Brandon Phillips Transcripts Michael Jackson Exe. John Branca V Irs

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UNITED STATES TAX COURT - TRIAL

ESTATE (OF MICHAEL J. JACKSON DECEASED) EXECUTORS: JOHN G. BRANCA. AND JOHN MCCLAIN V

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COMMISSIONER OF INTERNAL REVENUE (IRS) February 10th 2017 Presiding Judge Mark V. Holmes

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Jackson’s estate is represented by Avram Salkin, Charles Paul Rettig, Steven Richard Toscher, R obert S. Horwitz, Edward M. Robbins Jr., Sharyn M. Fisk and Lacey E. Strachan of Hochman Sa lkin 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 Mus en and Laura Mullin. -------------------------------------------Brandon Phillips

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EX. CEO AEG Live

Previous testimonies http://www.teammichaeljackson.com/jackson-v-aeg-the-trial

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Video testimonies http://www.teammichaeljackson.com/people-vs-conrad-murray

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Mr. Weitzman: Yes, Your Honor. Before I call my next witness, which is Brandon Phillips, I wanted to let the Court know that Mr. Phillips was told by Mr. Musen, who had .... it's the gentleman at the end of the counsel table on that side of the room, who had interviewed him, I think it would be a telephone if I remember correctly, not in person, that when he was finished today, he had to come back for another session to be called, I guess, as a witness for the Internal Revenue Service. It seems to me we should try to get it done at all one session. So I'm surprised and looking to guidance from you. But that was the idea, and I thought we'd agreed upon that early on in a telephone conversation with Your Honor.

Judge Holmes: I remember there were a couple of them. What's going on Mr. Musen? Is there a reason you can't get him now?

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Mr. Musen: I think we need an agreement for a stay of our trial session, that we would only be calling, I'm sorry, that for out of state witnesses, that we would try to do it during the .... during Petitioner's examination. But for local witnesses that we would call the witness back for our case-in-chief.

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Mr. Weitzman: I never heard that until today. I never would have agreed to that, and with Mr. Branca, I believe we made an exception because he's a party, the party in this case and I don't believe we ever discussed making that exception for any witness.

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Judge Holmes: The usual rule which the government's invoking here, is they get to put on their case-in-chief the way they want to. I do try to accommodate out of party, out of town witnesses and voluntary witnesses that way, but do you expect Mr. Phillips to testify a lot as part of your case- in-chief? He's not a 15 minute witness is he?

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Mr. Musen: No, no. It would be longer than 15 minutes.

Judge Holmes: How long do you think?

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Mr. Musen: 45 minutes, an hour, maybe more.

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Judge Holmes: And he's local? What's he do for a living, Mr. Weitzman?

Mr. Phillips: May I elaborate?

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Mr. Weitzman: Sure.

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Mr. Weitzman: What does Mr. Phillips do for a living.

Judge Holmes: Yeah, yeah.

Mr. Phillips: Right now, I'm the CEO of a company called Live Style, Inc., which was formally SFX, .

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Judge Holmes: Okay. So time is money for you, right? See what you can do on cross and see if you need to call him as part of .... I don't want you - - if you're not going to do your direct examination today, I don't want you not to call him. But we'll get him in and out as soon as we can. I understand he's busy. But no, I'm not going to have him show up just today, Mr. Weitzman. Go ahead with your direct case.

Mr. Weitzman: So could I just ask how that works though? I've never, I've never quite seen this.

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Judge Holmes: I will be cross with the government. If the government as part of its case- inchief does not call him after dragging him here for a second day. I will be somewhat less cross but still cross with the government if they give him only 15 minutes of time, rather than a full excruciating direct examination. But I will allow them to present their case as they wish to present it, and you too. So you can call Mr. Phillips now.

Court Clerk: , BRANDON PHILLIPS sworn in.

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Court Clerk: You may be seated, and to please state your name and address for the record.

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A. Brandon Keith Phillips. I live at ………………………..

Mr. Weitzman:

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DIRECT EXAMINATION

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Q. Mr. Phillips, can you tell us where you went to high school? Just a location, not the high school and what your post high school education was?

A. Mount Vernon, New York, I graduated. I went on to Brandeis University, undergraduate for two years. I worked in Washington, D.C. on the House, on the Hill for a year, and I finished my education, my undergraduate education at Stanford University.

Q. And did you have any post-graduate work?

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A. Yes. I spent a year and a half at law school.

A. Yes.

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Q. And what did you do?

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Q. So after your year and half in law school, you went into the work marketplace?

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A. I partially owned a club in Hollywood called .... at the it was called the Palace. It's now the Avalon. I was part owner of that. I was the managing partner, and then during that tenure I became partners in a management company called Stiefel Phillips Entertainment with a gentleman named Arnold Stiefel, and we were one of the probably five largest personal management companies in the entertainment business.

Q. Can you tell us, just give us a list of some of the artists you represented?

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A. Yes. Rod Stewart, Prince, Guns and Roses, Toni Braxton, Morrissey, Simple Minds.

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Q. Not a bad start.

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Q. Okay, and after .... well did you leave Stiefel Phillips?

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A. I was lucky.

A. No. We actually, we stayed together for 13 years or so, and I did a deal with MCA Records, which is now Universal Music, and I had a record label called Gasoline Alley Music, obviously named after the Rod Stewart album which .... and the label was quite successful. It had two multi-multi platinum artists. One was the group Shy, which were four Howard University students. This might be more information than you want, and then the last group, I signed this group called Sublime out of Long Beach, California and it was massive.

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Q. And then .... and was Gasoline Alley in addition to the management business or did you leave it?

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A. Yes, it was both. We were partners in both.

Q. And was there a time when you left the management business and the label business?

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A. I left the management business to run a record company with the former chairman of MCA Records, a guy named Al Teller. That was called Red Ant Entertainment.

Q. And after Red Ant and that experience, what did you do?

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A. I received a phone call from a new music manager of note named Irving Azoff, who had just sold a small boutique concert company to Phil Anschutz and Tim Leiweke at the beginning when they were starting AEG. They had just built Staples Center, and as soon as they bought that company, even with all of Phil's financial resources, they were shut out of getting any major headline talent by at the time Clear Channel Entertainment, which was SFX Entertainment. Clear Channel today is known as Live Nation Entertainment.

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Q. And did you then become an employee of AEG?

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A. Well first I was a consultant, and I brought in the Brittany Spears tour, the first really big tour she did worldwide. That started the company, and then they came to me and offered me the job of CEO of the company.

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Q. Is that of AEG Live?

A. Of AEG Live.

Q. And when did that position start?

A. I started that job in 2000.

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Q. And can you explain to us exactly what your responsibilities consisted of as CEO of AEG Live?

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A. I had created .... I named it AEG Live. Before that, it was called Concerts West, the Music division, and I did a 33 page business plan because before I would take the job, I wanted to make sure I was on the same wave length and same place that Tim Leiweke and Phil were in, Phil Anschutz, and that plan is the plan today of what AEG Live is, including Golden Voice, Coachella and JazzFest New Orleans, and regional offices and stuff like that. So the company reflects the plan that I gave them, and that's when I joined.

Q. And ultimately did you leave the company?

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A. Yes. I left in November I think 23, 2013.

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Q. Did you have occasion when you were working with AEG to speak with Michael Jackson and his representatives about putting together a concert tour?

A. Twice.

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Q. The first time was in what year?

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A. I think 2007 to the best of my recollection.

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Q. And was there a deal put together in 2007?

A. No. We made an offer, but it was turned down.

Q. Okay. Did you have a subsequent conversation with Michael Jackson and/or his representatives for a concert series or tour of some sort?

A. Yes, in the following year, 2008.

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Q. 2008?

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A. Uh-huh.

Q. And whom did you speak with or how did that come about?

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A. I received a phone call from Phil Anschutz, who received a call from Tom Barrack at Colony Capital. Colony Capital just purchased the note on Neverland from Fortress Capital, I believe, for about $24 million. He called Phil and said Michael wants to work again. Now he's ready to work, and he asked for Randy Phillips, if he would be interested.

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Q. Now have you worked with Michael Jackson on any other projects before the offer made in 2007, in the beginning of the conversations in 2008 regarding a tour?

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A. Yes, I have.

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Q. What other project have you worked on with Michael Jackson?

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A. In the 90's, and I can't remember the date. I think it was around '93 but I'm not 100 percent sure, '94, I represented .... I and a gentleman who's now deceased named Jay Coleman, who is a sponsorship agent, the two of us represented Michael in an endorsement product line deal with a company called LA Gear.

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Q. And what kind of endorsement deals?

A. It was .... Michael was endorsing LA Gear as a fashion line, and they were doing a pretty big line of sneakers with, you know, his branding.

Q. And did you negotiate an advance for Mr. Jackson?

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A. Yes.

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Q. Do you remember how much the advance was?

A. I believe it was $8 million.

A. Disaster.

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Q. And how did that project turn out?

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Q. And why was it a disaster?

