Monday, May 12, 2014

Interscope Records Ceo Jimmy Iovine Poised to Become Billionaire With Apple Beats Deal

Jimmy Iovine, the veteran music industry producer and executive, will become a billionaire if Apple Inc. (AAPL) completes a deal to buy Beats Electronics LLC for $3.2 billion. The Interscope Geffen A&M Records chairman formed Beats, a luxury headphone maker and music-streaming service, in 2006 with hip-hop artist Dr. Dre, whose real name is Andre Young. The two built the company into one of the electronics industry’s leading high-end makers of music accessories. “He’s an incredibly talented guy,” billionaire David Geffen said in a phone interview from his New York apartment. “He did a brilliant job merchandising Beats and is probably the first billionaire to come out of hip-hop.” Iovine, 61, owns 25 percent of the Santa Monica, California-based business, while Young holds 20 percent, according to data compiled by Bloomberg. The stakes were confirmed by a person familiar with the company’s ownership and financial performance who asked not to be identified because the details are private. Proceeds from the deal, in addition to millions of dollars collected over more than five decades producing artists such as U2 and Fleetwood Mac, and from his ownership of Interscope Records, will give Iovine a net worth of more than $1 billion, according to the Bloomberg Billionaires Index. Photographer: Kevin Mazur/WireImage via Getty Images Dr. Dre, left, and Jimmy Iovine attend a Beats By Dr. Dre unveiling in New York City,... Read More Susie Arons, a spokeswoman for Iovine at New York-based Rubenstein Communications Inc., said the music mogul declined The Beats purchase, which would be the largest-ever acquisition by Apple, could bolster the iPhone-maker’s online music capabilities by giving it ownership of the Beats Music service that started earlier this year. For $10 a month, subscribers get unlimited access to all of the songs in the service’s catalog through a smartphone, tablet or Web browser. Iovine will collect $800 million once the transaction is completed. The capital gain will probably be taxed at 33 percent, in accordance with a blended federal and state tax rate provided by Irvine, California-based accountancy firm Haskell & White. Young will collect $640 million. A video posted to YouTube the day news of Apple’s interest surfaced, showed Young alluding to the deal, saying “the first billionaire in hip-hop, right here.” Based on analysis of his proceeds from the transaction, taxes and past earnings from recording and producing, Young probably has a net worth of more than $600 million, according to the Bloomberg index. Arons, who also handles publicity for Young, said the rap star declined to comment. bloomberg.com