stipulation, as I understand it, we couldn't agree on the width. I'm not sure why,
but I was involved.

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Judge Holmes: All right.

Mr. Weitzman: Give myself a little pass on that. Couldn't agree on the stipulation. So an examination

lJa
will be three minutes...

Mr. Voth: Your Honor... ae


Mr. Weitzman: ...unless there's cross- examination.

Mr. Voth: ...I clarify. Respondent stipulates the truth of the matter asserted in all of their questions and
answers that were submitted to Cirque du Soleil by respondent. And that's... that was what... if
ich
respondent had failed to do so, petitioner indicated that there would be a need to call Mr. Daniel
Lamarre. Respondent fails to see that need given that respondent is not only stipulating to the
authenticity, but also, to the truth of the matter asserted in the statements contained therein.

Mr. Toscher: Your Honor, let me address it because I have been sort of running in the go between. We
mM

proposed a stipulation. The government didn't want to agree with it. Then he proposed, okay, will you
agree to your underlying documents or most of them. No, we have hearsay. Then they reconsidered,
and yes. But it's not complete with the... I guess, Mr. Voth, and I'm not confusing ???, if they want to
agree to all the things that we want, at least yet. So...

Mr. Voth: Well, we were just given the...


a

Mr. Toscher: Well, not yet. I try... I appreciate that we gave it to them before lunch, but our...
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Judge Holmes: Can we just solve this by... with a phone call?

Mr. Toscher: Yes.


w.

Judge Holmes: Are you on board with that? Let's swear him in. It's a little bit unusual to do this. I don't
know what the Canadians will think, but maybe they won't learn about it.

Mr. Voth: I mean the issues the respondent has is number one, the MOR was not listed in their pretrial
ww

memo; two, if this constitutes as direct testimony; three, we can't cross-examine him in person; four, it's
still an encore statement. And all of this was conditioned on respondent not stipulating to the
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authenticity and the truth of the matter asserted and the questions and answers that respondent gave and
received from Cirque du Soleil. So respondent fails to see the need of...

Judge Holmes: Why can't you just take this stipul... Mr. Toscher.

n.c
Mr. Toscher: Yes.

Judge Holmes: Take their stipulation and run with it. This is...

so
Mr. Toscher: Okay.

Judge Holmes: Is it going to hurt your case?

ck
Mr. Toscher: I'm sorry, Your Honor, I was...

Judge Holmes: Take their stipulation and run with it. Is it going to hurt your case? What more do you
want?

lJa
Mr. Toscher: Okay. Are you guys agreeing to the stipulation now? Are you still not the first six
paragraphs. ae
Mr. Voth: The first six paragraphs, can you give us an... he just this to us... can you give us an
opportunity before the review just the first six paragraphs, which kind of summarize the content in the
questions and answers, and they... we... they might be taken out of context, but the bottom line is that
the questions and answers, which is what this is all about, are coming in for the truth of the matter
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asserted.

Mr. Weitzman: Can I just... I'm told these are verbatim...

Female: The answers.


mM

Mr. Weitzman: What is the answers that were received by the...

Male: Well, then can be in the document.

Mr. Voth: Okay. So then the document speaks for itself and it's repetitive, number one. And number
two, we haven't had a chance to verify that they are indeed verbatim from the document. So we are...
a

respondent isn't...
Te

Judge Holmes: Okay. Here's what I... not you, Mr. Weitzman... Mr. Voth, I hope, but one person from
each side. Go and do the proofreading. Now, Mr. Weitzman.

Mr. Weitzman: What we wanted to do is the way they submitted it, the email was sent by Mr. Voth
w.

with the questions. Cirque, in a separate document, but not including the questions, sent it back. Our
stipulation is we will reproduce questions sent, answers given, so... with the originals behind it. So the
reader, which should be Your Honor, could read actually question, answer, question, answer, and not go
questions, answer.
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Judge Holmes: I don't care. If that's the way they want it, then it's the same word.
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Mr. Weitzman: Well then...

Judge Holmes: I don't care.

n.c
Mr. Weitzman: ...you're much nicer than I am.

Judge Holmes: Ms. Wood might care, but I can order her to bounce from document to document when
the time comes. Consider yourself ordered, Ms. Wood.

so
Ms. Cohen: And they're going to be... they're going to stipulate that he comes in for the truth of the
matter as stated.

ck
Mr. Voth: Yes.

Judge Holmes: There we go.

lJa
Mr. Voth: If they come in for the truth of the matter as stated... The COURT: We have a deal. You're a
peacemaker, Mr. Weitzman.

Mr. Weitzman: I am.

Mr. Toscher: Okay. Can we just...


ae
Judge Holmes: Go... two people, one from each side, go out in the hallway and do this while Mr. Voth
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and Mr. Weitzman continue with the examination of Mr. Anson. I think Ms. Cohen has just
volunteered.

Ms. Cohen: I can't leave Mr. Weitzman alone, so.


mM

Judge Holmes: We're getting what you want, I think, Mr. Camp, right?

Mr. Camp: I'm not sure.

Mr. Toscher: Yeah. It was a little... it's unclear.

Judge Holmes: Okay.


a

Mr. Toscher: Here's what we're going to do.


Te

Judge Holmes: Do you know what you want, Mr. Camp, on this?

Mr. Camp: Well, I believe it's what they want. It is one document which contains questions, and
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another document that contains answers...

Judge Holmes: I don't care if it's...


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Mr. Camp: ...and we were happy providing them...


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Mr. Toscher: Your Honor. Your Honor, I...

Mr. Camp: ...in an exhibit.

n.c
Judge Holmes: Yes, Mr. Toscher.

Mr. Toscher: Just... okay I can clarify...

Judge Holmes: Okay. I'll recognize Mr. Toscher of it.

so
Mr. Toscher: Okay. Can I ask the clerk to mark... I've given you two sets and marked them...

Judge Holmes: Oh, there we go.

ck
Mr. Toscher: ...as three out of order. Whatever the numbers are one, two, and three.

Mr. Voth: I thought... now, this is a misunderstanding.

lJa
Judge Holmes: Wait. Yes, you can have somebody mark them.

Judge Holmes: Mr. Toscher. Mr. Toscher. Stand in front of Ms. Wood, and she will mark them into
evidence.
ae
Mr. Toscher: ??? my email.
ich
Judge Holmes: Then she will...

Mr. Toscher: I'm sorry, I thought this was...

Judge Holmes: ...give them a number.


mM

Mr. Toscher: There's no disagreement you understand.

Judge Holmes: You are ahead of the game, Ms. Wood.

Judge Holmes: All right. What is the number of this, Ms. Wood.
a

The Clerk: Exhibit 715-P is marked for identification. It is the email from Todd Sorrell. Exhibit 716-P
is marked for identification. It is the memo to the Department of the Treasury Internal Revenue Service.
Te

And Exhibit 717-P is marked for identification. It is the questions for Cirque du 2923 Soleil.

Mr. Toscher: Okay. Your Honor, at this point, with the agreement of respondent, we move all three of
the four foregoing exhibits into evidence without objection.
w.

Mr. Voth: Indeed.

Judge Holmes: Oh, we have a deal.


ww

Mr. Toscher: Just so we're clear with no - -


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Judge Holmes: No, no, no. There...

Mr. Toscher: ...objection.

n.c
Judge Holmes: ...is no objection. They're in.

Mr. Toscher: Okay.

so
Judge Holmes: Ms. Wood. Number my personal copies and put a little c on them when the time
comes. We are now back to you, Mr. Weitzman. We have solved the problem and reduced the long-
distant charges for the Court.

ck
Mr. Weitzman: So there's the following schedule: Mr. Anson, Mr. Branca, which I'd love to take out of
order, but I don't think you all are going to agree with that. Okay, I'm just asking.
And then there's one witness out in the hallway, Mr. Wallet is here.

lJa
Judge Holmes: Okay.

Mr. Weitzman: And then Mr. Perlmutter. ae


Judge Holmes: There you go.

Mr. Weitzman: Okay. Could we show the Cirque du Soleil...


ich
Judge Holmes: Oh, there's more objection about that.

Ms. Herbert: Your Honor, may I be heard regarding Mr. Perlmutter? May I meet him briefly?

Judge Holmes: When the time comes.


mM

Ms. Herbert: Okay.

Judge Holmes: I take it you'll move to not let him testify...

Ms. Herbert: That's correct.


a

Judge Holmes: ...when the time comes. Mr. Weitzman may be selling me a puff ticket. Oh no, a woof
ticket, a woof ticket.
Te

Mr. Weitzman: You know, I'm... that's probably a younger generation than me.

Judge Holmes: Oh, okay.


w.

Mr. Weitzman: I don't know what you mean. Your generation.

Judge Holmes: Thank you.


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Mr. Weitzman: Could guess. So Mr.... have these marked already?


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Male: Yes.

Mr. Weitzman: Mr. Anson, these are questions that were sent by your lawyers to Cirque.

n.c
...You okay?

Male: I'm okay.

so
Mr. Weitzman: All right. These were... Can you put these documents side by side.

Q. These are questions sent by your lawyers to Cirque du Soleil. And if you scroll down to...

ck
Mr. Voth: Just for the record, we're not Mr. Anson's lawyers.

Judge Holmes: No. That was... they're the lawyers for the Commissioner of Internal Revenue.

lJa
Mr. Weitzman: But Mr. Anson refers to them as his lawyer.

Judge Holmes: Well... ae


Mr. Weitzman: It's just not literal.

Judge Holmes: That's right.


ich
Mr. Weitzman: Okay.

Judge Holmes: Your lawyer.

Mr. Anson: They're the taxpayers lawyers, I think.


mM

Mr. Weitzman: So you see where it says MJ-themed Cirque show?

A. Yes.

Q. And there's three questions that are on this screen, which are... pardon me... "2. Did Daniel Lamarre
ever consider doing an MJ-themed Cirque show while Michael Jackson was still alive." And then
a

there's three sub questions. "a. Why or why not? b. What did Daniel Lamarre envision? c. Is there any
written documentation of this consideration such as emails, meeting notes, et cetera."
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Mr. Weitzman: Do we have answers to those questions? Does our technology allow them to be...

Mr. Weitzman: You can't put the side to side?


w.

Male: Oh yeah.

Mr. Weitzman: I mean I know the Judge doesn't get confused, but I do.
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Q. We'll be able to do this. So the questions to a, b and c., and I'll want to read you the responses. I'll
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read the questions just for the record, obviously, not for you, Mr. Anson, as well.
"QUESTION: ...again, number two... did Daniel Lamarre ever consider doing an MJ-themed Cirque
show while Michael Jackson was alive?"

n.c
"ANSWER: No."

"QUESTION: Why or why not?"

"ANSWER: While they are presenting shows on tour, rock stars are not usually interested in being

so
associated with a Cirque show based on their music catalogue as they see it as a competitive show."

"3. Is there any written documentation of this consideration, such as emails, meeting notes?"

ck
"ANSWER: No."

So you have the questions asked of Cirque and the answers as given by Daniel Lamarre, who is the
CEO of Cirque. You've read the answer... questions and answers, and you understand that, correct?

lJa
A. Yes.

Mr. Weitzman: Can we go to number three please, Josh.


ae
Q. Okay. So the number three section, first question is:

"Did any Cirque du Soleil founder or executive consider doing an MJ-themed Cirque show while
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Michael Jackson was still alive?"

"ANSWER: No."

"QUESTION: Why or why not?"


mM

"ANSWER: See 2(a)."

And 2(a), if you might recall, was the question that dealt with if the artist is alive, they wouldn't want to
do it. You recall that response, don't you?

A. Yes.
a

Q. Okay. And question three. Actually, there's only three questions. Question three is:
Te

"Is there any written documentation of this consideration, such as emails, meeting notes, et cetera?"
And the answer is "no". So you've read both the questions contained in number three and the answers,
and you feel you understand the questions and the answers.
w.

A. Yes.

Q. Okay. We go to number four. "QUESTION: Describe any talks at Cirque du Soleil about doing an
MJ-themed Cirque show while Michael Jackson was still alive."
ww

"ANSWER: None."
om
You've read that question and answer and understand that. Is that correct, sir?

A. Yes.

n.c
Mr. Weitzman: And is there another one? There you go. Number five. Can you put the other ones
together at the break.

Q. "Number five: "Name all people that approach Cirque about doing an MJ-themed show while

so
Michael Jackson was still alive by Jack Wishna." Read those and understand that, correct?

A. Yes.

ck
Q. Okay. A. "Six: "Did Cirque du Soleil ever approach Michael Jackson about doing an MJ-themed
show while Michael Jackson was still alive? And then if so, provide the details such as how they
approached Michael and whether there is any written correspondence. And the answer is, "Yes."

lJa
A. No, the answer is no.