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A. Because Michael had a very heavy involvement in the design, product design of the shoes. So every shoe had .... at the time was when he had the red jacket with the zippers and stuff like that. Every shoe had zippers on it and they were just too complicated, nothing any self-respecting teenager would want to wear. And I remember the arguments between the LA Gear guys and him. I was involved in all those meetings up at a condo he owned on Wilshire Boulevard. And to a large extent, I think he kind of sabotaged the potential commercial success of that line by not being more open and listening to the professional designers. And they were so enamored of him that they would have gone along with anything he said, because they were just thrilled to be in the same room with him.

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Q. And during that time period, did you form a kind of personal social relationship with Mr. Jackson?

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A. Yes, I did.

Q. And did you stay in touch with him over the years?

A. Well actually at one point, Arnold Stiefel and I had negotiated to become his managers with John Branca, who was his attorney at the time, and prior to us concluding our management deal with Michael John got fired.

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Q. That also was in the mid-90's?

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A. Yes.

Q. By the way, did the LA Gear experience end up with a lawsuit if you recall?

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A. I don't know. It may have, because ....

Q. But you weren't involved?

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A. I wasn't involved, no.

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Q. Okay. Was part of your responsibility, just before we get into the details of the Michael Jackson tour that didn't happen, was part of your responsibilities as AEG kind of producing .... my phrase not yours; there may be a term of art I'm not familiar with .... producing concert tours?

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A. That is correct.

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Q. And were there certain elements or financial deals that you tried to implement with each tour?

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A. Yeah, and just to further illuminate on what you were just saying, some tours we promoted, just purely we were the promoters. Some tours we produced, and there's a .... and promote, and there's an art to the two. We are producing the tour. You're actually creating the show of the final product. We're buying the tour and promoting it. You're buying a finished delivered show.

Q. Well, for example you're familiar with the phrase "tour sponsor" correct?

A. Of course.

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Q. And as a tour sponsor, is it AEG Live's responsibility in helping put a tour together?

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A. It was one of our goals, you know. There wasn't a guarantee of sponsorship in the deal, so it's something, yes. We would .... but also the artist manager would also be, or if they had an agency would also be involved in finding a sponsor.

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Q. And did AEG have people or did you have a group or part of the company that just dealt with tour sponsor or sponsorship opportunities?

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A. Yes. Without sounding ridiculous, they were the best at doing that because AEG, the whole company was founded on what they call founding partners and naming rights and stuff like that. So yeah, they were in touch and in contact with all the major companies that would be potential sponsors.

Q. So getting back to the phone call you got from Mr. Anschutz about Michael Jackson, what did the phone call involve? What did you do?

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A. Phil said would I call Tom Barrack at Colony Capital? No, it actually wasn't Tom. It's Tom Barrack who we spoke to. He asked me if I would call Richard Nanula ....., who was an executive at Colony Capital I had never met before, and I did and we set up a meeting and I went over to Colony Capital's offices in Century City.

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Q. And neither Michael Jackson or his representative were involved in those initial meetings; is that correct?

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A. Well, when you say "his representative," I did not know what relationship Tom Barrack or Colony Capital had with Michael, so I'm not sure. I didn't meet .... they set up a meeting for me with his person who was called his manager at the time.

Q. And who was that if you recall?

A. That was Dr. Tohme Tohme.

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Q. And the meeting was Tohme, Nanula and who else was in the meeting?

A. What?

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Q. Paul Fuhrman?

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A. A lawyer named Ken Hertz, and there was another, I think the CFO for Colony Capital was in the meeting. I can't remember his name.

Q. Paul Fuhrman?

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A. Yeah, he was .... yes. He was in the meeting, and but not Dr. Tohme. He wasn't in that meeting, that first meeting.

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Q. And who was Ken Hertz representing?

A. He was representing Colony Capital.

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Q. And Ken was an attorney; correct?

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A. Yes.

A. No. He would argue that point, but yes.

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Q. Not practicing law anymore?

Q. So do you recall at all, at least in some summary fashion, the context of the meeting?

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A. Yes. Tom came in and pretty much took over the meeting from Richard, and he said that Michael needed to work. He was dead broke. They were going to foreclose on Neverland. He bought the note at the last, at the eleventh hour, and you know, said that Michael really wanted to work again and he asked for you, meaning me.

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Q. Okay.

A. Probably because I was the only one he could remember I guess.

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Q. All right. So what happened next with respect to working towards getting an ultimate deal for this tour?

A. I met .... my first meeting either that night or the next night at the bar at the Belair Hotel.

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Q. Far end.

A. Far end, the two seats at the far end with Dr. Tohme. That was pretty much his office.

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Q. And how many meetings .... how many meetings did you have with Dr. Tohme? By the way, I'm being a smart guy. Dr. Tohme's not a doctor is he?

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A. I don't know.

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Q. Okay.

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A. Could be a Ph.D. I have no idea.

Q. How many meetings did you have with Tohme Tohme before you met Michael Jackson?

A. Oh before I met Michael, we probably had two or three.

Q. And before you met Michael, did you discuss the outline of a deal with Tohme?

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A. Yes.

A. Yeah, yes.

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Q. What was it?

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Q. Do you recall a gentleman, I know you're not going to have .... or you might, each specific term? But do you recall in general what the deal was that discussed?

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A. It was to take Mike, to start a tour in London for two reasons. One, I felt we needed to rehabilitate him in the United States given what had transpired between the trial, the first allegations and the trial with the dentist's son and then the trial. I thought it was just too much for him to start here and achieve what he wanted to achieve. The other reason was we had just built the greatest arena in the world, the 02 Arena in London, and I sound like I still work there, okay. We had built that arena and obviously it behooved us as a company to start in London, because we made so much more from the sales of shows when we were actually on the real estate.

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Q. And when you say "rehabilitate," what is it you meant?

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A. I meant I had a plan. This goes back to 2007 with the former Raymone Bain, Peter Lopez who were representing him then. I had a plan to take Michael and get him back on a stage again,

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and the idea was to start in London and then work our way through Europe, and then the Far East, Australia, New Zealand and two and a half years later, come back into the States for a multiple night arena tour. Not a stadium tour, but a multiple night arena tour.

A. 20,000 seats versus 60,000.

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Q. What's the difference between stadium and arena?

A. Yes, I did.

Q. And where was that meeting?

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Q. So did you finally meet with Michael after the two or three meetings with just you and Tohme?

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A. That was a .... the first meeting this round was at a suite in the Belair Hotel.

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Q. Was Michael visiting Los Angeles or had he moved to the Belair Hotel?

A. No, he was .... I believe at the time he was visiting, but staying at the hotel. He still had a place in Las Vegas.

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Q. And did you discuss or what did you discuss with Michael?

A. We discussed him wanting to tour again, you know, because in a way I wanted to be reassured that this wasn't another wild goose chase, and I totally respect him.

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Q. I'm sorry. Why do you say that? What do you mean? I apologize for interrupting you when you ....

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A. Okay. For the 2007 with the Raymone, we had a lot of meetings and the tour never materialized because I was told that Michael was not ready to tour yet, and there was a lot of speculation in the industry that he would never tour again on the stage.

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Q. Right. So how did you reassure yourself that this might not be another wild goose chase?

A. By sitting with Michael and it was a very emotional meeting, and he told me why he was ready to do it now, because I asked him point blank. He said because his kids are old enough to appreciate what he does for a living, and he's still young enough to do it. Those were his exact words, and then he also broke down very emotionally. I don't know how much detail you want.

Q. Well when you say "broke down," first of all who was there besides you and Michael?

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A. It was Michael, Dr. Tohme and me. There was a security guard named Prince. I can't remember his name, but he wasn't in the room, and then the kids it was Halloween, so the kids were running around in costumes. I remember they had masks on. I think they were going to Elizabeth Taylor's house.

Q. Okay. How long did this meeting take place?

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A. Just about an hour, a little over. Probably an hour to an hour and a half.

Q. And you said Michael broke down. Tell us what transpired.

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A. When I asked him why now, he had made that statement, and then he said that he needed .... that he and the kids were living like vagabonds, his word, and they wanted .... he wanted to buy a house and settle down with the kids and give them a normal life, and he broke down in my arms when he was saying that.

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Q. Crying?

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A. Uh-huh.

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Judge Holmes: Yes. Is that yes?

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A. Yes, yes, yes.

Q. He didn't shake his head. All right.

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Q. Yes. He said yes.

A. And Dr. Tohme, I mean the truth is Dr. Tohme and I both were crying at the same time, because to see this super star in that condition.

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A. Just what I read in the media.

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Q. Were you aware of his financial situation at that time?

A. No, no.

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Q. And did you .... you didn't discuss that with Michael, at least at that meeting?

Q. Do you know where he was living in Las Vegas at the time he visited Los Angeles?

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A. When I met with him in Las Vegas, you asked Las Vegas, not Los Angeles, right?

Q. I said Las Vegas, yeah.

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A. When I met with him in Las Vegas, we met at the wine tasting room at the Turnberry Isle complex there. So we didn't go to his house, and I asked Dr. Tohme, I said not .... I asked Raymone, I said why aren't we meeting in his house, because I figured he had a beautiful spread there, and she said that it was not suitable. It was like a warehouse full of all his stuff.

A. This is the Vegas meeting, the Las Vegas meeting?

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Q. The Vegas meeting. So the Las Vegas meeting.

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Q. And at that meeting, was it you, Tohme, Ms. Bain and Michael?

