National News

Who gets the money made by dead celebrities?

Marketplace - American Public Media - Mon, 2014-11-24 13:07

The latest entry in our “I've Always Wondered” series involves dead celebrities, mythic mansions and legendary kings: the King of Pop and the King of Rock ‘n Roll.

Listener David Rigby, an actuary in Winston-Salem, North Carolina, asked: “We hear about the vast amounts made by the estates of deceased celebrities like Michael Jackson and Elvis Presley. Who enjoys the benefit of all this income, and does the government get any tax revenue from it?”

I started with the king of dead-celebrity lawyers, Mark Roesler of CMG Worldwide. He’s got offices in Indianapolis and, of course, Los Angeles. His client list reads like a "Who’s Who" of Hollywood's departed: James Dean, Ella Fitzgerald, John Belushi, Telly Savalas, Bettie Page, The Andrews Sisters.

When one of these stars checks out, Roesler checks in. He values what’s left and figures out how to make money on it, for the both heirs and his firm. “They have two types of assets," Roesler says of the typical dead celebrity. "Tangible assets — cars, bank accounts, homes; and intangible assets — copyrights, trademarks [and] the right of publicity, which is the right to your name and likeness.”

Roesler says for the heirs of music stars, this is where the big money usually is. It’s the songs: sold on iTunes, played in bars and used in ads. Plus, the celebrity’s name and image, put on products or even back 0n stage in holographic form.

And who gets the profits? The estate lawyers’ cut is typically 10 percent or more. Record labels and marketers also get a slice of the revenue stream. Income tax can grab as much as 40 percent of the profits, and the IRS also takes a one-time Estate Tax payment on the estimated value of the assets at the time of death.

Roesler says that for a complicated estate — when he’s doing licensing deals and he’s in court suing bootleggers using the artist’s image or music in ads or t-shirts — his cut can be 30 percent or more.

Now let’s see what the King of Pop and the King of Rock ‘n' Roll left to their heirs.

Michael Jackson

When Jackson died from a drug overdose in 2009, he didn't have much value to marketers. Numerous scandals had eroded his reputation and value as a product endorser, and he faced massive debts from his lavish lifestyle and the upkeep of Neverland Ranch. He was planning a major comeback and arena residency in London.

Jackson has topped Forbes’ annual dead-celebrities list for five years, bringing in $140 million this year alone. The Forbes list, released in the fall, estimates revenue from all sources from the past 12 months before taxes and management fees. As Beverly Hills entertainment lawyer Joseph Schleimer explains, death often brings a change in a star’s financial fortunes.

“The mansions, yachts, luxury cars, private jets and parasitic entourages are dispensed with,” Schleimer says. “Death ushers in lawyers, accountants and executors, and they usually bring a cold eye for maximizing revenue.”

Jackson’s will was clear: he left the bulk of his estate to his mother, Katherine, and his three children, Prince, Paris and ‘Blanket.’ His father, Joseph, and his siblings inherited nothing.

In the six years since Jackson’s death, the executors designated in his will given Jackson's legacy a complete turnaround, generating more than $600 million in earnings. They've raked in profits from several song catalogs Jackson acquired during his life, Cirque du Soleil shows in Las Vegas, posthumous albums, a documentary, plus numerous marketing and endorsement deals.

Jackson’s estate, meanwhile, is in tax court, fighting a $730 million IRS demand for back-estate taxes and penalties. The executors reportedly pegged the value of Jackson's assets at just $7 million when he died in 2009 and they say the half-billion-dollar turnaround they've engineered came after he died and couldn't have been anticipated. The IRS says the estate was worth at least $1 billion when he passed it on to his heirs, and that’s how much they should have paid taxes on.

AFP/Getty Images

Elvis Presley

When Elvis Presley died of a heart attack in August 1977, his finances were a wreck. His personal life, his music and his movie career had been in decline for years. Graceland was expensive to keep up.

Today, Elvis Presley is the second highest-earning dead celebrity, according to Forbes, with his estate pulling in about $55 million each year.

Presley’s longtime manager, Colonel Tom Parker, let Presley into several ill-advised business deals. In 1973, they sold off Elvis’s rights to all future royalties from songs he had recorded up to that date. RCA Records paid the pair $5.4 million, which they split 50-50. After multiple lawsuits over Parker’s handling of Presley’s finances before and after his death, Parker was removed from involvement in the estate altogether.

Elvis never sold off control of his hundreds of published songs, and they continued to generate revenue for him and for the estate after his death.

Presley’s will left his estate to his father, Vernon, his grandmother, Minnie Mae, and his nine-year-old daughter, Lisa Marie. Mounting debts led to a recommendation that the estate sell Graceland, but the heirs decided to keep the mansion, eventually opening it to the public in 1982. It is now listed on the National Register of Historic Places and receives 600,000 visitors per year. The estate has also since opened the Heartbreak Hotel and operates a Memphis shopping mall selling Elvis memorabilia.