Q. I'm sorry, the answer is no. Sorry. The answer is... thank you... the answer is no. "Number seven:
Was Cirque du Soleil aware of any other entities contemplating making MJ-themed shows, could be
ae
circus related musical theater Michael Jackson tribute at or around the time of Michael Jackson's
death?" And the answer is, "Yes. Franco Dragone and AEG." And number nine... eight, sorry. "Eight:
Describe Jack Wishna's, or his agent's, presentation about doing an MJ-themed show with Cirque du
Soleil executive in early-2009. And the answer is: "A. telephone conversation took place between Jack
ich
Wishna and Daniel Lamarre. No presentation was made by Jack Wishna to Cirque's executives. Jack
Wishna claimed having the rights to do a show based on MJ's music, but never confirmed it in writing
as requested by Cirque. No proposal was made by Jack Wishna." "Why did the proposal not
materialize," was the question. The answer was, "There was no proposal as he could not confirm
having the necessary rights." And then the last question: "8(b). Is there any written documentation of
mM

these talks, such as emails, meeting notes, et cetera." "ANSWER: No." And I think that completes the
stipulation, doesn't it? So you've been able to read the questions and the answers and understand them
as we presented them today, correct?

A. Yes.

Q. Were you given this statement when you were in the process of writing either your original report,
a

the rebuttal report, or the supplemental report?


Te

A. I don't believe so. I don't recall receiving this.

Q. Were you ever told about the Internal Revenue Service making inquiry and receiving the response
you reviewed today regarding Cirque du Soleil and Michael Jackson?
w.

A. I just don't recall, Mr. Weitzman. I really don't.

Q. If you had seen or been told about that communication, would you have included in your report the
ww

sentence... I read it to you a couple times now - - that in February... pardon me... in February 2009,
Michael Jackson was engaged in negotiations to develop one or more Cirque du Soleil shows?
om
A. Well, what I did have was the information Jack Wishna overturned to Cirque du Soleil. So the
answer is, yes.

n.c
Q. I'm sorry. Because of the emails from Jack Wishna, you would have ignored the responses from
Cirque du Soleil that there was no proposal, there were no negotiations about any Michael Jackson
show, and you would have written this lie in your reports that would have read, "In February 2009,
Michael Jackson was engaged in negotiations to develop one or more Cirque du Soleil shows." Is that
your testimony?

so
Mr. Voth: Objection. Argumentative.

Judge Holmes: Sustained.

ck
Mr. Weitzman: What the argument?

Judge Holmes: You said he was... you said he was lying, Mr. Weitzman.

lJa
Mr. Weitzman: No. I said it was a lie, not...

Judge Holmes: Oh.

Mr. Weitzman: ...he was lying.


ae
Judge Holmes: Oh, okay.
ich

Mr. Weitzman: And that's how I meant it.

Judge Holmes: Okay. You didn't phrase it that way, Mr. Weitzman, I don't think. But we can clarify
that. Do you... would change your report based on what you just heard, Mr. Anson?
mM

Mr. Anson: No, because this refers to two things. There's two parts to this question, I think. I think he
asked me two questions, but actually, three. One, "Do I recall seeing this?" No. Two, "Would I have
changed our valuation?" No, because we talk about a post-death show. I think the other question you
asked me, "Do I recall seeing this?" I think you asked me that before, and I don't recall seeing it.

Judge Holmes: But you would no longer say that Michael Jackson was in negotiations before he died,
a

would you?
Te

Mr. Anson: No, that's correct. I would not...

Judge Holmes: Okay.


w.

Mr. Anson: ...say that. If I... if... I don't recall seeing this. If I had seen this, I would not make that
statement.

Judge Holmes: It's an ornament. A small trifle that wouldn't change the bottom line.
ww

Mr. Anson: You're right. Your Honor, if I had seen this, I would not have made that statement.
om
Mr. Weitzman: So you're better at getting an answer to my question than I do, but I'll accept his
answer.

n.c
Mr. Anson: Which... I'm sorry, Mr. Weitzman, which question did I not answer?

Judge Holmes: Just go to your next question, Mr. Weitzman.

Mr. Weitzman: I am. I'm on my way to my next question.

so
Q. You believe that Michael Jackson, at or about the time he died, was... sorry... do you believe the
time Michael Jackson died he had begun his comeback?

ck
A. Yes.

Q. And at the time he died, there were no live performance. Is that correct? He had gigs and no live
performance?

lJa
A. No live? Did you say live?

Q. Live, L-I-V-E.

A. That's correct.
ae
Q. Okay. And he had no merchandise deals or endorsements, correct?
ich

A. Had nothing been signed yet, that's correct.

Q. Okay. And so on the date that Michael died... on the date that Michael died, he had sold a number of
tickets for people to come watch him perform at the 02 arena, correct?
mM

A. Yes. I believe the number... one number quota was 860,000 and another is 750,000.

Q. And did you consider that event Michael Jackson's comeback?

A. Yes.
a

Q. And were there other events that you considered Michael Jackson's comeback, something that
would cause you to say he had already come back before he died?
Te

A. Other events that had taken place already? Not... no, not yet.

Q. Okay. So the only event, as I understand it, that caused you to feel compelled to say that Michael
w.

Jackson had, in fact, made his comeback, were the sales of tickets to a concert that never happened,
correct?

A. He was making his comeback. He had not yet made the comeback.
ww

Q. Okay. So if I... I'll use a different phraseology, like something like the day that Michael died, he was
om
in the process of hoping to make a comeback. Would that be accurate?

A. That would be more accurate.

n.c
Q. Okay. And it does appear that people were... figuratively, not literally, yet.

A. Can't hear you.

Q. Were that people were figuratively lined up to see Michael Jackson make his comeback, correct?

so
A. Yes.

Q. But the comeback never happened, correct?

ck
A. He died. Correct. I'm sorry, correct.

Q. Okay. So the comeback never happened, and on the day he died, he died in a kindly... kind of highly

lJa
publicized way because it was determined that he died from having too much Propofol in his system,
which was the work of a doctor that he had employed to take care of him, correct?

A. That's essentially correct, yes.


ae
Q. Called Dr. Murray. You heard about Dr. Murray, right?

A. I have.
ich

Q. Dr. Murray was indicted for... even though someone like myself might it consider it murder, he was
indicted for manslaughter. Are you aware of that?

A. Yes.
mM

Q. And at the date Michael Jackson died, he's yet to make his comeback, and he had died in sad
circumstances, correct?

A. Very sad.

Q. And then you've heard about Mr. Branca and others and the team meeting and getting involved with
a

trying to come up with solutions and how the estate of Michael Jackson is going to be dealt with,
ranging from selling assets to looking for projects. You were here when that testimony took place, right,
Te

or most of it?

A. Yes.
w.

Q. And a few days later... that is the death was on June 25th... and a few days later there was a
memorial that took place... a memorial service that took place at Staples Center. Are you aware of that?

A. Yes.
ww

Q. I don't know if you watched it or not, but even if you didn't watch it, you were aware it was kind of
om
a grand event... my phrase, correct?

A. I think almost everyone was aware of that.

n.c
Q. Okay. And it was an event in which... it was televised to, I don't know, a million... you can probably
tell me... millions of people. How many people watched it?

A. It was... that's funny... even I... the memory even affects me.

so
Q. I sat there. I know how it feels.

A. It... it was a sad day.

ck
Q. Sad day.

A. It was. It was a sad day.

lJa
Q. And there were great stars and great people... I don't know if you recall... that appeared. Berry
Gordy gave that speech where he referred to Michael as the greatest entertainer of all time. And Magic
appeared... Magic Johnson, for those from the East Coast, and Kobe Bryant. And Lionel sang... Lionel
Richie, Mariah. You remember?

A. I do.
ae
Q. Smokey, Stevie Wonder. And then Paris gave her... I'm going to get choked up now... Paris gave her
ich
speech about Michael as one of the world's great dads.

A. Yeah.

Q. Would you consider that event kind of a Seminole event in beginning the rebranding?
mM

A. It was a global event.

Q. And then after that event, as you've heard the testimony, it appeared that the world opened up and
took a fresh look at Michael Jackson. Would that be fair?

A. Yes, sir.
a

Q. And after that time period, the estate began its negotiations with various studios to see if the
Te

rehearsal footage that we became aware of could be turned into some type of feature film, correct?

A. Yes.
w.

Q. And I don't know if you've seen the film.

A. I have.
ww

Q. But it turned out to be quite a spectacular piece. Is that correct?


om
A. I think so.

Q. So the... and I think you put it in one of your books. I don't remember which one. Or I wrote it
someplace that you... I read it someplace that you wrote where the executors and the management team,

n.c
after Michael passed away, basically created a program... these are my words, but I believe that's what
you were saying... of rebranding Michael Jackson.

A. I believe I wrote that somewhere.

so
Q. The production of that memorial service was quite extraordinary, wasn't it?

Mr. Voth: Objection. Asked and answered, Your Honor.

ck
Judge Holmes: Overruled.

A. Yes, it was.

lJa
Q. Do you know who produced it?

A. No. ae
Q. Would it surprise you if I told you AEG produced it?

A. No.
ich
Q. Would it surprise you if I told you the estate of Michael Jackson was not involved in producing it?

A. No.

Q. And it wouldn't surprise you either, would it, to know that that was not a money-making event.
mM

A. I hope not.

Q. Move to another topic. So on Cirque. I just want to go back to Cirque for a minute.

A. Right.
a

Q. I think it's Page 70 of your report. You referred me to Figure 36 at Page 70 of the report.
Te

Mr. Weitzman: If you could put that up, Josh.

A. I'm sorry, did you say Page 70.


w.

Q. Yes, sir.

Mr. Weitzman: Figure 36, make it a little bit bigger for me. I don't know if others can see it, but I can't.
Cool.
ww

Q. So this, sir, is your projected revenue streams on a Cirque shoe in which your rational investor was
om
going to recover some of his or her investments, correct?

A. Yes, sir.

n.c
Q. And would your rational investor have invested the valuation number that you gave in the show or
they would have paid for the name and likeness and contributed the name and likeness to the show.

A. I don't understand that question.

so
Q. Okay. I think the number on Cirque du Soleil was $18 million. Again, I don't have it memorized.

A. Cirque was about 18, that's correct.

ck
Q. So this stream, in effect, gives us an idea as to how your investor was going to recover, at least for
that portion of the projects you've itemized, his or her $18 million, correct?

A. Yes.

lJa
Q. Okay. And I know it says name and likeness royalty earnings, and that's because you own the name
and likeness, and you think you'd get around 3.5 percent of box office receipts. I'm assuming, by the
way, that's an adjusted box office. You're not talking first dollar. You're talking adjusted growth.

A. It's adjusted. It's adjusted.


ae
Q. All right. And then, next, it says, "Music Publishing Royalty Pool." What does that refer to?
ich

A. As we go down, the music publishing royalties are 5 percent on the show. Now, just above the
numbers we're looking at, you see Figure 35. We have to adjust that 5 percent to adjust for the allocated
compositions attributed to Michael Jackson.
mM

Q. Okay, wait. Time out.

A. Of course.

Q. You know you've got to move slow with me.

A. I don't think so.


a

Q. So to get from Figure 36 to Figure 35, why did you go from one to the other?
Te

A. Well, you're right, I shouldn't have left ahead of you. I was anticipating your next question. I
apologize.
w.

Q. So the Music Publishing Royalty Pool is for what? A. It goes to the composer, the writer.

Q. Okay. And those assets reside in some publishing company, either Mijac or some other publishing
company, correct?
ww

A. Right. They flow to the...


om
Q. Whoever the publishers are. A. Correct.

Q. That one was right.

n.c
A. Right.

Q. Okay. And you, the rational investor that's paying Mr. Anson whatever his percentage is of whatever
they make...

so
A. I work at a flat fee, Howard.

Q. Got it. Paying you the flat fee. They don't own publishing, right? I mean you guys don't own the

ck
publishing.

A. That's correct.

lJa
Q. So why would any of the publishing money here go to you?

A. As we said at the beginning of this testimony, which seems like days ago now, and also at the
beginning of the Mijac testimony, we made a point of saying we're not going to double count music
ae
income. And so this revenue, which is music revenue, we had to account for. And rather than split it in
half and put half into Mijac and half into name and likeness, we've accounted for all the Cirque du
Soleil intellectual property revenues together under Cirque du Soleil. So you are correct in saying that
this music revenue stream could be put into Mijac. But in order for... to more accurately project what a
ich
Cirque du Soleil project would generate, we've elected to put it all here, under name and likeness, so
that we don't double count and/or confuse the reader.