A. It was, you know, four tables put in a square, and it was Michael, Peter Lopez, a lawyer named Greg Cross, some associate of Raymone Bain. Raymone Bain, some associate of Raymone Bain's who I can't remember, and then on my side of the equation it was John Meglen, John Nelson, who was running Vegas for us, Paul Gongaware and me.

A. Yes, 2007.

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Q. Oh, this was the first program?

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Q. This was in 2008?

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A. Yes. This was the first time that we ....

Q. I'm sorry. So what you were describing was the wild goose chase?

A. Correct. There's a better way of putting it, but yes.

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Q. Okay, and when you met with Tohme and the Belair Hotel, in his office at the far end of the bar with those two seats, was that in 2008 that you're referring to?

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A. That was in 2008, correct.

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Q. So it was about a year plus between the time Michael broke down?

A. No.

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Q. Between Las Vegas and the time Michael broke down, it was about a year and a half?

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A. Correct, correct.

Q. Okay. So at the time you met with him and he broke down at the Belair Hotel, had he moved to Los Angeles by that time, or was he still living both in Las Vegas and visiting Belair, or visiting Los Angeles at the Belair?

A. To be honest with you, I didn't .... I didn't know, you know.

Q. Okay. What happened next?

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A. It was my impression that he still lived in Las Vegas, and he came Los Angeles for these trips.

Q. And when did you see Michael next after that meeting on Halloween in 2008?

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A. At that .... after that, we moved him out of the Belair Hotel. We had already concluded our deal. We moved him out of the Belair Hotel into a house, 100 Carolwood Drive.

Q. All right. So now you're moving a little faster.

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A. Uh-huh.

Q. Halloween 2008, you had the meeting with Michael; correct?

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A. Uh-huh, uh-huh.

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Q. You have to answer yes or no.

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A. Yes, yes.

A. Yes.

Q. And the deal wasn't signed in 2008, was it?

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Q. Okay, and then was there some negotiation after the Halloween 2008 meeting that took place, I guess, during November 2008?

A. No, but we had decided to go ahead and make the offer, get into negotiations because we had a high level belief that Michael was going to do this. There was also a subsequent meeting in Las Vegas that time with Phil Anschutz.

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Q. And who was at the Anschutz meeting in Las Vegas?

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A. It was Phil Anschutz, Tim Leiweke, Paul Gongaware, me, Michael and Blanket, the youngest of the three children, and it was a very .... it was a very good meeting. He and Phil, you know, got along quite well. Phil had a great degree of confidence that Michael was really serious about touring and was willing to take the risk of putting him on tour. And Michael came with a goal. He wanted to talk Phil into making movies with him.

Q. Was Tohme at that meeting?

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A. Yes.

Q. So when you say Mr. Anschutz was willing to take the risk, what was the risk?

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A. The risk, whatever the costs were for putting on a tour of that size.

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Q. And I'm still not understanding what the risk would be. You mean the chance that you wouldn't recoup your costs?

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A. Correct, correct.

Q. And when did .... when did Michael move to Carolwood, which is located in the Holmby Hills area of Los Angeles; correct?

Q. Audijer?

A. Yeah. It was his house.

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Q. The Ed Hardy clothing line?

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A. It was, yeah. It was either .... I remember we probably advanced the money for the lease. I wasn't involved in negotiating the lease. That was done by Dr. Tohme and a real estate agent, I can't remember, one of the well-known Westside real estate agents, and it was a house owned by this fashion designer.

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A. Yes, yes, yes. And I believe, if my memory serves me right, we had advanced the first $100,000 deposit for the house. It was 100,000 a month prior to even having the contract finished.

Q. Okay, and then what .... what took place next with respect to getting the tour or the concert in order?

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A. Dr. Tohme employed an attorney named Dennis Hawk to be the principal negotiator with us, and when I say "us," us meant Paul Gongaware, who worked for me, was a senior executive of AEG Live, myself and my GC, general counsel, which was a guy named Shawn Trell.

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Q. And on the other side you had a Mr. Hawk and Mr. Tohme?

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A. And also Peter Lopez.

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Q. When you initially started negotiating, was Mr. Lopez involved or did he come in a little bit later?

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A. He came in a little bit later. We took the negotiations pretty close to the end, and then Dr. Tohme wanted another opinion on that and he asked Peter Lopez to review the contract.

Q. And did .... was Shawn Tell, Shawn Trell dealing directly with Mr. Hawk?

A. Yes.

Q. Were you dealing directly with Tohme?

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A. Correct.

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Q. And was Mr. Gongaware, what was his role in this?

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A. He was putting the production budget together. Paul's role is to actually do the physical production on the tours.

Q. And the terms were negotiated by you and Tohme and the deal was documented by Hawk and Shawn Trell, or I guess somebody that works for Shawn Trell?

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A. Dr. Tohme and I did the kind of general plan for the deal and for the tour, and we discussed the economics of it. But the fine tuning of it was really done by Shawn Trell and Dennis Hawk, subject to obviously my approval and at that time Tim Leiweke and Denver's approval.

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Q. And on Mr. Jackson's side, Tohme's approval and also Peter Lopez?

A. Correct.

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Q. Okay. So when do you recall the deal closing?

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A. I believe it was some time in January of 2009.

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Q. And was .... by the way, did Michael Jackson own a home at that time, to the best of your knowledge?

A. To the best of my knowledge, other than his interest in Neverland, I don't think he owned a home. No, I shouldn't say that. I believe he owned Havenhurst, where his mother was living.

Q. But Mr. Jackson was not living in a home he owns as far as you know?

A. No.

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Q. And when used the phrase first referred to as he and his children as vagabonds, did you have any idea why he used that phrase?

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A. Yeah. I felt, and this is me just speculating what he meant; he's obviously not here to tell you, but living in .... not being able to go back to Neverland, making the choice that he did not want to live in Neverland, and he told me he never wanted to go back there. That pretty much left him, you know, with the rental house in Las Vegas, he didn't own it, and wherever we put him in Los Angeles.

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Q. And by the time the end of 2008 rolled around, were you aware of what Mr. Jackson's interest was in Neverland?

A. No.

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Q. Was there a public announcement of the tour, the This Is It tour?

A. In March there was, and I believe it was March 5th, 2009.

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Q. And Mr. Jackson was present for that announcement?

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A. One could say that, yes.

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Q. So when you say "one could say that," could you tell us the story? Tell us the story.

Q. At the .... at the 02 Arena?

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A. Sure. Michael was very, very nervous about doing, making the announcement. He honestly did not think people cared or were interested in him and his music and his stuff, because he had been in this kind of bubble he had created for himself, I think as a defense mechanism because of all the negativity. And at the press conference, I arrived that morning from Miami. I had started the Brittany Spears tour, which was that tour. I left that and flew to London to do the press conference. I was staying at the Dorchester Hotel. He was staying at the Lansborough with Dr. Tohme. I went there. We had the press conference was scheduled for I think three o'clock, 3:30 or four o'clock. The 02 ....

ww

w.

Te a

mM

ich

A. At the 02 Arena in the lobby of the 02 Arena, and if you know anything about London traffic and how far out this arena was from the West End, it was probably a good hour to an hour and a half to get there with the traffic. So I got to the hotel. I believe the press conference. I got to the hotel about two o'clock or 2:15. I was in Dr. Tohme's suite, and we were sitting there watching CNN and waiting for Michael to get ready, and then Dr. Tohme left the suite and I was sitting there watching CNN, and my phone was vibrating off the hook, you know. First it was Tim Leiweke and then it was Paul Gongaware from the building and Phil and everybody. What's going on, what's going on? He hadn't left the hotel yet, and I said well Michael's getting ready, okay. But don't worry, we're good. Everything's good. I'll go check on him. So I left Dr. Tohme's suite. I went to Michael's suite. There was a security guard Alberto in front of the door, and I said I've got to in and see Mr. Jackson, and he said to me I can't let you in. I said Alberto, okay, this is serious, all right. I have get in there and see him, because if Michael .... if he misses this press conference, we had 365 press organizations from around the world and about three to four thousand kids at the building, his fans, his hardcore fans. I said if he misses this press conference, okay, we will have no credibility, okay. The tour will be ruined. It's over, okay. And then I said and then, you know, I said to him, I said Alberto, you've got to let me in this room, okay, and I'm really serious about this because if you don't, okay, I promise you you will not get another job in this town. I know. It sounds very clichI know, I know. But at that point, I was sweating bullets and very, very concerned.

n.c om

Q. What happened?

A. I went in and Michael was in the room passed out on the sofa, with a bottle of vodka laying on the end of the sofa empty.

lJa ck so

Q. So what did you do?

A. The kids were in the other room. There's a two bedroom suite. The kids were in the other room with the makeup, hair and makeup woman who served also as like a nanny for them. She was there with them, and I heard cartoons on, okay. He was laying on the sofa passed out, and then I believe Dr. Tohme had come in at that point, had come back up to the room and we got Michael upright. I gently did like that (gesturing). I mean it got reported like I beat him up, but I didn't. I was just happy to get him ....

ae

Q. I think it got reported that you slapped him?

Te a

mM

ich

A. Yeah, yeah, yeah. I've read that, you know, amongst other things. So anyway I tried to just revive him, to get him open and we .... Tohme and I took him into the shower with Alberto and put him in the shower, just to get him up and stuff like that. It was probably a cold shower, and we got him ready, we got him dressed. I remember .... and that now was like four o'clock, and everyone at the arena, I mean I just turned my cell phone off. It was crazy. People were really, really concerned that this was not going to happen, this press conference. We got Michael ready. I remember he wanted a certain armband. The shirt had chevrons, and then he wanted a certain armband, and there were three shirts. They were all satin. One was black, blue and red, and he couldn't decide which one he wanted to wear. And I just said to him, I said Michael, it doesn't matter. Just pick a shirt, okay, and the armband, we couldn't get the armband done and I had to have the engineer come up from the hotel and fasten the armband because he wouldn't leave without the armband on. We got him into like one of these vans we had converted into a bus with seats here, seats there.

w.

