AEG Escapes Blame for Jackson’s Death for Signing 50 Concerts

When Michael Jackson died last week Randy Phillips, the promoter who committed $50 million (?31 million) to the King of Pop?s comeback, seemed to be heading for financial disaster.

Summoned to Jackson?s Beverly Hills mansion after a panicky call from the singer?s manager, Frank DiLeo, Mr Phillips arrived as the ?ambulance was just coming out of the gates? ? forcing him to turn tail and head to the UCLA Medical Centre. There he waited for ?an hour, an hour and a half? with Mr DiLeo before being told the worst: the superstar who was supposed to fill 50 nights at the O2 arena in London was dead.

If Mr Phillips ? chief executive of AEG Live, the company behind the O2 arena ? was grief-stricken he did not let it show, or slow him down. AEG Live had spent up to $30 million on production costs for the Jackson shows, and advanced the singer $10 million to $20 million, according to industry estimates. That made it $50 million down ? and there were $85 million in sold tickets to refund. And 50 nights to fill.

What has happened since has been a PR masterclass. The surge in sympathy for Jackson has, in fact, created a huge commercial opportunity while AEG has largely escaped blame for signing the singer for 50 concerts ? or paying his controversial doctor Conrad Murray.

Mr Phillips began taking to the airwaves, and behind the scenes AEG rapidly developed a strategy that involved the release of fresh information each day. In the weekend after Jackson?s death, as questions mounted about how the singer had died and the drugs he was receiving, AEG faced difficult questions as to why the company had agreed to meet Dr Murray?s wages. But his answer ? ?You don?t argue with the King of Pop? ? seemed to be enough. The focus moved away from the company and on to the doctor.

At the same time Mr Phillips was already referring to Jackson?s rehearsals that had taken place in the Staples Centre two days before his death, in an effort to demonstrate that AEG had not caused his death through overwork. With the funeral not until next week and the toxicology report weeks away, AEG became one of the few sources of genuinely new information on the story.

A check of the insurance policy revealed that about $17.5 million was thought to be recoverable. But there are doubts over whether AEG Live would get its money back if Jackson?s autopsy revealed he was seriously unwell when he signed up to the This Is It tour. ?Lost profits? from when the O2 is empty are not covered, and while Jackson?s dates in 2010 will almost certainly be covered it will be hard to fill the 27 summer dates this year.

One Phillips ruse worked well. Those who had bought tickets were given the chance to receive them in lieu of a refund. Indications are that ?40 to 50 per cent? will accept this offer, saving AEG $40 million in losses. It also became clear that AEG had photographs and video footage of Jackson?s last rehearsals. The value was rising as fans went on a buying frenzy.

Mr Phillips released the first pictures of Jackson in rehearsals on Tuesday and the video followed on Thursday. Then there was talk of a DVD, which would be a chart-topper, bringing a windfall for the family estate ? and its publisher, AEG.

It is hardly surprising that Mr Phillips can say: ?I?m heartbroken but the company?s fine.?