Q. Well, wouldn't the reader be more confused if they looked at a chart that showed they were getting
credited for money that they weren't entitled to get?
mM

A. That's why you and I are discussing it at this moment.

Q. Why would you take money that doesn't belong in this pot and put it in the pot except it caused it to
increase the valuation of Cirque du Soleil?

A. Sir, I can, if you wish, back out this amount and add it to Mijac. We felt this was a cleaner way to
a

present the Cirque du Soleil opportunity.


Te

Q. But it doesn't present the Cirque du Soleil opportunity accurately because it causes the valuation to
be much higher than it would be if you used the actual numbers, correct?

Mr. Voth: Objection. Argumentative.


w.

Judge Holmes: Overruled. Question is pending.

Mr. Weitzman: Yes. Thank you, Your Honor.


ww

Judge Holmes: There you go.


om
A. Mr. Weitzman, I'm not trying to play a game here. We just made the decision that it would convey
the Cirque du Soleil opportunity holistically all together, in other words, on one piece of paper. We can
back out the million 7, million 8 and million 88 et cetera, and transfer it over to Mijac. We believe that
this was simply a cleaner way to present Cirque du Soleil. It's a very mechanical computation.

n.c
Q. So this is a new methodology. I haven't heard about this. This is the holistic methodology.

A. No, sir. No, sir.

so
Q. So I appreciate your candor. The reality is this line, to create an accurate valuation of potential
Cirque du Soleil revenue streams, should be eliminated from the chart. Would that be accurate?

A. And added to Mijac.

ck
Q. That's fine. I'm not dealing Mijac. My responsibility is to ask you questions about name and
likeness. So you will agree with me, I'm assuming, that whatever the total Cirque du Soleil licensure
earnings trade below are, they should be reduced if you eliminated Mijac publishing royalty that your

lJa
rational investor would not be sharing, correct?

A. Right. We'd then add that to Mijac. ae


Q. But your rational investor doesn't own Mijac either, right?

A. Although, as we discussed earlier, it would be the ideal situation to own both the music rights and
the name and likeness rights.
ich

Q. But in our hypothetical that you and I have dealt with, the Anson investor doesn't own any of the
music rights, so if these music rights were in Mijac, that'd be good for the owner of Mijac, and more
accurate for the person that is trying to figure out what they might earn overall from Cirque du Soleil,
correct?
mM

A. Yes. In your hypothetical, you're absolutely right, sir.

Q. Okay. Now, in the Cirque show, I don't see where the masters are. Don't... isn't there some payment
for the masters as well? Is the masters?

A. We did not credit... excuse me, I'm sorry - - we did not credit to the masters here.
a

Q. What do you mean you didn't credit?


Te

A. We credited only to the composer because we're assuming there's a live band playing, so there would
not be any masters, sir.
w.

Q. So this Cirque show wouldn't be like a real live Cirque show. You wouldn't be using the masters. It
was to be more like licensing the rights to use the song without the recording of Michael Jackson not
having his voice and have someone else sing a song. Is that what you're saying?
ww

A. In the assumptions that we made here, we did not add additional music revenues for the masters to
the Cirque du Soleil evaluation. We only put in for music composition.
om
Q. So this is kind of like the MJ Live show? Are you just going to play Michael Jackson songs. No
disrespect, but no Michael Jackson voice, and people are going to kind of dance around a ??? on the
stage. Is that it?

n.c
A. I have not seen the MJ show. I can't...

Q. I just described it to you.

so
A. I can't say. We did not, in the Cirque du Soleil, include a master royalty.

Q. So this Cirque du Soleil show that you've suggested is one that doesn't have the masters, so you
have no Michael Jackson voice. It doesn't have a footage of Michael dancing. It doesn't have any video

ck
on the back of the screen. It's a Cirque du Soleil... which I'm not criticizing, it's a wonderful discipline...
show with great acrobatics, and a band behind playing some of the songs Michael Jackson recorded,
and I'm assuming probably a singer singing the vocals, right?

lJa
A. We're trying to convey in simple terms as possible without overstating what the probable income
would be, and are not attempting to produce a show here, but simply to state the sources of income as
simply as we can. ae
Q. And by the way, didn't you... I think one of the things you mention in trying so hard to get us into
the Cirque du Soleil arena, as if it was reason foreseeable, is it was... because of the Love show,
somebody should have known at the time Michael died, even though no one had any conversations
with Cirque, that they might be able to do a Cirque show kind of like the Love show, correct?
ich

A. The Love show is... I think... I've seen the Love show. It's a bit different than this show.

Q. Well, in that show for example, they have the masters don't they?
mM

A. I assume that... yes, I assume they do.

Q. Well, you've been to the show, haven't you?

A. Yeah.

Q. You here John, George, Paul, and Ringo, correct?


a

A. Yes. Yes. Yes.


Te

Q. And you hear the music from their records, correct?

A. Yes.
w.

Q. But that's not what you're suggesting for this show, correct?

A. We did not include a masters royalty.


ww

Q. Okay. Let's see here. So this is a show, that for the purposes of your report in these proceedings, you
om
kind of created on your own, correct?

A. Well, yes, we had to do that.

n.c
Q. No problem.

Mr. Weitzman: May I have a moment, Your Honor?

Judge Holmes: Of course.

so
Mr. Weitzman: Too late? Oh, we have to move some exhibits in. Your Honor, may we have a moment
to find out what exhibits we would like moved into evidence? I don't believe I have for...

ck
Ms. Strachan: Can we have this marked for identification?

Judge Holmes: I think he said you're done in sign language, Mr. Anson.

lJa
Male: Unless he... I just want him to identify what that is.

Ms. Strachan: Can we have this marked... can we have this man identify this?
ae
Judge Holmes: Wait, wait, wait. Mr. Weitzman, he's still your witness.

Mr. Weitzman: I thought we were done.


ich
Judge Holmes: Ms. Strachan disagrees.

Mr. Weitzman: I mean, I thought I was done. Well, different issue. I understand.

Judge Holmes: This isn't like WWE, there's no tag team.


mM

Mr. Weitzman: I've been asked to move 711- P, 713-P, 714-P into evidence. It's the CONSOUR
emails, 711, 713 is the Motown ad and 714 is the Marlon Brando case study.

Judge Holmes: They all come in.

Mr. Weitzman: And... sure.


a

Judge Holmes: She's giving lessons to Mr. Weitzman...


Te

Mr. Weitzman: She is.

Judge Holmes: ...on how to mark evidence, and get it admitted. That's...
w.

Mr. Toscher: Gently approach the clerk.

Mr. Weitzman: You know, I didn't have this class. Okay. I would like this webinar slide... the webinar
ww

slides or two next in order.


om
The Clerk: Exhibit 718-P is marked for identification.

Mr. Weitzman: I'd like to have the slides put before the witness and ask if he would identify them.

n.c
Mr. Anson: Yes, Your Honor, but I would like these marked as... I don't know how you mark this, but
this is something I would not want my competitors to have. This was done small group on a committee.

Mr. Weitzman: I'm willing to agree that whatever process the Court uses...

so
Judge Holmes: You have no objections to sealing?

Mr. Weitzman: ...they are sealed or confidential.

ck
Mr. Voth: In addition, Your Honor, this document was never exchanged with respondent, and also I'm
not sure what their purposes...

Judge Holmes: Are you attempting to, I don't know, use it for impeachment, or a follow-up line of

lJa
questions or what is the basis for admission of such a document?

Mr. Weitzman: I assume for impeachment purposes, and I say assume... Mr. Voth: There is an
assumption there...

Mr. Toscher: Yes, Your Honor. Mr. Voth: Okay.


ae
Mr. Weitzman: I just want...
ich

Mr. Toscher: Just for the record, it's the webinar he gave that we heard the announcement on. There's
no question of authenticity and it was...

Judge Holmes: What statements contained in therein are being used to impeach him?
mM

Mr. Toscher: There is quite a bit.

Judge Holmes: Mr. Weitzman, my ears are open only to you on this witness.

Mr. Weitzman: Nice.


a

Judge Holmes: What's been going on?


Te

Mr. Weitzman: Nice.

Judge Holmes: Do you have any reason to move for the admission?
w.

Mr. Weitzman: Can I talk to my lawyers, please?

Judge Holmes: I think you better.


ww

Mr. Toscher: Your Honor, I walked him into it, I'll...


om
Mr. Anson: Your Honor, may I speak to...

Judge Holmes: Not quite yet. I assume you had... Mr. Voth will represent... ask on your behalf that this
be sealed if you want it sealed. That's fine.

n.c
Mr. Weitzman: Your Honor, I understand now. I'm told that included in this... or in these sides or slides
are items that would be inconsistent with some of the methodology and some of the evaluation
approaches that are set out in his report. Things that...

so
Judge Holmes: Well, you have to identify those. And then on redirect, the IRS's lawyers may try to put
it in proper context.

Mr. Weitzman: I thought that's what briefing was for, but I'm out of my league here.

ck
Judge Holmes: Yes.

Mr. Weitzman: Obviously.

lJa
Judge Holmes: Which statements are you saying are prior inconsistent statements?

Mr. Weitzman: Listen, I'm clearly only the dummy here. If I can have Mr. Toscher whisper in my ear.
ae
Okay. We are referring to, which I... we are referring to Pages 18, 32, 33, and 40, of Exhibit 718. I even
asked you what the inconsistencies...

Mr. Voth: Can we get the page numbers again?


ich

Mr. Weitzman: Yes. Page 18 deals with Q.- Score data, which was, as the Court knows, mentioned in
the reports. Page 32, it's a tax affecting issue, and all I know about tax affecting is how you pronounce
the words, and the same with respect to 33, and I think with 40. Let me just see. Okay. And with 40, the
same thing, correct? Yeah, and with 40, all tax affecting issues.
mM

Mr. Voth: Your Honor, I don't think petitioner has laid a proper foundation for...

Judge Holmes: No, he has not yet.

Mr. Anson: Um...


a

Judge Holmes: No, nothing from you yet, Mr. Anson.


Te

Mr. Anson: I apologize, Your Honor.

Mr. Weitzman: Mr. Anson, did you put these, or have someone at your instructions, put these slides
together for your January 11, 2017 presentation before the licensing executives society?
w.

Mr. Anson: This is a co-authored...

Mr. Voth: Objection, as to characterization, there's another presenter as well.


ww

Mr. Anson: This is a co-authored...


om
Judge Holmes: No. He's asking.

Mr. Voth: Oh, I'm sorry.

n.c
A. This is a co-authorship, with a Mr. D'Souza.

Q. Did he put these together, or did you?

so
A. Well, we wrote to this presentation together. That's the best I can tell you. This... much of this is
proprietary, this is not...

Q. I'm fine with it being sealed, or however - -

ck
Judge Holmes: Again. Just answer the questions, we will be sealing.

Mr. Anson: Oh, I'm sorry.

lJa
Judge Holmes: He said he was a real co-author here. So go ahead, Mr. Weitzman.

Mr. Weitzman: Well, I'd like to... I asked that it be admitted and I would like to...
ae
Judge Holmes: You haven't shown a prior inconsistent statement yet.

Mr. Weitzman: You know what, I can't do that because I don't know where it is.
ich

Judge Holmes: Okay.

Mr. Weitzman: So if you don't want to admit it I'll...


mM

Judge Holmes: It's excluded.

Mr. Weitzman: I'll submit it.

Judge Holmes: You win.

Mr. Voth: May we have our afternoon break?


a

Mr. Toscher: Your Honor, may I be heard on the evidentiary issue? Judge Holmes: No. 2957
Te

Mr. Toscher: I know it's not my witness.

Judge Holmes: No. One lawyer, one witness.


w.

Mr. Toscher: Okay.

Mr. Voth: Ten, fifteen minutes to...


ww

Judge Holmes: To do redirect?


om
Mr. Voth: ...to do our redirect. There's a lot of...

The Clerk: Motion to seal those all?

n.c
Judge Holmes: Deal with that motion to seal, Mr. Voth. Fair enough. I intend to proceed directly to
rebuttal though after the direct case, so be prepared petitioners.

Mr. Toscher: Thank you, Your Honor.

so
The Clerk: All rise.

(Recess)

ck
REDIRECT EXAMINATION BY MR. VOTH:

Q. Elvis's fans are basically located in the USA. No tour show would have been proper. What do you

lJa
make about that, what's your opinion?