Q. Right.

ww

A. It was Dr. Tohme. It was the actor Mark Lester, who was Oliver Twist when he was a kid.

n.c om

Q. Yeah, the younger in the movie.

A. He was an adult now, a married adult.

lJa ck so

Q. Right.

A. Probably in his mid-30's or 40's. So it was Mark Lester, Michael Jackson, myself, a gentleman who worked for me named Dave Loughler and Alberto. We headed to .... and Dr. Tohme, and we headed to the 02 Arena.

Q. And then Mr. Jackson did give a presentation, made some remarks at the 02 Arena did he not?

mM

Q. But it's interesting.

ich

ae

A. Yes. I didn't .... he asked .... Michael asked us. Michael was a little disheveled so we had the thing, and then he kept saying to me, because he knew I was mad, you know, or angry because we were so late for the thing and stuff like that. He kept telling me God, you've lost so much weight. You look so thin. I was the heaviest I ever was at that time, and I said to Michael, I said Michael .... and this may be too much detail for this proceeding, but you tell me if you want me to stop.

Te a

A. But Michael said .... I said Michael, what do you think, okay, you know. Pacing up and down that hallway, who wouldn't lose weight, okay, all that. I had to write what he was going to say, because he wasn't in a real condition to just do an open press conference. I wrote, we had no time. So I ended up writing like three lines. That's all I had time to, so they could put it into the teleprompter, and those were the lines "This is it, you know, this is it, this is it" and stuff like that. But if you look at the .... it's funny. In England, and people are so hungry to see him perform again, that he could almost do no harm. Like the kids, the media.

w.

Q. Didn't he repeat himself?

ww

A. Yeah, yeah, yeah.

n.c om

Q. Repeat himself.

lJa ck so

A. Well, I only wrote three things, you know. So he kept reading the three things over and over again in the teleprompter. But it got reviewed very well, and people were just so anxious for him to perform again that they accepted it.

Q. So after you left the 02 Arena, did you go back to the States shortly thereafter?

ae

A. No, no. First of all, I stayed in the building. Michael went back and I dealt with the press, because he was not in a condition to do the individual interview, so I did that. And then the next day, I took Michael to see a new version of Oliver Twist in the West End in the theater with Oliver Twist, with Mark Lester.

Q. With Mark Lester?

mM

ich

A. Yeah, yeah, and his kids, his daughter and stuff like that, and when we went to the theater, Michael got a standing ovation when he walked into the theater, which was very reassuring for him. I saw his whole mood change, and then when we left the theater, we had to get police officers on horses to create a path for us, because there were thousands and thousands of fans outside of that theater in the West End.

Q. Now during that time period, this is February or March 2009, right?

Te a

A. March 5th-March 6th.

Q. 2009?

w.

A. '09, uh-huh.

ww

Q. And the AEG deal was in effect; is that correct?

n.c om

A. Uh-huh. Yes, yes.

Q. And how was Michael living? In other words, what income stream did he have?

lJa ck so

A. I mean I wasn't aware of that. Dr. Tohme was handling his finances. All I know is we were paying for the house and that was 100,000 a month or something like that.

Q. And was that recoupable off the tour production budget?

A. Yes.

ae

Q. And were you all building sets and beginning rehearsals?

ich

A. Yes, in Los Angeles. Ken Ortega was the director. A gentleman named Bugsy, who for the life of me I can't tell you what his real name is, and Paul Gongaware were in chart of that. I was on the road, I think, with Lionel Ritchie at that time.

mM

Q. And when did the rehearsals in earnest start, if you recall?

A. Well, with the production meetings and the creative meetings between Kenny Ortega and Michael, I believe, you know, and I'm only speculating because it started before I got back to the States, but I believe they started some time in either mid- to late April or May.

Te a

Q. And had you been able to secure a tour sponsor for the This Is It tour by that time? We're talking like I guess April 2009.

w.

A. No.

Q. Were you ever able to secure a tour sponsor?

ww

A. No.

n.c om

Q. Why do you think that was?

Q. I'm only talking about the London run.

A. Yeah, okay. No, we ....

lJa ck so

A. Well, I can only say for the London run.

Q. To be clear, you didn't have any other runs booked at that point did you?

ae

A. No.

ich

Q. So for the London run, is it fair to say that you, when I say you I mean AEG, not you Randy Phillips, but AEG wasn't able to .... unable to secure a tour sponsor?

Mr. Musen: Your Honor, calls for speculation?

mM

Judge Holmes: Overruled.

A. No, we weren't.

Te a

Mr. Weitzman:

Q. And did you try?

w.

A. Very hard.

ww

Q. Okay, and in your humble opinion, you had the best group in the business to secure tour sponsors; is that correct?

Mr. Musen: Leading, Your Honor, argumentative.

n.c om

A. Yes, Todd Goldstein ....

lJa ck so

Judge Holmes: Overruled. You could ask him if he did have the best group.

A. In my opinion, my opinion Andrew Klein, Todd Goldstein, Shervin Hashemi ..... were the cream of the crop in the sponsorship business and the live entertainment business.

Mr. Weitzman: And do you .... why do you think you couldn't secure a sponsor?

ae

Mr. Musen: Okay, Your Honor. Speculation here.

Mr. Weitzman:

ich

Judge Holmes: There you go. That's sustained.

mM

Q. Did you have conversations with the group that worked with you about the inability to get a tour sponsor?

A. We always thought it was a long shot.

Te a

Q. Why?

w.

A. Because it was too soon in his comeback, in order for companies to feel secure, and there's two reasons, Mr. Weitzman. The reasons are one, the damage to his reputation created by the court case and the allegations. The other part of it was people didn't have great confidence in that he was actually going to perform, which is why had he missed that press conference it was over.

Q. Did you have a merchandising deal for the tour?

ww

A. Yes.

n.c om

Q. And who was that merchandising deal with?

lJa ck so

A. It was with a company called Bravado, which I think then or subsequently bought by Universal Music Group, a gentleman named Tom Bennett.

Q. And did you negotiate the merchandising deal with Tom Bennett?

A. Yes.

Q. And did the merchandising deal include an advance payment to AEG .... well, strike that. Was the deal between AEG and Bravado or Mr. Jackson and Bravado?

ich

ae

A. If my memory serves me right and I could be wrong, but it was between AEG and Bravado. However, I'm sure and having not seen that contract in years, I'm sure they required some kind of artist inducement letter to agree to the terms of the deal.

Q. Do you know whether an advance was ever paid or not for that agreement?

mM

A. We negotiated a $5 million advance, of which two million of it was non-recoupable. So it was a good advance on the merchandising deal and the terms were really good. But they weren't going to pay anything up front until the tour started, because they too were not convinced he was going to do it.

Te a

Q. Were you present at some of or at many of the rehearsals?

A. The real production rehearsals?

w.

Q. Yes, the real production rehearsals.

ww

A. At the Forum and at Staples Center, yes I was.

n.c om

Q. And did you .... did you pay for hand-held cameras to record the rehearsals?

lJa ck so

A. Yes.

Q. By you I mean AEG?

ich

ae

A. Yeah. When we shot, if you watch the film This Is It, the stuff shot, the audition that was shot at Microsoft Theater, which was then Nokia Theater, the stuff that was shot there with the dancers when we auditioned, we hired a professional company to do that. It cost 20 grand a day to do that. That's why that footage looks so much better than the other stuff, and I said to Paul, I said Paul, we can't afford to keep spending, because the production budget was rising dramatically at that time, much more than what we originally had budgeted for. But you take that into account in dealing with Michael, okay, and we .... I said we can't spend this every day of rehearsal just for B roll footage for the concert DVD, which is what it was for, for a TV special, whatever we would have repurposed it for. So then Paul went out and bought the two cameras and found the two cameraman, okay.

mM

Q. And when you say "B roll," was the original concept to record the concert that was going to take place in the 02 Arena?

A. Yeah. Not these guys, yeah, yeah.

Q. No, no, no. I mean I'm talking about real

Te a

A. Yeah, yes, yes.

Q. I don't mean real people but ....

w.