Today, the Elvis Presley Estate owns a vast collection of photos, album covers, movie posters, archive video footage, as well as the Presley's catalog. It protects and markets Presley's name and image.

But the estate isn’t controlled by Presleys anymore. In 2005, Lisa Marie Presley sold an 85 percent stake to Robert Sillerman’s CKX media company. The estate was sold to Authentic Brands in 2013. The company also manages the Marilyn Monroe and Juicy Couture brands. Lisa Marie Presley retains a 15 percent stake in the estate, as well as owning Graceland and her father’s personal effects, which she manages with her mother, Priscilla Presley.

Vitamin D Tests Aren't Needed For Everyone, Federal Panel Says

NPR News - Mon, 2014-11-24 13:05

There's not enough evidence that screening the general public for vitamin D deficiency helps reduce the risk of disease, the U.S. Preventive Services Task Force says.

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Grand Jury's Decision In Michael Brown Case Will Be Announced Monday

NPR News - Mon, 2014-11-24 11:37

A news conference is reportedly being scheduled for Monday evening, when St. Louis County officials will relay the jury's decision.

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Silicon Valley's Power Over The Free Press: Why It Matters

NPR News - Mon, 2014-11-24 11:35

A big shift has occurred over the last few years. Tech companies now control how you get news and what news you get. Should journalism companies be building and deploying more technology?

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Sandwich Monday: The Thanksgiving Hot Durkey

NPR News - Mon, 2014-11-24 11:20

For this week's Sandwich Monday, we make our own holiday turkey — out of hot dogs.

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Immigration policy could change the education equation

Marketplace - American Public Media - Mon, 2014-11-24 11:00

We're only beginning to grasp the implications of President Obama's executive action on immigration, announced last week. With millions of undocumented immigrants free to work legally, and deportation no longer a risk (at least for a few years), there will be better-paying jobs for many – and a lot less stress.

For some, there may be another opportunity: education.

In some states, undocumented workers who qualify for deportation relief will become eligible for in-state tuition. They'll be able to get driver's licenses, making it easier to get to school. They also may be eligible for work-study jobs and internships.

Some may enroll in professional programs to become lawyers, teachers and pharmacists, says Michael Olivas, who teaches immigration law at the University of Houston, "because many of them just hadn't been able to afford it before."

Under the new policy, as many as 3.7 million parents of children who were born in the U.S. — or are legal residents — will become eligible for temporary relief from deportation, according to the nonpartisan Migration Policy Institute. Another 290,000 undocumented immigrants whose parents brought them here illegally could also qualify. The action lifts the age requirement for the 2012 Deferred Action for Childhood Arrivals program, which applied only to people 30 and under.

The new policy won't mean a flood of new college students, says Michael Fix, president of the Migration Policy Institute.

That's partly because most who qualify are older than the traditional college-going age. Also, undocumented students still won't qualify for federal financial aid. Most of those who are eligible live in states that already offer in-state tuition to undocumented students, Fix says.

But the new policy will help the school-age children of many who qualify, he says.

"What you could see among some of the U.S. citizen children is more persistence in school, better attendance, you could see maybe better grades, and you might well see better health," he says.

A recent study from the nonprofit group Human Impact Partners found that children in families under the threat of detention or deportation end up with less education than children of citizens.

"Undocumented parents are really struggling with poor job conditions, with economic hardship and stress, and it can limit their participation in learning activities," says Lili Farhang, one of the study's authors.

Undocumented parents who have shied away from institutions, for fear of being found out, might now be more involved in their children's schools, Farhang says.

An immigrant from Peru, Lorella Praeli didn't discover that she was undocumented until her senior year in high school, but her sister found out at a much younger age.

"I could see how it affected her so much in both how she performed in school and how she related to others," says Praeli, director of advocacy with the United We Dream network, which advocates for immigrant youth and families. 

Two years ago, Praeli's sister qualified for the Deferred Action for Childhood Arrivals program and has blossomed in college, Praeli says.

"I was able to see it firsthand in my family, how this piece of paper this identification card and a nine-digit Social Security number – just changed who Maria was," she says.

Praeli now has her green card. And under the new policy, their mom will qualify for one, too.

Help wanted: Versatile executive to lead Department of Defense

Marketplace - American Public Media - Mon, 2014-11-24 11:00

When Chuck Hagel was appointed secretary of defense in early 2013, the military was winding down from the wars in Afghanistan and Iraq. But new overseas conflicts have changed the job's requirements.

Today's secretary of defense needs to possess management experience, the ability to oversee shrinking budgets and be skilled at dealing with conflict at home and abroad. Military experience is a plus but not required. Must be a strong policy adviser.