A. Again, Michael Jackson had a global audience. We may forget for a moment that close to 55 percent
or more of his albums were sold outside of this country.
ae
Q. All right let's move on to number 23, please. So 23 states in part, the question is, with respect to
Cirque du Soleil's operations. "QUESTION: What is your process and criteria for evaluating the
commercial opportunity for a Cirque du Soleil show, and where did Michael Jackson fit into that
ich
criteria?"

"ANSWER: The research agency, PROP , performed a study to evaluate how the Cirque and MJ brands
were compatible and if the MJ fans would attend to a Cirque show based on MJ's music."
Regarding how the brands were compatible, what does that say to you?
mM

A. I think that the answer says it all. Obviously they must have been compatible. Cirque was willing to
not only do the show, but finance it all in advance.

Q. Now during this trial, we've obviously heard, and no disagreement here, that Michael Jackson has
been described as the greatest entertainer of all time. Would you anticipate that... his unexpected death
to generate significant media coverage?
a

A. We don't need to anticipate, we saw it happen.


Te

Q. Now, with Mr. Weitzman, you delved into the Cirque du Soleil category and your analysis. Was
your analysis, with respect to Cirque du Soleil an example of bundling name and likeness and music?
w.

A. Yes.

Q. Why?
ww

A. Well, clearly the two go together. You need music and you need name and likeness to be able to do a
Cirque du Soleil show successfully.
om
Q. All right. And you also talked with Mr. Weitzman about not including the master recordings, so I
have the following question for you. If you included the master recordings, in your analysis of Cirque
du Soleil, would your value conclusion have been higher?

n.c
A. Yes, of course. You would have had another, I think, 5 percent royalty for the masters flowing to the
Cirque du Soleil valuation, so probably another... well, a substantial amount of additional value would
have been added to Cirque du Soleil.

so
Q. And Mr. Weitzman described the Beatles show and the use of the master recordings and there, does
that change in any way your analysis regarding the foreseeability of a Michael Jackson theme show,
given the existence of Love since 2006?

ck
A. It... obviously I... at this point it's further proof to me that, I mean, at this point in time we see that
Love has been running now for what, 11 years. It's just a reaffirmation of the success, the predictability
of success of a Michael Jackson Cirque du Soleil show.

lJa
Q. Okay. So at this point in time, let's go back to the moment of death. Tell us why you thought it was
foreseeable at the moment of death.

A. Even then, as a performer that had an international appeal, and with a catalog that attracted the
ae
young and old. And as a performer that had a reputation for being an entertainer, it just seems so
obvious in 2009 that that would be a logical next step.

Q. All right. Mr. Weitzman also delved into the exemptions that are listed under Section 3344.1(a)(2),
ich
now in your opinion does the California postmortem right of publicity statute provide a guarantee
against all legal claims?

A. No.
mM

Q. Why not?

A. Well, when you say against all legal claims for, I assume you mean for use of name and likeness
rights, it provides coverage specifically for right of publicity and it doesn't cover use of other name and
likeness assets.

Q. And in your view, why did you not rely solely on the California postmortem right of publicity
a

statute?
Te

A. Because, maybe I'm not being clear, because it does not cover federal trademarks, common law
trademarks, endorsement rights, it doesn't cover international rights usage, international trademarks and
the rest of the bundle of name and likeness assets.
w.

Q. In your opinion, if we're talking about a film, would licensing Michael Jackson's name and license
rights be one of the only guarantees, or the only guarantee against all liability related to infringement
lawsuits?
ww

A. Well, it would be as a broad a warranty against infringement lawsuits as you could possibly get if
you have a license for all of his name and likeness assets. So the answer is yes.
om
Q. All right. So we have the Estate that has chosen to capitalize on certain categories so was the fact
that they have not capitalized on others, specific categories that you've identified in your report, mean
that a rational investor could not have 2962 capitalized on those?

n.c
A. No. No not at all.

Q. Why not?

so
Mr. Weitzman: I'm sorry. Could we just ask that some identification be given to the... whatever areas
or project he's talking about? I don't understand what he's talking about.

Judge Holmes: Are these the five projects in your report?

ck
Mr. Voth: The five categories in your...

Mr. Anson: That's what I'm referring to.

lJa
Mr. Weitzman: Oh, okay. Thank you.

Mr. Voth: In your opinion is that there a... is it possible for a hypothetical buyer to still capitalize in
ae
certain categories that the Estate has yet to do so?

A. Yes.
ich
Q. Would a hypothetical buyer have different means by which to capitalize on Michael Jackson's name
and likeness than what the Estate has done?

A. Of course. Yes.
mM

Q. I mean is there is any value in having the option to use Michael Jackson's name and likeness for the
various categories you identified, even if it has yet to be monetized?

A. Well, yes, there is value whether you monetize it today or at some point in the... whether you
monetize it on January 25th, '09 or whether you monetize it two years later, it still has value. Did I say
January 25th?
a

Q. Or several years from now?


Te

A. Excuse me, I think I said January 25th. I meant June 25th.

Q. Or even several years from now?


w.

A. Right.

Q. All right. Mr. Weitzman talked about the Nederlander contract, was that used as a proxy for a play
that could be developed using Michael Jackson's name and likeness?
ww

Mr. Weitzman: Objection. Calls for speculation. We have Mr. Nederlander here.
om
Judge Holmes: Ask him if he used it that way.

Mr. Voth: If he... yeah. I'm sorry. What is the question or what or what was the question?

n.c
Q. Did you use the Nederlander contract as a proxy for a play that could be developed using Michael
Jackson's name and likeness?

A. Yes. Yes, we did. Yes, I did.

so
Q. In your opinion would a Michael Jackson play, film, or other production be more successful if the
name and likeness rights of Michael Jackson were licensed as opposed to if they were not?

ck
A. Yes, indeed. Absolutely.

Q. Why?

lJa
A. Because they add to the surety of success by granting the rights to use all of the identifiers and
insignia, if you will, of Michael Jackson, the greatest entertainer of all time, and the King of Pop, and
provide to the licensee protection from infringers.
ae
Q. By the way, in your report do you include - - do you attribute revenue to impersonator shows?

A. No.
ich
Q. And in your opinion why does the show MJ Live not use the name Michael Jackson or the actual
image of Michael Jackson and/or the trademarks of Michael Jackson?

A. Because they are, I believe, they understand if they did they would be sued for infringement of the
use of his name and likeness.
mM

Q. All right. As you know, petitioners expert's claim that there are certain categories that are exempt
and that should not be included within name and likeness, such as video games, a film, or even a
Cirque du Soleil show. Yet with respect to these three categories particularly, the Estate has licensed
name and likeness for those three categories. How does that impact your analysis, if at all?

A. It's just good to see that we have agreement that those are, in fact, categories that should be licensed.
a

Q. Now do you consider historical earnings when developing revenue projections for this kind of cash
Te

flow analysis?

A. Yes, if they are available.


w.

Q. When is it appropriate to deviate from these historical earnings?

A. Well, if historical earnings are either nonexistent or too old to be used for current data, one would
not use them.
ww

Q. And then is it fair to say that, I mean in your opinion, would it make sense to rely on historical
om
financials as a measure of future revenue potential when you're dealing with a fairly stable asset or
revenue stream? In that case would it make sense?

A. If I understand your question correctly, if you're dealing with an asset that has... does not have

n.c
historical earnings but you can project future earnings, then you build your income stream based on
future earnings. I'm not sure...

Q. Right. So my question was, if you have an asset that has stable historical financials, in that case,
does it make sense to rely on unsaid...

so
A. I'm sorry, I misunderstood you. Yes. Yes is the answer.

Q. Let's delve a little bit into that hypothetical with the Michael Jackson Broadway play and let's say...

ck
all right. You agreed that the Michael Jackson Broadway play did not use any of Michael Jackson's
name and likeness. Let's assume that they do have the Mijac music available. If you have, for a
Broadway play, both access to the Mijac catalog and Michael Jackson's name and likeness, how would
a hypothetical rational investor consider that?

lJa
A. Well, you would have the benefit of being able to produce a play that would capitalize not only on
the music, of course, but on the Michael Jackson name, and trademarks and persona, copyrighted
materials, and all of the indicators and trademarks of the Michael Jackson brand. Without the name and
ae
the likeness, you can't market it under the brand umbrella of Michael Jackson.

Q. Was your name and likeness valuation conducted as of the moment of death?
ich
A. Yes.

Mr. Voth: One moment, Your Honor.

Judge Holmes: Certainly.


mM

Q. Now, Cirque's responses to the government's answers... to the government's questions indicated that,
you know, rock stars would often consider Cirque shows as competition, you know, while they were
alive. After Michael Jackson's death would a Cirque du Soleil show based on Michael Jackson still be a
source of competition?

A. No.
a

Q. Implicitly, or explicitly, you've been criticized for relying on Tohme Tohme. Now, you heard that...
Te

or read that Randy Phillips loved Tohme Tohme, that he thought he had Michael Jackson's best interest
in mind, that he was a novice, but a visionary, and that he wasn't trying to steal money from Michael
Jackson. Does Randy Phillips' testimony impact, at all, your reliance on Tohme Tohme?
w.

A. Mr. Voth, I've also heard Mr. Branca say not nice things about Tohme Tohme, I'm really indifferent
to what Mr. Branca says. I'm totally indifferent to what Mr. Phillips says. Tohme Tohme has a
tangential and best impact on my work here.
ww

Q. But if it turns out that the Court disregards Tohme Tohme's testimony as unreliable what effect, if
any, would that have on your report?
om
Mr. Weitzman: I just want to see if I hear your question. If the Court... I'm going to object. First of all,
calls for speculation, assumes facts not in evidence, but certainly...

n.c
Judge Holmes: He's an expert. He's asking a hypothetical.

Mr. Weitzman: I'm not...

Judge Holmes: If I disbelieve Tohme Tohme...

so
Mr. Weitzman: Yeah.

Judge Holmes: ...how would it affect the valuation that Mr. Anson has done.

ck
Mr. Weitzman: Oh, I'm sorry. If you currently disbelieve Tohme Tohme.

Judge Holmes: No. If I disbelieve him when I'm writing the opinion.

lJa
Mr. Weitzman: Well, how would that impact a report that's already in evidence?

Judge Holmes: Oh. I see. I see what you're saying. I do understand your objection now, Mr. Weitzman.

Mr. Weitzman: Thank you, Your Honor.


ae
Judge Holmes: Assume everything Tohme Tohme says that cannot be verified is a lie, how would that
ich
affect your valuation?

Mr. Anson: I don't think it would affect it because the only sustentative factual document was the Jack
Wishna document and we would have seen that anyway. Other than that, the balance of what we have...
of what I have from Tohme Tohme is the two conversations that were held with my associates. So no, it
mM

would not... no. No. No, it wouldn't affect the valuation.

Mr. Voth: Did you hear any testimony that disputed that Tohme Tohme was Michael Jackson's
manager between part of 2008 and at least until April 2009?

A. I had a chorus of coughing. I'm sorry, Your Honor, I apologize. It wasn't just you. I had a chorus of
coughing and I missed the first two- thirds of that.
a

Q. Did you hear or read testimony that disputed in that Tohme Tohme was Michael Jackson's manager
Te

from sometime in 2008, and at least until March or April 2009?

A. Yes.
w.

Q. Does the fact that the Estate is in litigation with Tohme Tohme impact your opinion of what you
heard throughout this trial with respect to anything with respect to Tohme?

A. I didn't know that until I got here.


ww

Q. All right. Let's delve into your themed attractions and products. It seems that petitioner implies that
om
you continuously... just, you know, where did this $86 million come from? Is it solely from tying to
develop Neverland Ranch into a fan destination or can you explain how you arrived at the $86 million?

A. Yeah. I think one thing that was not made clear in my report, and I regret it, having spent the last

n.c
two days up here. First of all, Neverland does not enter into, excuse me... into our calculations of value.

Q. I'm going to stop you right there. But you do mention it as, at least in passing, in your report as a
viable option.

so
A. As an option that Michael wanted, but not as a viable option given the zoning issues.

Q. Okay. So then help us understand where the $86 million that you attribute to this category of themed
attractions and products comes from because I don't think it's clear.

ck
A. All right. And my apologies for that to the Court and to you. Two areas, themed attractions first, the
licensing of the name and likeness assets to operators of hotels, to operators of restaurants and casinos,
particularly in centers not necessarily in this country. We tend to forget the popularity of Michael

lJa
Jackson outside of this country in places... I'll just use one example. Well, I'll use two, Macau, Shanghi.
A Michael Jackson casino, even though, the Estate has not chosen to do so, a rational investor might
choose to do so, to open both a casino and a hotel within a hotel. Those are two areas, restaurants are a
third. Other facilities are themed attractions within theme parks, again, not necessarily in this country,
ae
but outside of this country. Beyond that other services include, and I'm not going to be exhaustive here,
I'm not going to reopen this entire report. Things like...