A. No, but I'm yeah.

ww

Q. But an eight camera shoot and sound engineering and all that. Was that the original ....

n.c om

A. Yes.

lJa ck so

Q. Not original. Was that the idea?

A. That was the idea, professional director, the whole thing.

Q. And AEG had hoped to, correct me if I'm wrong. Had AEG hoped to have a two disc release rather than a one disc release or both, I guess, of the concert?

ae

A. Most likely. I mean I don't remember what the final configuration was going to be, but it was going to have .... no yeah, it would have been two disc, because you would have had the full concert, the This Is It concert from the 02. You would have had that on one disc and the other disc would have all been the interviews and behind the scenes.

A. Yeah, yeah.

ich

Q. And the B roll?

Te a

A. I'm not ....

mM

Q. And of course the B roll, I shouldn't say that of course. Was the B roll to be used in conjunction with the performance filmed concert, or the filmed performance concert?

Q. In other words, I'm sorry. You were going to film the concert; correct?

w.

A. Yes, yes.

Q. With a professional recording group?

ww

A. Correct.

lJa ck so

A. Correct.

n.c om

Q. That is cameramen, multiple cameras and sound equipment; correct?

Q. And then the B roll was going to include the footage and the interviews or whatever else was going to be included on the second DVD; correct?

A. That is correct.

Q. Okay, and the .... I just want to make sure I understood that. Now when Mr. Jackson passed away, how did you learn it?

ich

ae

A. I was at the dry cleaners in Westwood getting my laundry. I mean you wanted detail. I was getting my laundry.

Q. Don't tell me what the laundry was.

w.

Te a

mM

A. Okay. I got a call from Frank DiLeo, who at that point was managing Michael, and he said .... and he was at the Beverly Hilton Hotel and he said I can't get up to the house, but there's a problem. Can you get up there? I dropped everything out of my car. This gentleman, Dave Loughler who was in London with me was with me. We went to Carolwood Drive, just the house where we were renting from .... just as we got there, the ambulance was coming out, and then there were .... and then the two black SUVs with the kids. We got behind them, and it was like a mad dash to Ronald Reagan Emergency Room at UCLA. I got there when they .... I got .... I parked my car. I ran in there. They were pulling .... he was on a gurney. They were taking him into this room to try to resuscitate him, although I believe he had passed away by then. But they were trying to resuscitate him, and I was standing outside the room when they were doing it, and then Frank DiLeo arrived, and he and I were sitting on the gurney in the hallway, you know, flipped out.

ww

Q. If we can just leave that scene for a moment. I want to back up. When did Frank take over as the manager from Tohme, Frank DiLeo sorry, D-I-L- E-O? When did Mr. DiLeo take over the management responsibilities from Tohme?

n.c om

lJa ck so

A. Like everything with Michael, okay, there aren't clean transitions. So I'm not sure if Dr. Tohme ever got really formally terminated, and I believe he still spoke to Michael. But Frank was brought in to be the music manager. I think ultimately Michael wanted them to work together, if that was at all possible, and I believe that was some time after we got back from London.

Q. Okay.

A. I got a call from Michael's .... because I had never met Frank DiLeo, and I got a call from Michael who said I need a music manager for this, and I want to bring Frank DiLeo back. Do you know him? I said no, I've never met him, and so Michael set up a phone call for us to speak, and that was the first time I had spoken to Frank DiLeo.

ae

Q. In the agreement that you made with Mr. Jackson for the tour, did you also make a development deal, film development deal with Mr. Jackson?

ich

A. Yes.

A. Correct.

mM

Q. And did you .... did you do that with Tohme I'm assuming?

Te a

Q. And what was the purpose of the development deal, film development deal?

A. Well originally Michael wanted us to agree to finance the film, which was ....

w.

Q. Was there a particular film?

ww

A. Thriller 3D that he was going to star in. He wanted us to finance that. As much as we wanted to do the tour, we weren't going to make a, what could have amounted to a $50 million or more with animation commitment to a movie with Michael starring in it. That was not, you know. The economics of the tour didn't make sense. But what I did do is I agreed to a million dollar fund to

n.c om

hire writers, what I call the development fund to hire writers to put a script together, something he could then shop to a studio.

Q. So there was no green light, as they say in the trade, for a go on a movie?

lJa ck so

A. No. I mean there was no script, you know. No studio would green light it us a high concept like that.

Q. All right, and were you aware of any screenplays that existed at that time?

A. No screenplays. Only a short film, I think it ran like 15 minutes or so, called "Ghost" that Michael starred in.

ich

ae

Q. Did you .... let me ask a different question. Were you aware of whether or not Michael Jackson had any general or retail merchandise deal before he passed away?

A. No.

mM

Q. So he passed away, and after he passed away were you involved in putting together the memorial service?

A. Yes, I produced it with Kenny Ortega and Ken Ehrlich ....., the producer of the Grammys.

Te a

Q. Did AEG have, my phrase now, other financial concerns, immediate financial concerns upon Michael's passing?

w.

A. Yes, of course.

Q. And had AEG invested some money in putting together this show or a lot of money?

ww

A. We were out .... we were out $36 million a the time Michael passed away.

n.c om

Q. And just in a general fashion, what had that money been spent on?

Q. Do you remember how much that was?

lJa ck so

A. 30 million approximately was for the production, which grew and grew and grew, and the other six million was for his living expenses. We also had to make a payment to buy him out of a contract he was in with a sheik or someone in either Bahrain or Dubai or I don't remember. Dr. Tohme handled that, you know. We just put up the money.

A. It was part of that six, I think it was two and a half million dollars or something. I don't remember 100 percent to the best of my recollection.

ae

Q. Were the terms of the tour agreement unusual as compared to other tour agreements?

ich

A. Everything with Michael is unusual compared to anything else, yes.

Q. What was unusual, as you recall, in the tour agreement you made with Mr. Jackson?

mM

A. Well, originally what we had committed to and what he had committed to were ten shows, with a cap of 31 shows. Now you're going to ask me why 31 shows. Well, because Prince did .... we produced Prince. Prince did 21 shows at the 02. Michael wanted to get as far out as he thought he could and to best him.

Te a

Q. You mean he wanted to do ten more?

ww

w.

A. To best him. They were very competitive. So that's why the cap was at 31. The minimum commitment was ten, and the reason for that was at the time we made the deal for him, we didn't think that the production costs were going to go as high as they did. We just kept spending and spending because he just kept having ideas and stuff like that. But at the point we were spending the money, we had already sold the tickets. So it didn't really .... we were not at risk anymore, other than for him to perform the shows, and we tried to control him because it was in his best

n.c om

interest, because everything he was spending was recoupable. Kenny Ortega finally was able to pull the plug when he wanted us to do Victoria Falls on stage.

Q. What? Could you explain? I mean I heard what you said, but what is it you meant?

ae

lJa ck so

A. We had spent 20 plus million dollars on an incredible production, a 3D suit that no one had ever seen before, where you don't need the glasses to get the 3D. All of this stuff, new technology that had never been done before. We didn't know if it was going to work, but we had spent that, and Michael said I need Victoria Falls. You have to create Victoria Falls, and that's the rain coming down from the top of the arena, a waterfall, the whole thing. Because he had seen at the Brittany Spears tour I did. She had water. She was like dancing in it. So Kenny and I said this has got to .... and this was in May or early June. This may have been early June, and the thing was supposed to pack up, go on a boat to London for rehearsals to begin there. So Kenny and I called a meeting with Michael at the Carolwood house. It was just Michael, Kenny and me. I don't remember if DiLeo .... no, DiLeo was out of town at that point, and we said to Michael, Michael, there is no more time. I said there is no more money, okay.

mM

ich

We have to stop and just we have the best show that the world's ever going to see, okay. Frankly, if you were just on that stage, okay, by yourself with a stool and a good sound system, that would have been enough. But you have everything you could possibly want. He said to me you don't understand. Then he looked at Kenny. He said to Kenny, he said Kenny, I get these ideas from God at night. If I don't use them, then he'll give them to Prince. This is a real conversation. Kenny Ortega could, if he were up here, he'd tell you. So and finally I just said to Michael, because I had .... I was able to have that kind of more hard core relationship with him, and I said Michael, it's over. We can't do anymore. It's done, you know. God bless Prince if he takes this idea, okay. But remember we produce, we promote Prince. We're not .... we wouldn't spend the money for him, you know. I had that conversation. So that was the end of that.

Te a

Q. Between that meeting which was the first week in June 2009 and the time Michael died, did Mr. Ortega express to you concerns about Michael's well being, his health?

ww

w.

A. Yes. We all did. I was concerned about his weight and about one meeting I had at the house where he was staring aimlessly off into the distance when we were talking to him, and that was the only time. I mean it was spot on and very clear. But and he had just come from Dr. Arne Klein's office, so and the interesting thing I remember after the meeting, I said to Paul Gongaware, I said Paul, that was not good. I mean .... and Paul thought he was fine. So he was as clueless as a human being that I could see, okay.

n.c om

Q. Him meaning Paul?

lJa ck so

A. Paul, yeah, not Michael, okay. But it was not a good meeting, okay, and that concerned .... two things concerned me. That one meeting and the loss of weight. Michael was always thin, even when we started, okay, and healthy thin, okay. But he had really lost a lot of weight and I didn't know why, if it was the stress of the tour. I didn't know what was causing that, but he had a doctor on call that he made us advance the money for, who we didn't hire, you know, in spite of the poor health. We never really hired him, okay.