 

Clydesdales go missing from Budweiser's holiday ads

Marketplace - American Public Media - Mon, 2014-11-24 11:00

Budweiser has been using Clydesdales in its holiday advertisements since 1987. But this year the brewing company is saying goodbye to the horses and hello to Jay-Z.

With the help of Jay-Z, the brewing company hopes to appeal to untapped potential customers. According to the Wall Street Journal, 44 percent of 21 to 27-year-old beer drinkers have never tried Budweiser.  

To add some context, Jay-Z has appeared in a few Budweiser advertisements in the past, like this one from 2012:

And in case you are a huge Budweiser Clydesdale fan, give thanks for the Internet. You can watch this Budweiser holiday commercial from the 1980s here:

Or the 2014 Super Bowl commercial here:

 

 

The hidden dangers of low oil prices

Marketplace - American Public Media - Mon, 2014-11-24 11:00

If OPEC doesn't decide to cut oil production when it meets in Vienna this week, some say oil could fall to $60 a barrel. Lower costs sound like bad news for the oil industry and good news for the rest of us.

But it's not that simple. There are other losers – and a chance that $60 oil could end up being bad news for all of us down the line.

Other losers

The oil boom has produced one big set of winners outside of the traditional oil business: the whole economies of oil-producer states like North Dakota and Texas. 

"The places where the booms have been occurring have largely benefited from increases in land and housing prices," says economist Michael Greenstone, director of the University of Chicago's Energy Policy Institute. "They’re now going to give some of that back."

Broader risks

When oil prices collapsed all of a sudden in the late 1980s, it blew back on the rest of us, says Michael Webber, deputy director of the Energy Institute at the University of Texas at Austin.

First, he says, oil producers in Texas and Oklahoma went bankrupt, "which caused a lot of land deals to go bad— because the land had been overvalued, which caused tens of thousands of savings and loans to go bankrupt and belly up, which caused a nationwide S&L scandal, which eventually led to recession."

That particular set of dominoes isn’t likely to fall this time, Webber says. But it’s an example of what can happen.

Wild cards

Nobody knows for sure whether we’re looking at a long stretch of low oil prices. Maybe we’re looking at a stretch of volatility – prices that go up and down.

That can slow down the economy, says economist Christopher Knittel, director of the Center for Energy and Environmental Policy Research at MIT.

He starts with household example:  Gas prices are high, so a family buys a Prius instead of an SUV. "Now, if oil prices fall, then they wish they had bought the more-powerful car instead of the more fuel-efficient car," he says.  

But it’s too late, the money’s been sunk. Companies can also get caught with the wrong big-ticket items. Airlines, railroads, shippers. "When they bet wrong, then their prices have to increase," says Knittel. "And we pay those prices."

The really big picture

Lower gas prices could have another cost: More driving, which leads to more carbon emissions and more global warming. Economists are still struggling to calculate the price, but they expect it to be high.

For The Next Food Drive, Go For The Canned Tuna, Not The Saltines

NPR News - Mon, 2014-11-24 10:11

If you're giving nonperishables to a food pantry this year, skip the sodium-packed soups and focus on nutrient-dense foods, hunger advocates say. Some of them may be cheaper, too.

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The Economics Of Thanksgiving 2014

NPR News - Mon, 2014-11-24 09:01

More people will be driving and flying this Thanksgiving holiday weekend. Gas isn't the only thing that's cheaper. Turkey is too, along with its companions, stuffing and cranberries.

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Hagel Steps Down After Discord On Syria, Iraq

NPR News - Mon, 2014-11-24 09:01

President Obama announced the defense secretary's resignation Monday morning. Chuck Hagel clashed with White House adviser Susan Rice on Syria policy, and he never made it into Obama's inner circle.

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Hello Flowers, Bye-Bye Stray Dogs: Nepal Preps For South Asian Summit

NPR News - Mon, 2014-11-24 08:16

VIPs arrive in Katmandu tomorrow for the big event. The government is whitewashing buildings, sending beggars away and promising 24-hour power. But what happens when the summit ends?

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Israel's Cabinet OKs Controversial Nationality Measure

NPR News - Mon, 2014-11-24 08:06

The bill, which must be approved by parliament, defines Israel as "the nation-state of the Jewish people." It has angered not only Israel's Arab citizens, but also members of the coalition government.

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Merck Partners With NewLink To Speed Up Work On Ebola Vaccine

NPR News - Mon, 2014-11-24 08:01

The experimental NewLink vaccine is based on a harmless virus that has been genetically engineered to incorporate bits of the Ebola virus. Testing of the vaccine has begun in healthy volunteers.