Q. No, please explain.


ich

A. All right. Planned appearances and I use, as an example, Coachella where appearances fee... 2972
appearance fees these days can run up to a million dollars, a holographic appearance fee, with music.
Going to products...
mM

Q. What about...

A. Going to products for a moment, Mr. Voth.

Q. Yeah, okay.

A. A couple we've talked about during testimony, well a couple have actually been done by Mr. Branca,
a

slot machines, gaming machines of all types. Pachinko machines, which I think is a clever... a very
clever idea, again outside this country, and inside. Virtual reality devices, the new Oculus is a perfect
Te

example. Gaming devices, Gameboys, Gameboxes, Xboxes, et cetera, these are all part of themed
attractions and themed products, they all fall into that category. Excuse me.

Q. Now on Page 61 of your report you mention also, specifically a... there was a reasonableness check
w.

you talk about the Michael Jackson The Experience, and that it's had, you know, with retail sales of a
price of $49.99 the game has generated more than $200 million in gross revenue, I understand that's not
to the Estate, but just as a general number.
ww

A. That's a rough calculation.


om
Q. Right. What impact, if any...

A. Based on the number of units that have been sold.

n.c
Q. Okay. How did... explain to us how that serves as a reasonableness check, that's your term, for
themed attractions and products.

A. Well, it gives us an example of how one machine, one game, can generate, and relatively quickly,
millions of units in sales. A rational investor that is keyed to and devotes one... devotes themselves to

so
developing this area of products can expand that into a broad range of visual products, be it video
games, be it strap-on... the latest strap-on game devices or the more traditional console devices. The
number of units that can be moved on a global basis are substantial and global is where this market is
for Michael Jackson. Again, retrospectively, I wish I had put more of an emphasis on the global market

ck
for these themed attractions and products. I should have made that clear in my report, I did not. But
there is a substantial opportunity, sir.

Q. Okay. I don't recall if it was today or yesterday, but there was some reference to Michael Jackson's

lJa
toxic image at or near the time of his death, and then during this trial we heard from James Nederlander
and Tom Bennett, AEG, it was Randy Phillips of AEG. And so with... let's take one by one. We have
Mr. Nederlander willing to be associated with Michael Jackson pre-death, what impact if any does that
have on your analysis?
ae
A. I think he's one example of both of professional people in entertainment, mass entertainment, that
pre-death had no qualms about dealing with Michael Jackson and his image.
ich
Q. What about the CEO of Bravado, one of the top, if not top, music merchandiser in the world, Tom
Bennett who stated that he had no qualms at all about being associated with Michael Jackson, what
impact if all that has on your analysis?

A. He's another great example, like Mr. Nederlander.


mM

Q. Let's just briefly talk about foreseeability. Now, yesterday Mr. Weitzman asked you whether certain
deals were consummated before Michael Jackson's death. There were several that were not. Is the
consummation of a deal necessary for a project to be foreseeable by a rational investor?

A. No. And in fact the fact that... of it not being consummated would put it in the category of being
foreseeable.
a

Q. Why?
Te

A. Well, because it's been consummated already it is a fact. If it's not consummated then it becomes a...
it goes into the category of either being foreseeable.
w.

Q. And why does it go into the category of being foreseeable?

A. Projectable, probable, possible, probable, projectable, foreseeable, it becomes a future act.


ww

Mr. Voth: No further questions, Your Honor.


om
Judge Holmes: All right. I don't think I have any.

Mr. Anson: All right. Yes, Your Honor.

n.c
Judge Holmes: Oh, is there a re-cross coming on?

Mr. Weitzman: I think I'm going to have to, Your Honor. ??? but I'm going to...

Judge Holmes: Going to? Going to re-cross. You're almost done Mr. Anson.

so
RECROSS-EXAMINATION BY MR. WEITZMAN:

Q. Mr. Anson.

ck
A. Yes, sir.

Q. As I understand it, your descriptions of the themed product foreseeable opportunities was not well...

lJa
was not made understandable, or well, or detailed enough in your original report, in your rebuttal
report, in your supplemental report. Is that correct?

A. Was not made well enough, no. I think I said I should have put more details in, perhaps.
ae
Q. Okay. Was not detailed enough in those three reports. Is that correct?

A. In my primary report.
ich

Q. In your... well, was it detailed any more in your supplemental report?

A. That... I don't believe the purpose of the supplemental report is to expand on the primary report.
mM

Q. So would that be a no, it wasn't detailed any greater in your supplemental report?

A. That's a no.

Q. And the same with respect to your rebuttal report, correct?

A. That's correct.
a

Q. Okay. And it wasn't detailed any more in our conversations, questions and answer conversations
Te

yesterday and today, correct?

A. I... evidently not.


w.

Q. Okay. And then during one of the recesses did a light kind of go off and you thought you might want
to detail it more for Mr. Voth?

A. Well, the light's always been on inside of my brain.


ww

Q. Okay. I'm just going to let that go. But assuming the light was on, came on, tell me what the
om
conversation you had with Mr. Voth and how you two decided to tell us about the more detailed part of
the themed product.

Mr. Voth: Objection. That calls for a privileged communications.

n.c
Mr. Weitzman: Calls for what?

Mr. Voth: Calls for privileged.

so
Judge Holmes: For privilege? Is that...

Mr. Weitzman: What's the privilege?

ck
Judge Holmes: Yeah.

Female: ???.

lJa
Judge Holmes: Just a minute, miss. Answer the question.

Mr. Anson: Yes, yes, of course, Your Honor. Mr. Voth said, give us more detail about themed products
and services.
ae
Mr. Weitzman: So... and he said that at the most recent recess?

A. Yes.
ich

Q. Did he tell you that he felt your report and your rebuttal report and your supplemental report and
your testimony wasn't quite detailed enough and the government would like you to expand on your
testimony, or words to that effect?
mM

Mr. Voth: Objection. Hearsay. It refers to purported statements that I might have made outside of Court
to Mr. Anson.

Judge Holmes: You're not looking for the truth of Mr. Voth's statements, are you?

Mr. Weitzman: I am, Your Honor.


a

Judge Holmes: You are looking for the truth of the statements?
Te

Mr. Weitzman: Well, not the truth of the statement, I'm looking for what he said.

Judge Holmes: Oh.


w.

Mr. Voth: The truth of what I said out of court.

Mr. Weitzman: Well, first of all...


ww

Judge Holmes: Let's...


om
Mr. Weitzman: ...the truth is not an issue here.

Mr. Anson: The answer is no.

n.c
Judge Holmes: There you go.

Mr. Weitzman: So Mr. Voth said nothing to you other than be more detailed.

A. Correct.

so
Mr. Voth: Objection. Asked and answered.

Judge Holmes: Overruled.

ck
Mr. Weitzman: What other conversations did you have with Mr. Voth about what questions you were
going to be asked during this session?

lJa
A. He said I was going to...

Mr. Voth: Your Honor, may I... perhaps a misunderstanding hearsay. If he's... it's my understanding that
Mr. Weitzman wants to know the truth of the matter asserted, the questions that I purportedly made...

Judge Holmes: That they were made.


ae
Mr. Voth: ...that purportedly were made of Mr. Anson out of the court.
ich

Judge Holmes: But those statements aren't being admitted for the truth of the statements themselves.
They're only for whether they were made, you know, instructions to an expert witness, that type.

A. We had about two minutes because I spent most of my time getting coffee. And what we talked
mM

about in those couple minutes are, first, that he was going to ask me about Cirque du Soleil, and
second, that the balance of the questions were going to be basically yes and no.

Q. So your representation under oath is that you barely spent two minutes and you did not discuss with
Mr. Voth anything that you were going to testify about during this session. Is that your testimony?

A. Basically just they were going to be yes or no questions. He was going to ask me a lot about Cirque
a

du Soleil, and we did not discuss anything what the questions were going to be.
Te

Q. So you were shown some responses from Cirque du Soleil earlier. Do you remember that?

A. Yes. And Mr. Voth did not show me those earlier.


w.

Q. Did I ask you that question?

A. I'm sorry.
ww

Judge Holmes: Just answer the question you were asked.


om
Mr. Anson: I'm sorry. I apologize. I was anticipating what you were going to ask me. I'm sorry.

Mr. Weitzman: You were shown some questions and answer from Cirque, correct?

n.c
A. Yes.

Mr. Weitzman: And could you put those up, please?

Q. Okay. Let's look at this for a moment. Thank you. So if we go to number seven, and the answer to

so
number seven... thank you... says: "QUESTION: Was Cirque aware of any other entities contemplating
making MJ-themed shows could be circus-related musical theater, Micheal Jackson tribute, et cetera,
at or near the time of Michael Jackson's death?"

ck
"ANSWER: Franco Dragone and AEG." From that answer, you don't know when those conversations
took place or whether or not they included representatives of the estate. Is that correct?

A. Correct.

lJa
Q. And then going to number eight, Jack Wishna. Are you still relying in any part whatsoever on Jack
Wishna's email of February 2009 in arriving at your valuation of Cirque du Soleil?
ae
A. Well, it's certainly factual. He had contact with Cirque du Soleil.

Q. Are you relying on that Jack Wishna email as part of your valuation process of Cirque du Soleil?
ich
A. Only to the extent that it shows they had contact.

Q. And could you tell us what "fact they had contact" means to you and utilize it in your valuation?

A. Well, it obviously shows to me that on that date... and I forget the date of-- email that...
mM

Q. February of 2009. I can't remember the exact date it was. So A. No, I can't either. But it shows that
Cirque du Soleil had enough interest that they would take a meeting... or a telephone call... I'm sorry... a
telephone call from Michael Jackson's group, whatever the group meant to them, to explore the topic.

Q. And the fact that Daniel...


a

Mr. Weitzman: Would you put down the next... I think it's the next question, 9. Well, that wasn't it.
Te

Q. Do you recall there being the question and answer where Daniel Lamarre said that they had... did
not think about doing a show when Michael Jackson was alive?

A. Yes.
w.

Q. Did you take that into consideration? You didn't know about this, right?

A. I didn't know about it.


ww

Q. Got it. Okay. By the way, you talked... Cirque du Soleil, why you thought it was reasonably
om
foreseeable is because of a possibility of shows in Asia?

A. You know, I said to you that you have to remember that Michael Jackson has great popularity
outside of this country. Independently, you've seen this. I have not seen this before today that Cirque du

n.c
Soleil themselves came to that same conclusion.

Q. But as far as you know, the only residence he showed that Cirque has with Michael Jackson is in
Las Vegas. Is that correct?

so
A. Right, the traveling show is closed.

Q. And there was a question that you were asked by Mr. Voth about bundling. When you and I had a
conversation about Cirque, was my recollection that your rational investor only owned the name and

ck
likeness and that the estate of Michael Jackson or some other entity that was a hypothetical owned all
the music and the masters? And do you recall that part of our question and answer earlier today?

A. That was your hypothetical.

lJa
Q. It was my hypothetical. And on your revenue chart... I think it was at Page 70, is it? Let's go back
there again. ae
Mr. Weitzman: Thanks. And enlarge the Figure 36.

Q. I want to make sure I'm clear here. So in this chart, you added publishing, which as we know was a
Mijac asset. But I thought you agreed with me that it really didn't belong there. You just put it in for
ich
whatever your arbitrary reasons were. They could just as easily have been in the Mijac statistics,
correct?

A. I didn't call it arbitrary.


mM

Q. Well, I called it arbitrary.

A. Ah.

Q. Did you arbitrarily place it in the Cirque du Soleil revenue streams even though your rational
investor doesn't own any of the publishing?
a

A. Well...
Te

Q. I mean, I think that calls for a yes-or-no answer, sir.

A. I didn't arbitrarily place it there, but I did place it...


w.

Judge Holmes: Anyway...

A. ...there.
ww

Judge Holmes: ...he said no.


om
Mr. Weitzman: And what was the reason you placed it in there rather than the box it belonged in,
which was the Mijac box?

Mr. Voth: Your Honor, this is beyond the scope of Respondent's redirect. And we've been through this

n.c
on...

Judge Holmes: It is sustained.

Mr. Weitzman: I thought Mr. Voth asked you that you considered in the Cirque analysis bundling. You

so
remember him asking you that?

A. I don't. You'd have to reread it to me, sir. I've been on the stand for two days now, and I don't
remember everything that was asked me.

ck
Q. Mr. Voth asked you whether or not you engaged in an exercise of bundling with respect to Cirque
and the name and likeness of music. And you said yes. Is that correct?

lJa
A. I accept your word for it.