Q. You would be talking about Dr. Conrad Murray; correct?

ae

A. Murray, yeah, yeah. Dr. Murray got very agitated at Kenny and at me, but mostly at Kenny, for you know, for even asking or insinuating that Michael was not in great health since that was Conrad Murray's job, to keep Michael healthy and stuff like that. He told us that Michael was fine. He's always thin, he's always been thin. He doesn't eat a lot. He drinks shakes, protein shakes and fine.

mM

Mr. Musen: Leading.

ich

Q. And if you look at some of the video, there are times he seems to be a little sharper than others; is that correct?

Judge Holmes: Sustained.

Mr. Weitzman:

Te a

Q. Are there times when you looked at the video This Is It, the film "This Is It," are there times when Michael appears sharper than other times?

ww

w.

A. Well, considering I edited the film with Kenny, okay, and have seen all the footage, right, this footage we used were the best performance shots of Michael. And remember, this was a .... this was we pieced together that movie from a bunch of aberrant rehearsal footage. So you never saw him really finish a full song. He wasn't completely emoting vocally, and that's why he's wearing so many different outfits in each song. We took the best cuts from each song. There is footage somewhere that's not as good.

n.c om

Q. I understand. So after Michael passed away, before the memorial service .... by the way what day, if you recall, was the memorial service?

Q. And he died on June 25th?

lJa ck so

A. I believe it was the Thursday after he died or the Monday. I can't remember, but it was like a week after he died or something like that.

A. Yeah. So it may have been like July 4th or around that. I don't remember.

Q. If I said July 7th, would that refresh your memory?

ae

A. Yeah, it sounds right.

mM

A. Yes, on a Sunday.

ich

Q. Between the day he died and July 7th, did you participate in a meeting with Mr. Branca and others at his office?

Q. And did you or were you at a dinner some time after that Sunday meeting?

Te a

A. Yes, I was.

Q. And do you remember when and where the dinner was?

w.

A. I think it was on the Wednesday or somewhere in the middle of the week at Mr. Chow's in Beverly Hills.

ww

Q. Upstairs?

n.c om

A. Yeah, in the private dining room.

Q. And what were the subjects discussed, if you recall, at the meeting in Mr. Branca's office and at the dinner upstairs at Mr. Chow's?

lJa ck so

A. How we could make as much money from whatever we had, you know, the merchandise book that was the designs, that type of thing. Just ways, you know at that point, I believe Mr. Branca was anticipating being the executor of the Estate, because he had the will, and he was going to be charged with creating value from what existed. You know, in some instances Michael was worth more dead than alive, and so this was all post- death, that we were trying to figure out how to monetize. We were out $36 million.

Q. We being AEG?

ich

ae

A. Meaning AEG. We're out $36 million. So all we cared about at that point was getting, recouping our money and not being unsecured creditors, you know, standing behind God knows how many other people.

mM

Q. And so as late as the dinner at Mr. Chow's, which was the Wednesday after the date Michael died, there were no concrete plans on what to do with it?

A. Well, not on our side. I mean, you know, there were other people involved in that, you know, Mr. Branca, Mr. Katz, other lawyers of his firm. You were there.

Te a

Q. So and the concern, tell me what the concern was that AEG had about the money you'd been out, or maybe that's ....

A. Recouping it. I mean it's obvious.

w.

Q. Right, okay, getting paid?

ww

A. Yeah, yeah. It was a big company, but $36 million is not chopped liver as they say in my business.

n.c om

Q. When were you first .... when did you first think about the rehearsal footage as a possible avenue of a revenue source?

lJa ck so

A. Well, it had been discussed, but none of us knew what we really had in terms of .... because no one had, you know, we hadn't sat down and watched and gone through it or anything like that, and you know, a funny thing is success has a thousand fathers; failure is an orphan. During the subsequent time after Michael's death, a lot of people have taken credit for producing that movie or coming up with that movie, and the person who actually had the idea to try to make a movie out of the rehearsal footage was a guy named Jim Gianopulos, who at the time was the chairman of Fox Films studios, and a great film executive. He asked me to have lunch with him at Spago in Beverly Hills that week after the ....

ae

Q. Chow's dinner.

mM

ich

A. Chow's dinner. It was either Thursday or Friday, and I had lunch with him. He said what do you have in this footage? I said I don't know. We shot everything, but I don't know how good it is or what it is. He said I'm telling you, if we can get it out fast enough, there's a major motion picture there, because everybody wants to see Michael perform and see the behind the scenes. That was Jim's idea about the movie. We subsequently ended up holding a bidding war with the studios.

Q. Wait. After you had this conversation with Mr. Gianopulos, did you advise anybody of Mr. Gianopulos' suggestion?

Te a

A. Yeah. I told John Branca and I told Joel Katz of my lunch.

Q. And that was ....

w.

A. And I told Tim Leiweke and ....

ww

Q. ....after the lunch?

n.c om

A. Yes.

Q. Okay, and so the thought about the footage wasn't discussed at the UCLA Hospital or the Sunday after Michael's death?

lJa ck so

A. No, not in the way Gianopulos talked about it being a major motion picture.

Q. Okay. How did the process begin with respect to the putting together of the film?

ae

A. Well, Kenny Ortega, Paul and I, we had in the vaults at Staples Center. It was secured in the vaults there, and we also .... we had editing facilities in our offices downtown at LA Live, and we took the footage with an editor and we started looking at what we had. We kind of realized that we might have enough to make a movie, with some kind of narrative, and there was no one better or more suited to do that than Kenny Ortega, who happens to be a director.

ich

Q. So this footage wasn't shot like a motion picture or a commercial film would have been. But you were looking at this footage for what purpose?

mM

A. Well, it wasn't on film. It wasn't shot on film. It wasn't lit and all that. It was done on DVD, high definition video.

Q. Okay, and so you began to look through the footage; is that correct?

Te a

A. Correct.

Q. And what else was involved in that process?

w.

A. In that process is we put a, like a .... I think it was a minute and 30 seconds. We took some of the best stuff and created a sales reel to show it to the studios.

ww

Q. Sizzle reel.

n.c om

A. Sizzle reel.

Q. And did you show it to Mr. Gianopulos?

Q. And did you show it to other studios?

lJa ck so

A. Yes, we did.

A. Showed it to Paramount, Columbia Pictures, Sony, Universal. Yeah, we showed it to everybody.

ae

Q. And was there kind of a bidding war for the opportunity to be involved in the project?

Q. And the winner was?

ich

A. Yes.

mM

A. Well, it ended up being Columbia Pictures and Sony, not because it was necessarily the best bid, but they also controlled the music rights, the underlying music rights and stuff like that. So it was just easier to do it there. I personally wanted to do it with Fox, because I thought we owed Jim, since he was the original idea.

Te a

Q. Was it also discussed .... was it only a motion picture release that was discussed, or were there other opportunities discussed as well? Pay TV, HBO, stuff like that.

w.

A. Well, after the theatrical release. Not as a stand-alone, because there wouldn't have been enough money in that for us to recoupment or for the Estate to make that much money.

Q. And was the rehearsal footage ended up of itself sufficient enough to release as a film?

ww

A. Barely, just barely. We pieced it together.

n.c om

Q. What does "just barely" mean? Sorry.

ich

ae

lJa ck so

A. That means that we didn't have one single take of Michael doing a song. So you have a bunch of takes edited together. You had two camera positions, not eight. It wasn't lit for that. You had only the lighting that was there for the actual live show itself. So all of those things conspired to make us question whether it could actually be a motion picture. And then Kenny and the editors did a brilliant job. We worked for four months or three months up in a room on top of a building, very secure, at the Culver City Sony Studios piecing that together. Then there were issues with the vocals, and having to fly in vocals on some of the songs, just to get him through it, because he wasn't emoting either. He wasn't singing out. He was saving his voice, because it was a rehearsal. So yeah, it was an ordeal to put it together. But there were so many interesting things, like when he was doing the 3D of Thriller footage with Kenny, and then the auditions with the dancers, which were very emotional. So slowly but surely, and I watched Kenny Ortega do this. He came up with the narrative that made the whole thing pull together, and if you look at that film and it's considered one of the greatest concert movies of all time, even though there wasn't the actual concert from beginning to end in full production. One of the reasons it's so special is Michael forgot that those cameras were even there, and you got to see inside the creative process of a genius at work, and it was fascinating for people to see that unvarnished look at him, and the reality is if he was alive, he would never have let us put that out, I believe, as a film.

mM

Q. And is it .... well, how was the audio on the footage?

A. It was terrible.

Te a

Q. And did you .... how did you correct for the audio ....

A. Well, most of it we mixed and it was him live in those rehearsals. But there were some songs we had to borrow from tracks that he recorded for Sony.

w.

Q. From the masters?

ww

A. From the masters, yes.

n.c om

Q. Didn't he also use all of the pieces of all the masters on the set?

lJa ck so

A. I believe pretty close. John Doelp was the executive at Sony at the time that we were working with. He could probably answer that better than me for the sound mixer.