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Secretary Of Defense Hagel To Resign

NPR News - Mon, 2014-11-24 06:29

Chuck Hagel's resignation comes amid concern over the rise of ISIS, also known as the Islamic State, and a return of U.S. troops to Iraq. President Obama is announcing the move Monday morning.

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'Ferguson Forward': Churchgoers Seek A New Normal

NPR News - Mon, 2014-11-24 05:38

Spiritual leaders are praying for calm, but preparing for everything, as they wait for a grand jury decision in the shooting of Michael Brown.

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The problem with fracking

Marketplace - American Public Media - Mon, 2014-11-24 05:31

Slumping oil prices are wrecking life for drillers around the world, particularly high-cost producers now struggling to make a profit ... like the U.S.

American oil from shale, which comes out of the ground through fracking, is pricey to extract. On top of that, sources of oil become mere trickles within a year or two.

The notion of oil wells tailing off and aging isn’t new. In the late 50s, a Hollywood celebrity famously joked that actors are, “about as short-lived as an oil well and twice as pretty.”

The issue is, for the new so-called shale wells, production falls like a stone in the first year.

“Let’s say you produce 500 barrels in the first month of production,” says James Burkhard, head of oil market research for IHS Energy. “Twelve months later you could be producing around 250 barrels. So a decline rate of about 50 percent. In a conventional well, the decline rate is much less steep.”

Oil from shale is not a pool of liquid, but rather small amounts trapped in tight rock. That requires drillers to fracture, or frac, the shale rock to release the oil. Quickly, though, output slows and pressure falls. And the driller has to drill and frac again, in a new spot. That’s expensive — in many places, each well costs $8 million.

“I’ve seen it personally firsthand,” says Ed Hirs, managing director of the Houston-based oil and gas firm Hillhouse Resources. He also teaches economics at the University of Houston. “We’ve had wells on production since 2009, 2010 that have been plugged and abandoned here in 2014, because they are not producing enough to cover their cost.”

Hirs says his firm barely profited in shale. So it returned to drilling old-school conventional oil, where a good well returns five, even 10 dollars for each one invested.

Fracking for shale oil, he says, is a fad, like that scene where the cruise ship tilts to one side.

“They all ran to the shale side of the boat,” Hirs says. “That was the fashion of the day. We see this in other industries as well.”  

Fast-declining wells also require continuous drilling and investing to increase production. Before one tails off, you have to drill the second. And then before that tails off, you drill the third. It’s a treadmill, which may be speeding up as the most productive drilling spots are taken.

Some call this the 'Red Queen' race. Remember Alice, from the Wonderland books? In one scene, she runs and runs and gets nowhere, at which point the Red Queen chimes in.

“Now here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”  

Constant drilling means constant spending, and according to the U.S. Department of Energy, production revenues are not keeping up with expenditures. Some shale investors are edgy, analysts say.

“If you’re giving money to somebody, you eventually want to get something back,” says Virendra Chauhan of Energy Aspects in London. “If that’s not happening, then there seems to be something wrong with the business model.”

To which shale optimists shake their collective heads. Looking back more than a century, drilling technology has repeatedly proven skeptics wrong. “Until we hit peak knowledge, until the human race hits peak knowledge, we won’t hit peak oil supply,” Burkhard of IHS Energy says.

Companies now drill and frack wells deeper, closer together and more efficiently. So, can technology improve faster than shale wells fall off? “If today the wells you’re drilling are twice as good as the wells you drilled two years ago, then that goes a long way toward addressing that decline,” says geologist Allen Gilmer, CEO of oil and gas database firm Drillinginfo.

Today, the U.S. produces more than 3 million barrels a day, from shale alone. That’s more than the total output of Iran, or Iraq, or Venezuela. “I think it’s very unlikely to ramp down,” Gilmer says, “unless operators really start pulling back on drilling. And as long as a well is economic, I don’t see that happening.”       

Ed Hirs at Hillhouse Resources does see that happening. With oil prices low, and investors antsy, exuberance could go bust. “The challenge with these fast-declining wells is this pace of drilling needs to continue,” Hirs says. “Without the pace of drilling continuing, that three and a half million barrels a day will peter out to zero in the next three to five years.”

That’s the debate: whether shale oil production declines the way its wells do, the way movie stars come and go. Bullish types will note the actor who compared short careers to oil wells decades ago. That actor's name? Ronald Reagan

Defense Secretary Chuck Hagel Will Step Down

NPR News - Mon, 2014-11-24 05:30

The news comes as troops pull out of Afghanistan and begin a new offensive against the Islamic State. The New York Times cites officials saying that fight would "demand a different kind of focus."

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Quiz: The best-connected state in the nation

Marketplace - American Public Media - Mon, 2014-11-24 04:43

More than 70 percent of American households have a high-speed internet connection, according to a Census Bureau report.

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