Q. Is this the bundling you're referring to? ae


A. Yes.

Q. And so bundling is when you take together assets, apparently, you own and assets you don't own to
get to a particular result. Would that be correct?
ich

A. Well, not necessarily. You could put together assets that you own.

Q. Uh-huh.
mM

A. You bundle assets that you own typically together.

Q. But here, you put assets together that you don't own, based on our hypothetical, correct?

A. Based on your hypothetical, yes.

Q. Okay. So did you put together under some other hypothetical that you must have discussed with
a

someone else?
Te

A. Well, again, going back to the very first day of testimony last Friday, I think... Thursday or Friday of
last week... in Mijac, I think I talked about... it wasn't with you. It was with Mr. Salkin. We talked about
the synergies of bundling together the music assets with the name and likeness assets. And so that goes
back to last week, and I'm sure you were here at that time when we had the discussion.
w.

Q. I was. So bundling means you take separate assets that are valued separately and you value them
together to get a particular value in joint assets.
ww

A. You use them together to maximize the value out of both bundles.
om
Q. Here, your assignment, as I understood it, was to value separate assets. I think they were name and
likeness and Sony/ATV and Mijac, correct?

A. Yes.

n.c
Q. And in some of your models, are you telling us that I chose... I, Wes Anson, chose to take some of
those assets, and even though my charge was to value them separately, I kind of bundled them, to use
your phrase, to arrive at my valuation?

so
A. No, we kept them separate. This...

Q. So tell me what bundling has to do with any of this.

ck
A. I'm simply pointing out that the greatest synergy and the greatest value for this estate as of June
25th, '09, would be to see that a rational investor would hopefully arrive at the end of the day with
ownership of both name and likeness and Mijac Music.

lJa
Q. But the rational investor... you know what? Maybe I misunderstood. Are you saying that the rational
investor that I, Wes Anson, would be advising to someone who ??? the name and likeness for 161
million and would have paid, I guess, some other number for the Mijac asset?
ae
Mr. Voth: Objection. Beyond the scope of redirect, Your Honor.

Judge Holmes: Sustained. I'll be asking questions like that, though, Mr.
ich
Mr. Weitzman: Sorry.

Q. Were you here when Andy Heyward testified?

A. You'll have to remind me who that is, sir.


mM

Q. Andy Heyward was the gentleman that created, or tried to create, an animation presentation. It
would have been a cartoon animated based on Thriller. Were you here when he testified?

A. Yes.

Q. And did you hear when he testified he specifically did not want Michael Jackson's name and
a

likeness or character because he believed it was toxic for his business, was... which was a children's
business even though he, Andy, considered himself a friend of Michael's? Were you here when he
Te

testified?

A. Yes.
w.

Q. And Mr. Nederlander, he wasn't looking for anything but the music, correct?

A. And the name.


ww

Q. So you're still taking the position, despite the words of the contract, that the credits when you write
music and lyrics are tantamount to name and likeness.
om
Mr. Voth: Objection. Beyond the scope of redirect.

Judge Holmes: Sustained.

n.c
Mr. Weitzman: And were you here when Tom Bennett testified that he personally had no problems
selling tour merchandise for a tour that never happened, but that, in his experience at this particular
time, 2990 there was little to no interest in the retail market for name and likeness products for Michael
Jackson?

so
A. I don't... I recall he testified. I don't... I... I'm sorry. I don't...

Mr. Voth: Your Honor, that's beyond the scope of redirect, the scope of the merchandising.

ck
Judge Holmes: Sustained.

Mr. Voth: I only asked about association with Tom Bennett.

lJa
Judge Holmes: Wait. You just got sustained. You won.

Mr. Voth: I'm sorry.

Mr. Weitzman: I don't have any more questions.


ae
Judge Holmes: Oh, I have a few.
ich

RECROSS-EXAMINATION BY JUDGE HOLMES:

Q. Mr. Anson?
mM

A. Yes, Your Honor.

Q. Are you familiar with the Coase theorem, by any chance?

A. The Coase theorem?

Q. Yeah.
a

A. I am. Yes, Your Honor.


Te

Q. All right.

A. Oh, please.
w.

Q. Well, a problem in this case, as you must have intuitive from Mr. Weitzman's line of questioning, is
what do we do with a bunch of inter-related rights that are different than their definition but may be
worth more if put together because, in our sad, fallen world, people don't always get together and
ww

profit-maximize together a zero transaction cost. Is it Coase theorem?


om
A. Yes.

Q. All right. So at... when you were hired by the government or began writing these reports... there
were three little groups in front of me... one for name and likeness, one for NH II, and one for NH III...

n.c
that all contained differently defined groups of rights, right?

A. Yes, sir.

Q. Did there come a point in your research when you thought, oh, my, we're missing something here; if

so
we put them all together, they would be worth more than if we value them separately?

A. At some point, it dawned on me that putting name and likeness with music under one ownership
would maximize value under an aggressive owner.

ck
Q. Another way of posing this problem that has puzzled me throughout these three weeks is that we
have testimony from Mr. Branca backed up by considerable proof that there was a vast increase in the
income earned by the estate after Mr. Jackson died and Mr. Branca and his team were put in place. The

lJa
question, of course, is how to figure out how much of that was in the asset on June 25th, 2009, and how
much of the value added was from Mr. Branca and his team and, for that matter, random events that
were unpredictable. Did you approach this case that way? Or did you approach the case as you were
told to look at it one asset, another asset, another asset?
ae
A. Well, we approached it on an asset basis. But if I can speak directly...

Q. Well, that answers my question, in part. And so when Mr. Weitzman was going through these and
ich
saying, oh, wait, in name and likeness, you included royalties to songwriters, was that an effort to
compensate for the inherent problem of dealing with separate assets when synergies are an important
consideration in the establishment of value?

A. Yeah, yes. You put your finger right on it. I mean, Cirque du Soleil is an exact example of where you
mM

need the synergy between the music and the name and likeness.

Q. When did it dawn on you that that was a good thing to do?

A. I've been in this business a long time, Your Honor. It dawned on me pretty early.

Q. So why did you decide to put the projects into the name and likeness rather than try to disaggregate
a

them in accord with your original instructions of this asset, that asset, the third asset?
Te

A. Cirque du Soleil was the only time that I did this on this project. And I believe that it... perhaps to
some extent, I may have indulged myself, but also to illustrate the... both the bundling theory and to
illustrate the synergy theory.
w.

Q. That takes care maybe of the synergy theory. Did you take into account... or heavens, in your
expertise, is there any way to do it... of trying to figure out a really rational experiment, which is that on
the day of Mr. Jackson's death, we have a hypothetical auction where all the hypothetical estate
managers of the world gather and hypothetically bid? And then we can say that the value of the estate
ww

was the value of the second-highest bidder, and the increment in value added to the estate by
management was the difference between the second- highest bidder and the highest bidder.
om
A. Yes, that's a really interesting idea. And in the past...

Q. Is there any way to do it in the real world?

n.c
A. I've actually... our firm has actually run auctions in the past of intellectual property for firms on the
edge or sometimes over the edge into bankruptcy. And I'll give you as a... I shouldn't get into anecdotes.
But I will quickly tell you the anecdote of Polaroid Corporation where it had both very valuable
trademarks and very valuable technology. And we ran an auction like that to very good effect and got

so
far more money by doing it that way than by splitting up the assets between technology and marketing.
Could we have done that here? Given a few months to organize, we probably could have.

Q. Is there any way in valuing a report... and again, in our fallen world where people pick their own

ck
executors and everything costs a lot of money and there... all of us here are transaction costs, I'm afraid.
Is there any way to value an estate with that in mind rather than as all the reports here suggest... looking
at each separately, valuing them in accordance with the legal rights in each bundle represented by each
of the assets?

lJa
A. I think in this case you would take Sony/ATV and put it to one side and buy it separately. You would
take Mijac and rights of publicity. You would value them together. Short of going public with a bidding
process, you'd still have to rely on valuation and commercialization people like ourselves to give you
our best estimate of value.
ae
Q. And even that wouldn't have worked because one of the more important assets in this estate is Mr.
Jackson's right to his own recordings, right?
ich

A. Yes, that's right. That's right.

Q. Hmm.
mM

A. You'd have to be locked into a contract... or you would have to be locked into an assurance that the
owners of Mijac/right and the name and likeness would have the rights to use.

Q. Were you asked at any point during your representation of Respondent... or your retention by 2996
Respondent to value those master recordings before that issue was settled?

A. No. No, we weren't.


a

Q. Did you consider the impact or the effect of access to master recordings in your valuation of the
Te

right of publicity, the NH II or NH III assets?

A. No, we weren't. No, we were not.


w.

Q. Just a few more much less theoretical questions.

A. That's fine.
ww

Q. Is there anything in the appraisers... well, what does USPAP stand for? Well, you know what I'm
talking about.
om
A. That stands... professional appraising practice.

Q. Is there anything in those standards that tells you that in evaluating... evaluing... I'm sorry...

n.c
evaluating an estate's assets some consideration towards synergies must be given?

A. No. The standards are not well written. They're being rewritten. They were...

Q. Well, what do they say now?

so
A. They were revised in 2014, and they speak almost entirely to tangible assets.

Q. Oh, there you go.

ck
A. And that's one of the problems we have, is the standards for intangible assets and intellectual
property are not well written, and there's not great detail.

lJa
Q. Is maybe one where the law just requires people to look at asset by asset by asset and then attribute
for better or worse a increase in synergies to the management of those assets when they are commonly
owned? But that's more for my instructions for briefings. I won't go there now. There is no question
pending. I object. I'm being argumentative.

A. There's a...
ae
Mr. Weitzman: Sustained.
ich

Judge Holmes: There we go.

A. There's a piece of the document that's not in the record...


mM

Q. Yeah?

A. ...that's worth reading.

Q. I think I excluded it. Anyway, Page 56 of your primary report... that's 709-R... tell me when you're
there.
a

A. Page 56.
Te

Q. This is Elvis.

A. Right.
w.

Q. You seem to have based this part of your evaluation of Mr. Jackson's right of publicity. Which is the
broader... which... what's the genus and what's the species here? Is it right of publicity and then name
and likeness or vice versa?
ww

A. The broader definition is name and likeness. Right of publicity...


om
Q. Okay.

A. ...fits under that umbrella.

n.c
Q. We'll call them name and likeness then. In this part of your name and likeness valuation, it talks
about Elvisland, or whatever they were going to call that amusement park. Now, do you know what
rights were conveyed by the agreement you used as your source for valuation here?

A. Yes. We actually quoted... and if we can move ahead to... we have it out here... I actually have it

so
quoted somewhere in our report. And it defines very precisely what was included. Let me see if I can
find it... 327... look at my doc list. Ah, in the doc list, you're going to find the license agreement
between Elvis Presley Enterprises and FX Luxury.

ck
Q. And so that did... that included only name and likeness and didn't even have a nonexclusive license
to Mr. Presley's distinctive recorded voice?

A. In those days, they didn't include voice in Tennessee. They do now. They've rewritten the law in

lJa
Tennessee.

Q. Oh. Page 64. These are just random questions that unpointedly Mr. Weitzman didn't ask. Figure 25.
ae
A. Yes, sir.

Q. You calculated the compound annual growth by... it appears to be based on all retail everywhere. Is
that correct?
ich

A. Right, because it is... I think we're all aware department store sales are shrinking. We also look,
therefore, at e-commerce and online. You get a blended growth rate between the two in order to come
up with an overall growth rate for all kinds of retail.
mM

Q. Okay. So this is all kinds of retail being used as a proxy for branded merchandise...

A. Yes.

Q. ...and Michael Jackson branded merchandise, in particular.

A. Yes, Your Honor.


a

Q. We got through that one. On Page 73, that... there's Figure 41 here, a list of comparable films.
Te

A. Yes.

Q. Did you make any distinction between documentaries and Hollywood-like biopics?
w.

A. There's a pretty fine line. No. The short answer is no. There's a pretty fine line in these movies. And
these are the flicks ... movies that were released prior to his death. And so we were restricted to these.
ww

Q. A. few pages on, on Page 77 right after the text at Footnote 411 is the sentence, "As a majority of a
Michael Jackson film would likely be based on footage at the time owned by the estate as well as 3006
om
music copyrights at the time owned by the estate, I estimate compensation for the use of Michael
Jackson's name and likeness would be 50 percent on the film's licensing budget." Have you changed
your mind about that?

n.c
A. No. I think that's fair because...