Q. And you all had to license the masters from Sony; correct, for the project?

A. Correct. Which is why the film ended up at Columbia Pictures, which is a division of Sony. It ended up there because of that.

ae

Q. Yeah. Are you aware of any other motion picture or documentary, motion picture/documentary being made from rehearsal footage of a possible tour?

ich

A. Well, I'm sure .... as a motion picture in the movie theater, without having the actual concert?

Q. Yes.

mM

A. Because I also produced Justin Bieber's Never Say Never, which ....

Q. I'm aware of that.

Te a

A. Which was also a combination of stuff in the bus. There was a narrative that his manager Scooter Braun created, of him wanting to play Madison Square Garden.

Q. But there was a tour?

w.

A. But there was a tour, yeah.

ww

Q. Are you aware of any motion picture that has ever been released just with a rehearsal footage as a portion of the motion picture? When I say "portion," because the audio was ....

n.c om

A. Absent the full concert?

lJa ck so

Q. Yes.

A. No.

Q. So this was the first?

A. That doesn't mean it doesn't exist. I just am not aware of it.

ae

Q. To the best of your knowledge, this was a first in motion picture documentary with musicians?

ich

A. That is correct.

A. No.

mM

Q. So the Internal Revenue Service has indicated that when Mr. Jackson died, he had irons in the fire, projects lined up to implement. You were there. Do you know of any projects that he was prepared to implement at the time he died?

Te a

Q. No theme parks he was ready to launch?

A. No.

w.

Q. Colony Capital wasn't going to put his name on a hotel or a casino as far as you knew?

ww

Mr. Musen: Leading.

n.c om

Judge Holmes: Sustained.

Mr. Weitzman:

lJa ck so

Q. Did you know of any projects where Michael Jackson's name and likeness was going to be put on hotels or casinos, resorts, commercial developments, restaurants, video games, websites or haunted houses?

A. By Colony Capital?

Q. Or by anybody.

Mr. Weitzman: Q. By anybody?

ich

Judge Holmes: No, overruled.

ae

Mr. Musen: Compound.

mM

A. No, no. All Tom Barrack wanted was to resuscitate the Beverly, the Las Vegas Hilton, and he wanted Michael to actually perform there, which Michael had no interest in doing.

Te a

Q. At the time Michael passed away, were you aware of any branded merchandise deals that anyone would make with Michael?

A. Outside of Bravado?

w.

Q. Well, Bravado was the tour merchandise.

ww

Mr. Musen: Your Honor, lack of foundation. Personal knowledge.

Judge Holmes: Lay a foundation.

n.c om

Mr. Weitzman:

Q. Were you involved with trying to get name and likeness merchandise deals for Michael Jackson during this period?

lJa ck so

A. No. I was aware of the efforts, but it was Dr. Tohme who was doing that.

Q. Okay, and was he able to make any such deals?

A. Not to my knowledge.

ae

Mr. Musen: You have lack of personal knowledge.

Mr. Weitzman:

ich

Judge Holmes: Let's have no further questions on this unless he can prove knowledge.

A. Yes.

mM

Q. Have you heard of the show Cirque de Soleil, or not the show, the producer Cirque de Soleil?

Te a

Q. Were you aware of any Cirque de Soleil shows that were pending for Michael Jackson at the time he died?

Mr. Musen: Again, same objection Your Honor.

w.

Judge Holmes: Well, he can ask about personal knowledge. We just heard no.

ww

Q. Were you aware of any films that Michael Jackson had in development or were available to him at the time he died?

n.c om

A. No.

Q. Were you aware of any Broadway plays that were being developed at the time Michael died?

lJa ck so

A. Yes.

Q. Is that the one with the Nederlander and Thriller?

A. Correct.

Q. Was Michael working on a new album at the time he died?

ich

ae

A. Not to my knowledge. There were some recordings being done with some family he was friendly with in New Jersey called the Cascios. But we never heard any music from those sessions.

mM

Q. And were you aware of any completed, unreleased songs that Michael was holding in his possession to be released?

A. I believe Rodney Jerkins ..... had done some recording with him, and I know Rodney quite well and he told me he had some Michael Jackson tracks after Michael died. I didn't know before that.

Te a

Q. And to the best of your knowledge, have those tracks been released?

A. No. I don't know. John Branca might have used them on that album he put out.

ww

w.

Q. Did AEG take any action or implement any plan to protect their rights to the footage immediately upon Michael Jackson's death?

n.c om

A. Yes. The president of the Anschutz corporation, who also is an attorney, a gentleman named Cy Harvey, wanted the footage locked up and in our possession at all time.

Q. And do you know whether or not there was a copyright registration for that?

lJa ck so

A. I believe we were told to copyright it, and our lawyers did.

Q. And did AEG have control or possession of the footage at the time Michael died?

A. Yes, we did.

ae

Q. And was there then .... was there a deal worked out between AEG and the Estate regarding the ownership and the exploitation of that footage, at some point after Michael died?

ich

A. It was a little .... it was a little bit acrimonious, yes.

A. What?

mM

Q. Well not between you and I.

Q. Not between you and I?

Te a

A. No, no, no.

Q. But it got resolved?

w.

A. Yes, it did.

Mr. Weitzman: Your Honor, I don't have anything else at this time.

ww

Judge Holmes: We shall have direct and you shall be able to go home.

n.c om

A. That's incredible. Thank you.

lJa ck so

Judge Holmes: Go ahead, Mr. Musen.

CROSS/DIRECT EXAMINATION

Mr. Musen:

Q. Thank you. Good afternoon, Mr. Phillips.

ae

A. Good afternoon.

ich

Q. Earlier you said that Michael was his own worst enemy. Can you explain what you meant by that?

mM

A. Because he had unbridled creative energies, and he had really no concept of money and cost and stuff like that, and so that's what I meant.

Q. Do you think he sabotaged the project?

Te a

A. Depends on the project. You'd have to ....

Q. How about the zipper project, the clothing line?

w.

A. The LA Gear?

ww

Q. LA Gear.

n.c om

A. Yes, I do. Now if you're asking me did I think he intentionally did it, no. I just think his instincts in terms of design in clothing and sneakers and what teenagers were into at that time was off.

lJa ck so

Q. What about preparing for the 02 tour? Do you think part of him tried to sabotage that?

A. By getting sick and by taking propofol to sleep or, you know.

Q. Yeah.

A. I'd like to think not, because I would think that that was kind of his .... that would have been his comeback, and he never got to realize that so ....

ich

ae

Q. Let's go back to 2007. At that point, you had a similar plan that kind of mirrored what eventually happened in 2008-2009. Can you talk a little bit more about that?

mM

A. Sure. There was a publicist named Raymone Bains, who was handling Michael's affairs at that time. He's had a lot of managers in the 2000 era, from 2000 to 2010 that I know about, and she was representing him at the time, and Peter Lopez was his lawyer, had done a Pepsi commercial for him. The one with the lizards, where they used his music. He wasn't in it, but they used his music.

Judge Holmes: Is the lizards the name of the group or a visual effect?

Te a

A. The visual effect, those little dancing lizards. You know like the GEICO lizard.

Judge Holmes: Okay.

ww

w.

A. Yeah, okay. That was .... that was Peter Lopez did that deal for him. So you want me to elaborate about that, okay. So Peter Lopez called John Meglen, who worked for me as a senior executive in the Concert Division, that Michael wanted to work again, and then I spoke to Peter. I called Peter after that, because he asked John to have me call him and we went to set up the meeting in that wine room at the Turnberry Isle in Las Vegas. There were a bunch .... as I

n.c om

described, there were a bunch of people sitting around, you know, the tables stacked that way, and Michael was in the meeting and very, you know, easy. Very full of energy, very full of vim and vigor. He looked good, and that was in 2007.

lJa ck so

Q. Okay. So Michael's career was a little bit on hiatus. Why did you want to do something again?

Mr. Weitzman: Objection, Your Honor. It calls for speculation. Mischaracterizes. The use of the word "hiatus." I'm not sure what he means and what he's asking.

Mr. Musen: Q. Michael hadn't toured in a while?

ae

A. That is correct, that is correct.

ich

Q. Why did you want to try to tour with him then?

mM

A. Because I felt there was a huge demand to see him on stage, and that, you know, if I could get him to do that, then it would be very successful for him both personally and financially, and extremely successful for the company I was running at the time.

Q. Why did you think it would be a demand for him on stage?

Te a

A. Because he was one of the greatest live performers of all time.

Q. You mentioned earlier that you had a rehabilitation plan at that point?

w.

A. Yes, I did.

ww

Q. Can you explain that?

n.c om

Q. So NARAS, the Grammy people?

A. Yes.

Q. They were interested in doing this?

ae

A. Yes.

lJa ck so

A. Yes. I had set up the meeting from Michael and Ken Ehrlich and Neil Portnow, who was the president of NARAS, National Recording Association that does the Grammys, and Ken's the producer, Tim Leiweke, Michael and me, and actually Peter Lopez was in that meeting. And we discussed the Grammys doing a retrospective on him with other stars like Justin Timberlake and Celine Dion and people like that doing Michael Jackson songs, almost like a tribute as part of the Grammy telecast. Prior to me putting the tour on sale, had he agreed to tour that time, that was kind of like .... would have been the beginning of what I called the resurrection plan.

ich

Q. What about all those allegations? Why would they want to do that?

mM

A. Because he was Michael Jackson. He never stopped being Michael Jackson, okay. But it was always about him live, you know, and it's undeniable. You know, I don't know the intricacies of this lawsuit, but you know, the catalogue is undeniable and he's a superstar, probably one of the biggest superstars ever, and had he not gotten hurt in that Pepsi commercial in '83 or whenever that was, who knows what would have been?