Q. Where did you get that number from... 50 percent?

A. Well, if we were just a small component, we being the hypothetical purchaser of these rights... if we

so
were just a small component of this film, then the 50 percent of the licensing budget would be not
meaningful. But here, we're contributing virtually everything to the film, and everything's contained in
that film from background to primary, primary theme to music to all of the name and likeness, all the
video. Everything is there. So...

ck
Q. For that matter, for his actual songs, his recordings, right?

A. Right. And it's everything that's on the film already, so very little else would need to be licensed for

lJa
that movie.

Q. I understand your position. Page 78. How do we describe this one? Second full paragraph, part of
the last sentence of the second paragraph, "A. rational investor would likely conclude that a Michael
ae
Jackson film could generate revenues in each of the distribution categories equivalent to the maximum
generated by the 13 comparable films." Why did you make... how did you reach that conclusion? Or is
that an assumption?
ich
A. Well, it's an assumption influenced by a conclusion.

Q. And what's the conclusion?

A. Well, the conclusion is that we... I knew just how well This Is It did at the box office, and then that
mM

obviously influences my assumption. The box office grosses for This Is It were quite substantial. And
for that reason on both the revenue and expense side, I assumed maximum numbers.

Q. I understand that as well. Page 87. In the Broadway play project, how did you distinguish between
the jukebox musicals and the... I don't know... the play equivalent biopic like that Motown musical
where there was somebody who was obviously looking a lot like young Michael Jackson? If Mr.
Nederlander had in mind a Mama Mia- type production where you don't even see those four middle-
a

aged Swedish people singing or doing 3008 anything but using all their songs, would that make you
allocate a different portion of any revenues to name and likeness?
Te

A. Let's see if I... let's see... I make sure I understand. In Mama Mia, the... that play used the full name
and likeness rights of the Mama Mia group. So it's not...
w.

Q. Did they ever appear?

A. No, but let... I'm...


ww

Q. Oh.
om
A. I'm familiar with them. With Jersey Boys, I'm one of the minor investors in that. And there again, in
Jersey Boys, they never appeared either, but we used all of their name and likeness rights and did well
when we did.

n.c
Q. And so you know that that... the same thing was true in Mama Mia?

A. Yes.

Q. And would the same be true of all jukebox musicals?

so
A. Not necessarily. But as we go down this list, I have to speak from memory.

Q. If you don't know, you don't know. I mean...

ck
BY JUDGE HOLMES:

Q. You done? Have you looked at the list?

lJa
A. I'm sorry, Your Honor. I didn't realize...

Q. Oh.
ae
A. I was just going through it then, and I didn't realize...

Q. Okay.
ich

A. ...that you were ready for the answer. Obviously, Lennon, Jersey Boys, ABBA, and... I'm sorry...
Mama Mia; and the others I don't want to guess.

Q. Okay.
mM

A. I don't want to guess the others.

Q. Well, I don't want you to guess either.

Mr. Weitzman: Is it in the report?


a

Judge Holmes: All right. Follow-up questions, Mr. Weitzman?


Te

Mr. Weitzman: Yeah. Yes.

RECROSS-EXAMINATION BY MR. WEITZMAN:


w.

Q. Mama Mia, are you familiar with that play?

A. Yes.
ww

Q. You said you were an investor in it?


om
A. No.

Q. Do you know whether ABBA licensed any other name and likeness?

n.c
A. I believe they did.

Q. I didn't ask you that. Do you know if they licensed any of their name and likeness?

A. Without going back and looking at the contract, I can't give an absolute yes or no.

so
Q. They did license the use of their music, correct?

A. Yes.

ck
Q. And they're not in the play in any way, shape, or form...

A. No.

lJa
Q. ...correct?

Mr. Weitzman: I don't have any further questions.

Judge Holmes: Mr. Voth?


ae
Mr. Voth: No further questions, Your Honor.
ich

Judge Holmes: Okay. You can step down, Mr. Anson.

Mr. Anson: Thank you, Your Honor.


mM

Judge Holmes: They might actually recall you, they said yesterday. We'll see. Any further witnesses,
Respondent, in your case-in-chief?

Ms. Herbert: We have nothing further.


a

Judge Holmes: Ms. Wood has informed me that somebody on Respondent's side probably forgot to
move Mr. Anson's various name and likeness reports into evidence. I take it you want those into
Te

evidence?

Mr. Voth: I thought they were...


w.

Judge Holmes: I thought so, too.

Mr. Voth: Yeah, no. They're moved in.


ww

Judge Holmes: But she's keeper of the minutes.


om
Mr. Voth: Yeah.

Judge Holmes: They are admitted. Thank you.

n.c
Mr. Voth: While we're at it, Your Honor, we also wanted 702 and...

Mr. Weitzman: We have another witness to call.

Mr. Voth: I'm sorry. I think I'm being interrupted.

so
Mr. Weitzman: Another rebuttal witness? Now is the time.

Mr. Voth: Oh, no, we were just... we're talking about moving documents in.

ck
Judge Holmes: Yeah.

Mr. Voth: Respondent wants to ensure that documents 702 and 703 are, which are the deposition of

lJa
Mr. Branca and his summons interview are moved into evidence.

Judge Holmes: Those are admitted as well. Those are the Branca interviews and deposition transcripts
that we were talking about. Another witness, Mr. Weitzman? Oops. Mr. Weitzman? Another witness?
ae
Mr. Weitzman: Yes, Your Honor. Michael Perlmutter.

Judge Holmes: There we go.


ich

Ms. Herbert: Respondent objects to this witness being called at this time for many reasons.

Judge Holmes: Let him be called, and then we'll see who he is, which I don't even know. What? Who?
Where? Time? Off the record. Ms. Herbert, I need this.
mM

Ms. Herbert: All right. I'll start over. Michael Perlmutter is an IRS employee. He is an estate tax
attorney examiner. He was not listed in the pretrial memo, he has not been subpoenaed, and he would
not be permitted to testify in court today without a testimony authorization from the appropriate
official from the IRS. We do not have a testimony authorization, and we would have to coordinate such
with the national office because it could potentially involve Section 6103 issues. Chances are, the
testimony authorization would state, as they all do, that he may not testify in violation of IRC 6103.
a

Furthermore, we don't believe his testimony is relevant for any issue in this case. And let's see what
else. And we heard one of the estate's attorneys say that they were planning to call him to impugn the
Te

trial team and to propound a preposterous conspiracy theory. And that's all we have to say.

Mr. Toscher: Was that me?


w.

Judge Holmes: Mr. Toscher.

Mr. Toscher: No, I... it wasn't me.


ww

Judge Holmes: Refer the objections before the proffer.


om
Mr. Toscher: Go finish, Ms. Herbert. May I be heard, Your Honor?

Judge Holmes: Well, what's the proffer before... I'll just assume that the objections are all there still
when you're done with the proffer. But go ahead.

n.c
Mr. Toscher: Yeah. Your Honor, we do have a proffer. We proposed a stipulation to the government to
avoid having to call Mr. Perlmutter. But we were informed that, no, we can't stipulate to it because we
might be violating 6103. Put him on the stand.

so
Judge Holmes: This is...

Mr. Toscher: But it's after the Court's ruling.

ck
Judge Holmes: Okay. Wait a second. This is...

Mr. Toscher: Who informed us?

lJa
Judge Holmes: No, no. I mean, what is it about?

Mr. Toscher: This is about we wanted them to acknowledge that the Whitney Houston report... I'll read
the proposed stipulation into the record. Is that... that's my proffer.

Judge Holmes: As your proffer because...


ae
Mr. Toscher: Yeah, as my proffer, of course.
ich

Judge Holmes: Okay.

Mr. Weitzman: 720?


mM

Judge Holmes: 720... we'll keep it reserved for the first and last pages of the expert witness report.
And I assume that there's no information on the first and last. They're just...

Mr. Weitzman: Well, it has nothing to do with any IRS...

Judge Holmes: There you go. There you go.


a

Ms. Herbert: Your Honor, I'd like to make it clear that the proffer made by Mr. Toscher is not in
Te

evidence in this case.

Judge Holmes: No, it's not. It's been excluded because I'm excluded Mr. Perlmutter and we're not
going to go that route. But we'll get the first and last pages, which was my default this morning when
w.

we had this discussion in chambers. Any other witnesses, Mr. Weitzman or Mr. Toscher:?

Mr. Weitzman: No, Your Honor.


ww

Judge Holmes: Any witnesses in surrebuttal?


om
Ms. Herbert: No, Your Honor.

Judge Holmes: Here we go. The record is not quite closed. As I said, we'll hold it open for that one last
exhibit.

n.c
Mr. Toscher: Yeah, Your Honor? Go ahead.

Mr. Camp: Well, yes. We're...

so
Mr. Toscher: ???.

Mr. Camp: We're going to need to hold it open for the third stipulation of facts, which the documents
have been completely narrowed. But due to some encryption issues...

ck
Judge Holmes: Oh, okay.

Mr. Camp: ...the petitioners have only had since, well, yesterday, today, to review. And they haven't

lJa
quite completed their review.

Judge Holmes: That would be fine, too. Oh, please, please don't have problems with the third
stipulation.

Mr. Horwitz: We won't. We're...


ae
Mr. Camp: I...
ich

Mr. Horwitz: We're almost done. We should have it by the end of next week, I assume.

Mr. Camp: There... I don't believe there are any authentication issues.
mM

Judge Holmes: Okay.

Mr. Camp: Is that correct?

Mr. Horwitz: I haven't seen any yet.

Judge Holmes: Okay. Ms. Wood, do whatever the paperwork requires to make sure that happens as
a

well. Can you do that?


Te

The Clerk: Yes.

Judge Holmes: Okay. Very good. Ms. Wood promises. Anything else?
w.

Ms. Herbert: Your Honor, I would move the second stipulation of facts into evidence. I believe it's
been lodged.

Judge Holmes: There... hearing no objection, it is admitted.


ww

Mr. Toscher: Which one is the second stipulation, the actual paragraphs? Judge Holmes: Oh, the
om
narrative.

Mr. Toscher: The narrative. I don't think we had any resolved public information. Any sealing issues
on the narrative?

n.c
Judge Holmes: Yeah, that was the nice paragraph. There's actually a whole background for somebody
who, you know, didn't know the background.

Mr. Toscher: It's fine, Your Honor.

so
Judge Holmes: I like narratives. You know that.

Ms. Cohen: Yes. There were relevance objections...

ck
Mr. Toscher: Well...

Ms. Cohen: ...a whole bunch of facts about...

lJa
Mr. Toscher: No, no, no. We're done. This...

Ms. Cohen: Yeah.


ae
Mr. Toscher: There are relevance objections to the second stipulation?

Ms. Cohen: To the facts, to settle the facts.


ich

Mr. Toscher: Okay. Let...

Judge Holmes: Oh, good heavens. They're overruled as interesting background to tell the story of Mr.
Jackson's life.
mM

Ms. Cohen: It's not background. It's information about assets that are not subject to this litigation.

Mr. Toscher: Yeah.

Ms. Cohen: And also post-death information.


a

Mr. Toscher: Yeah, are we talking about... sorry, Your Honor.


Te

Judge Holmes: Yeah. Over... off the record.

Mr. Toscher: We are good with the second stipulation.


w.

Judge Holmes: It is admitted. Anything else? Oh, subject to something.

Mr. Toscher: But is it reserved in the stipulation?


ww

Judge Holmes: Subject to what?


om
Mr. Toscher: Well, subject to our continuing relevancy on certain post-death events.

Judge Holmes: Oh, I understand that.

n.c
Mr. Toscher: But you observe that.

Judge Holmes: You know I understand that.

Mr. Toscher: I understand that. But I'm getting...

so
Judge Holmes: You're going to be briefing it, and that's fine. It's fine.

Mr. Toscher: Okay. So there's some other housekeeping matters, Your Honor, that...

ck
Judge Holmes: Yes.

Mr. Toscher: ...still open. We're going to be filing next week the... our position on what documents in

lJa
the... I guess it's the first stipulation need to be sealed.

Judge Holmes: Yes. ae


Mr. Toscher: And the government will give us their position, and then the Court will balance...

Judge Holmes: Yes.


ich
Mr. Toscher: ...those issues and go from there. And we've laid out... we've tried to as we've gone
through it to tell the Court as we go through it. But that will do it. Are we going to be able to do that by
the end of next week? Yes.

Judge Holmes: Will that present any logistical problems, Ms. Wood? I think they'll still be in the trunk
mM

heading east by that time, right?

The Clerk: ???.

Judge Holmes: Yeah. So that won't be a problem. Right now, they're not sealed, but they're in a trunk
that nobody can get to. So
a

Mr. Toscher: And... okay. So they're giving me the other... on the first stipulation, we provided the
respondent our objections to relevancy, and we'll file that with the Court this week... or today's Friday...
Te

Monday so you have that. So the relevancy, it's all taken care of. Okay. We have the sealing issues
taken care of. I would just... I think as a matter of formality, Your Honor, I don't think we need to do it.
Just renew our motion, our Daubert motion to disqualify Mr. Anson for all the reasons in that motion
and all the reasons which have transpired through the evidentiary record of the trial. We'd also re-renew
w.

our motion to strike portions of his report based upon the settlements. So we will...

Judge Holmes: You can mark both of those denied, Ms. Wood.
ww

Mr. Toscher: Okay.


om
Judge Holmes: This will be just more argument in the briefs. So those are denied. Yes, Ms. Herbert?

Ms. Herbert: I have one housekeeping matter regarding the admissions. I would like to confirm that
the admissions are in... part of the record or in evidence. And if not, I would move them into evidence.

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Judge Holmes: Do they have an exhibit number?

Mr. Toscher: No, Your Honor. And we would... I'm sorry... we would object to that because they
haven't moved them into evidence. And you have to go one by one to do that.

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Judge Holmes: Yes. Those remain excluded if they weren't admitted. Next, Ms. Herbert?

Ms. Herbert: Pardon me. What was the ruling, Your Honor?

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Judge Holmes: They remain excluded if they weren't admitted during the course of trial.

Mr. Toscher: Your Honor, just... oh, one other... I just... when I was talking about re- renewing our

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motions...

Judge Holmes: Uh-huh. ae


Mr. Toscher: ...before we go off the record. Is there anything... I just want to...

Ms. Herbert: Well, can we get a briefing schedule for beyond that?
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Judge Holmes: Oh, okay. Well, you see, that's why I specified please tell me whether you're satisfied
with an order. An order is, like, a couple of weeks. An opinion can take time. I mean, it has... you know,
I...
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Mr. Toscher: Yeah, I... understood.

Judge Holmes: I go through court conference a lot when it comes down to it.

Mr. Toscher: That's the fun part, though, right?

Mr. Toscher: I'm going to wait for... we - - Ms. Herbert and I have had some discussions...
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Judge Holmes: Okay.


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Mr. Toscher: ...regarding the briefing schedule. And I gave her a proposal. But what do you... Your
Honor
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Judge Holmes: Anyway, let me do this because you'll want some time after this order comes out...
order or opinion comes out. So excuse me.

There will be another two or three, I'm sure. So I won't give you dates now, but we'll have a
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conversation. And if you reach an agreement on a serial briefing schedule... I'd much prefer seriatim
briefs... that will be highly likely to be granted. For the briefs, let me give you the general rules and
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observations here. No findings of facts, as always with my cases. I like narratives. Second stipulation is
good. I really like that. Thank you, Mr. Camp. You were like...

Mr. Camp: You're welcome, Your Honor.

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Mr. Toscher: You said no findings of fact?

Judge Holmes: Right. I like narratives like an appellate brief...

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Mr. Toscher: Right.

Judge Holmes: ...with copious citations to the record, of course.

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Mr. Toscher: Right.

Judge Holmes: But tell me stories.

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Mr. Toscher: Okay.

Judge Holmes: Particularly in a valuation case like this, it's important that I understand the formulas
that are being used. For the most part, they were all there in both sides' expert witness reports tucked
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away in exhibits I found. But that's okay. You can put them in the briefs that way. Just be transparent as
to the variables 3061 throughout. There was a lot of transparency even when you got into the weighted
average cost of capital on those variables. So that was very helpful. Just I'm not afraid of equations.
They're actually helpful in understanding. My last pure valuation case was a ??. It was Terrene, T-E-R-
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R-E-N-E. And there... it's helpful for me to know where the parties are disagreeing in variables, as
you'll discover. And I tuck the math away as it's affected in the footnotes so that the narrative of the
opinion can come through. And what I do is I try to figure out each variable that's being disagreed with,
make a resolution, and see how that affects the math as you work your way through the valuations.
Please remember when the time comes for briefing to address the burden of proof issue. There was that
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Ninth Circuit case which Tax Court has acknowledged might well shift the burden of proof to
Respondent here. But I'd like that briefed as well. Clear about formulas... I already mentioned that.
Clear about your disagreements about the formulas... you know, Vivendi versus whatever the 3062
other side used, that kind of thing. And then I'll want disagreements about the inputs into the various
formulas. But you already anticipated that in the expert witness reports. We have the extremely
important issue discussed the first week of trial that I know Ms. Cohen is especially interested in, it
seems. Ahmanson Curry... is this a group of assets, or is it a single asset? We had some of that just
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today. Think about that. It gets tied into reasonable foreseeability, of course, because some of the...
what you might think of as the assets of the estate, like the Cirque du Soleil deal, weren't there the date
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of death. They were maybe hovering, maybe foreseeable. That's a fact I suppose may be contemplated,
but they weren't in effect. So does that make it more like Ahmanson Curry where you had different
classes of stock that were being split up upon death but they were there at the beginning as of the date
of death? Or is it like something else? Must those be attributed under currently accepted appraisal rules
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as just being something that we have to attribute as an increase in the value of the estate after the date
of death due to its management, as might be suggested by the USPAP regulations? I don't know. You're
going to tell me.
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Mr. Toscher: You also... oh.


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Judge Holmes: Oh, go ahead. Go ahead.

Mr. Toscher: Tucked in that whole issue is sort of the procedural estoppel issue.

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Judge Holmes: Oh, yes, yes. Procedural... I have that in my notes, too. Thank you, Mr. Toscher. There
is that, yes. Oh, and that actually ties into whether this is a new issue or a new argument because, as
you will discover if you haven't already, if you would be prejudiced as petitioners by having learned
about this late in the game when you didn't have a chance to bring in expert testimony about synergistic
effects for that kind of thing, that might alter things as a procedural matter and whether I can consider

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that. That's the new issue versus new theory problem. There was a reserved question on whether or how
I can consider the 2016 Sony deal. That's sort of an instance of this broader problem that I've been
talking about, the Sony deal being seven years after the date of death, of course. And you know, was it
synergy? Was it attributable to Mr. Branca's efforts as executor? Was it attributable to passage of time?

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Mr. Toscher: I'm sorry, Your Honor.

Judge Holmes: This is the more specific instance. We had a reserved question on the consideration by

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me of the Sony 2016 deal as evidence of what Sony/ATV was worth on June 25th, 2009. That's actually
an example of this broader problem that we're talking about on reasonable foreseeability. And then
generally, be especially careful with the notion of reasonable foreseeability and specificity. As I said,
specificity, in my mind, is what I'm using as was the deal in place as of the date of death versus
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reasonable foreseeability. Did somebody think about it? Would an executor... a potential investor in the
estate have said I will bid up because I can see this coming? How does one measure that? Can one
measure that, especially... and this plays into the synergistic problem because you have assets that
might be worth more bundled together and sold all together than separately evaluated. But appraisal
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standards, as Mr. Anson said, say item by item. The regulations say item by item. Help me figure that
out. Oh, for Petitioner, in particular, please work the Fannon tax-effecting into each of the items that are
to be evaluated. Many of the experts didn't seem to quite put in the tax-effecting part of this. So help
me understand how...
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Mr. Toscher: Got it. Okay. That...

Judge Holmes: ...in each of those three...

Mr. Toscher: You want Ms. Fannon's formula.

Judge Holmes: Yeah, yeah...


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Mr. Toscher: Got it.


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Judge Holmes: ...as applied to each of the three...

Mr. Toscher: Yeah. No, I heard phantom.


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Judge Holmes: Oh, I'm sorry. Fannon. Fannon.

Mr. Toscher: No, no. That was... I don't hear very well.
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Judge Holmes: Well...


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Mr. Toscher: Got it.

Judge Holmes: ...I don't speak very well. So for Respondent, let's see. There... this might also affect

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Petitioner. But for Respondent, in particular, the Sony/ATV is... both experts did this, but especially Mr.
Anson seemed to be valuing Sony/ATV not as this peculiar operating business, but based on the value
of Sony/ATV's own assets. I kind of understand that, but there's this triggering clause and the
probability that it will be triggered and the conditions that it will be triggered. And help me figure out
what that looked like on June 25th, 2009. The buy-sell clause is complicated for me to understand at

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this point. I need to understand it better. Persuade me, in other words, that this is like an in-the-money
option, that it clearly would have been taken by a hypothetical buyer into account and triggered the
buy-sell provision or, alternatively, that it would not have been if you're Petitioners. But figure that out
for me and persuade me one way or the other. I don't want to have this go off as a valuation of

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Sony/ATV rather than the interest of the estate in Sony/ATV, in other words. Parties naturally would
tend to look at Sony/ATV and then split it in half and make adjustments that way. But figure that out for
me within the constraints of the expert witness reports we have and the fact that we never have perfect
knowledge of what's going on as of the date of a person's death. Any questions?

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Ms. Cohen: Yes, Your Honor. I have a question.

Judge Holmes: Yes.


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Ms. Cohen: I'm going to go back to the issue I brought up the first week, this... I... this concept of
synergy. And by the way, Your Honor, I think there are two different issues. There's synergy, which is
the synergy among the assets. And then there is do you look at all of the assets together as one business,
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let's say, and value them that way. That's different than synergy, as I see it. And if Your Honor is going
to... first of all, nobody... not Mr. Anson, not Respondent... nobody has suggested or...

Judge Holmes: Well, that's the...


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Ms. Cohen: ...or proposed appraisals. Looking at all of these assets, I just... Your Honor...

Judge Holmes: Mm-hmm.

Ms. Cohen: ...if we looked at all of these assets together, I think that Respondent would have a
problem because, actually, the value would be less than looking at the assets individually.
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Judge Holmes: Maybe. But the... one point is Mr. Toscher's point, which is a procedural one, which is
if I started talking about synergies of the entire estate together, especially when you've been settling
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individual items in that, so we wouldn't be talking about the synergies of these three remaining items,
as important as they are... yeah, it would be hard to do master recordings without song rights and
performance rights. But that question might trigger
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Mr. Toscher:'s point, which is, as a matter of procedure, Tax Court says we won't consider a new issue,
defined as something for which a party opposing that issue who need to develop new facts. If, on the
other hand, you're just citing to a different section of the code, we call that a new argument. That's fine.
And that, I think, is one of your problems.
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Ms. Cohen: Yes, it is.


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Judge Holmes: So that's... so make that in your brief. Mr. Toscher understands it, I can sense.

Ms. Cohen: Because my concern is if we're just doing it in the briefs and Your Honor decides, yes,

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these should be looked at all together, we are going to be substantially prejudiced because...

Judge Holmes: Of course. That's why you would appeal if I were to do that. But you... I mean, that
may be an argument. And the reason that it's come up here is that I noticed in reading Mr. Anson's
reports that he appeared... and through your cross-examination, of course... he appeared to be

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attributing value to things that weren't name and likeness but had value elsewhere in the estate because
he saw them in these projects that he hypothesized a rational investor would have value that he then
latched onto name and likeness because there was no other place to put it.

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Ms. Cohen: But there was another place to put it, Your Honor. And...

Judge Holmes: Maybe there was and it was settled. I understand.

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Ms. Cohen: No.

Judge Holmes: Oh, no? ae


Ms. Cohen: Not even settled...

Judge Holmes: Oh.


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Ms. Cohen: ...because, for example, if you just looked at Mijac, Your Honor...

Judge Holmes: Well, yeah, he did that in that footnote that we saw today.

Ms. Cohen: The publishing income in the name and likeness, he could have... he, in fact, did include it
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in Mijac because of the way he...

Judge Holmes: Well, then prove that to me. Then it's duplicative, and it should be included in Mijac
instead. Similarly, if there are any such games being played in the various expert opinions of the
petitioners, by all means, point them out to me in Respondent's briefs. But I just need to be clear about
what I'm valuing here because, you're right, as I run into it, I thought there are three stacks. I have three
clerks. You know, I can sort it out pretty easily. But if there are, in fact, synergies that I have to take
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into account because the code says the value of the property of the decedent, then I need to know that.
It might be that simply is a matter of practicality... we don't have all the information that we'd like to
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have in any case... and as a matter of law because the regulations nobody's ever challenged what those
say item by item and as a matter of custom in the appraisal trade where it says you do item by item by
item. This is just airy speculation by somebody who was corrupted by the University of Chicago Law
School to think about transaction costs in every regulation. Help me. And I'm sure y