Te a

Q. Okay. So 2008 rolls around and you have another idea to approach Michael to do a similar concept?

w.

A. No. Tom Barrack approached Phil Anschutz, that Michael needed to work because he was broke.

Q. And Phil Anschutz is your boss?

ww

A. Yes.

n.c om

Q. Okay, and what happened again? Can you just ....

lJa ck so

A. Phil called me and said would you call Richard Nanula, an executive at Colony Capital, and take a meeting with them. They're telling me that Michael wants to work again and they just paid off the note of Neverland.

Q. So you were interested in doing something then similar to 2007?

A. Yes.

Q. So I guess you were going to use a similar rehabilitation plan?

ae

A. It was the same. It was virtually the same plan though.

ich

Q. Okay. So take, walk us through this plan if the work were to materialize exactly. You would start with live performances?

mM

A. Yes. I felt, and you know, promoters use their gut instincts a lot. There's not a focus group research on stuff. It's not like today with the Internet, where you could gauge popularity and stuff like that.

Te a

Q. Well, how did you do it?

A. Well now?

w.

Q. For all of it. You're ....

A. Yeah okay. I am .... I'm, you know I'm ....

ww

Q. You've put on a lot of successful acts, haven't you?

n.c om

lJa ck so

A. Yes. I look at my job description as risk management, okay. My job is to, you know, everyone thinks it so glamorous because it's show business and all that. There's nothing glamorous about it. You're looking at whether there's enough demand for a certain artist and their music and, you know, I'm passionate. I love music, I love artists. But at the end of the day, if you're going to take these bets, you've got to believe you're going to be successful, and that's what they hired me for, to make bets like that. I felt that Michael, you know, he needed .... the reason he needed the rehabilitation was obvious. It's not just me sitting up here. There was so much damage done in the public mind. But his music and his ability to perform live was always at a level far beyond, you know, most other performers.

Q. So you would start live shows in London. Would it end there or would your rehabilitation ....

ae

A. The question is what would he agree to do, you know. That's not me on stage.

Q. Well, you must have had a plan yourself though before you approached Michael?

Te a

mM

ich

A. Yeah. We had a plan to start in London. We had no idea he was going to sell 50 shows. We frankly could have sold more, but we had no idea he was going to sell 50 shows. The idea was to start in London, use that to start the comeback, that people knew he was into it, he was going to perform, he was going to show up, he wasn't going to cancel, okay. There was a lot of insecurity in the marketplace about whether this was real or not, okay, which is what the press conference was, as I testified, okay. Then if Michael loved it during that run and he loved performing again, then I was going to lay out a world tour. In fact, Kenny Ortega's deal as a director had a layered different phases, you know. You've got X amount of money. It was a million dollars as a director if he just did the 02. If he went into Central Europe, Kenny got another 250. If he went to China and Japan, the Far East, another 250, Australia. So it was a staggered deal and his contract reflects .... Kenny's contract reflects that.

Q. So it seems like you thought he was more popular overseas than here in the United States?

ww

w.

A. Yes. I felt they were less judgmental and more forgiving, and also the charges with the dentist's son and then the trial in San Luis Obispo and all, or Santa Barbara or wherever it was, okay, it wasn't constantly in people's faces like it was here. So I felt it was safer, and then .... and then I mean I was also looking at the fact that we owned the venue and we had this ....

n.c om

Q. The 02 Arena?

lJa ck so

A. Yeah. We owned that, so if there's ever a place that made sense for us to take risk, it's where we own the building too, because you have to understand the economics are very, very different when you rent a building or lease someone else's building, a third party venue and when you do it in your own building and you own the food and the beverage and you're fulfilling sponsorship obligations and things like that. So there were two reasons. One, it was a market I felt was more forgiving for a start, and two, we owned the building.

Q. Would you never bring him to the United States if this worked out?

ae

A. No. I wanted to at the end, like in two and a half years.

A. Correct, correct.

ich

Q. Okay. But you first start out overseas and then that succeeded?

mM

Q. So you have plans for this tour and you discussed a lot of that with Mr. Weitzman. There's an announcement about the tour. Can you explain a little bit about in reaction?

A. You're talking about the press conference?

Te a

Q. The press conference, right.

ww

w.

A. Yeah. Well obviously people did not, who were very skeptical as to whether Michael was serious performing again, because he had made statements, I think, where he was never going to preform again or whatever. So you know, it was this high degree of skepticism, which obvious impacts ticket sales because are not confident. They're not going to put their money out. They're not going to plan their lives around the date. The dates in London, if you remember okay, we sold probably 35 percent of the tickets from other countries and 65 percent from the UK.

Q. So people might be flying in from Japan?

n.c om

lJa ck so

A. Yeah. So the press conference, people had to see him in the flesh and hear from him. Other artists you could probably put a press release and that would have sufficed, like most tours are like that. But with Michael, there was so much insecurity that we needed to produce him person and have it come out of his mouth that he was going to do this.

Q. Could you paint a picture for the Court? Could you explain what the fans were like, what the press was like, just sort of bring us to that place?

Q. Is that more than you expected?

ae

A. Well, the fact that we got 365 press organizations and camera crews and that's a pretty good attendance from all around the world, from Japan, from all major networks and stuff like that. So that was a very good sign for our PR people that was a high degree of interest from the media. And then there were like three to four thousand kids who showed up just for the announcement.

ich

A. No. It's more than Michael expected. It's a lot more than Michael expected.

mM

Q. You were please though with that reaction?

A. Yeah. We after that announcement, we could tell because people had to preregister to buy tickets. We could tell that there was a demand, a great demand for people to see him on that stage.

Te a

Q. Well, walk let's walk us through that preregistration. What happened?

ww

w.

A. Well he sold .... not sold, but we had so many requests for tickets and each request represented four tickets, because they will have to buy four tickets. I got a call when I was at a rehearsal for Lionel Ritchie's European tour and I was still in London. I got a call from Paul Gongaware, who was monitoring the registrations and stuff. He said you know, we're going to blow through all of these tickets for the 31 shows in the presale, which means when we open up to the general public, we're not going to have any tickets left and that would be a terrible black eye on people who didn't know how to do the presale, weren't Internet savvy, okay. So there it was very important that we have tickets on sale for the public. So I called Dr. Tohme. I said Dr.

n.c om

Tohme, we need to get Michael to do more shows. He said how many? I said well at least 50, because you know, we could do more but I know that's not even possible for him to do 50.

Q. If Michael was up for it, how many do you think you could have done?

lJa ck so

A. A hundred.

Q. A hundred?

ae

A. Yeah, because it was .... you have to realize, no one thought he was going to go anywhere else. This became an event. This was probably the last time the consumers mind they were ever going to see Michael Jackson perform on the stage. That was a big driving motivation for the consumer.

ich

Q. So originally there were .... you started with how many shows?

mM

A. It started with ten. The original P&L that I made the deal was based on ten shows, and a $7.8 million production budget, okay. It swelled to well past 20 as we got into it, but we were already, as they say in our business pregnant in the deal. But we had sold the tickets, so it's not .... we were advancing the money and he would have to recoup it. My concern was he wasn't going to make any money, and he really needed to make money, and that was my biggest concern.

Q. But the number of shows went more than that?

ww

w.

Te a

A. Yeah. It was obvious with what we call the registration for the presale, it was obvious that demand was greater that ten shows. Michael didn't know that. He thought he washed up and the public didn't love him and all that and we had those conversations. I knew he was bigger than that, than he thought, but I didn't know how big either. You know, I thought if we got to 20 shows, it was a home run, like Prince did 21. I never heard of one artist doing that many dates in one sitting before. So we did .... the ten .... I got him. I called Dr. Tohme. Dr. Tohme spoke to him and then he had his assistant security guy call me. He said Mr. Jackson's on the phone. I got on the phone with Michael and that's when he told me that, you know, he was willing to do 50 shows, but how long am I going to have to be there? I was joking with him and I said we'll have to get you a British passport and he started screaming and saying no, I can't be away that long

n.c om

and stuff like that. And I said 50 shows for Michael realistically, given your performance record of cancellations and reschedule, I said it's probably nine months. It's going to probably take us nine months, and only average two and a half shows a week.

lJa ck so

Q. How do you do a half a show?

A. I knew you were going to ask that, okay. You average two and a half, okay. You don't just stop halfway through the show.

Q. You mentioned Tohme Tohme. What did you think of him?

ich

ae

A. I loved him. I mean I loved dealing with him. I mean he was odd in terms of traditionally what I call a civilian. He wasn't from the business, you know. I didn't understand his relationship with Colony Capital, that he was raising money for them from countries and sheiks and stuff like that. I didn't understand that part of his life, but as far as the dealings I had with him with Michael, they were really very above board and you could tell that he had Michael's interests. He was just not, you know, a scam artist locking onto a star, okay. But he didn't know the business, and you know, what's the saying where sometimes your eyes are bigger than your stomach when you're going to eat? I don't think he realized how hard it was to sell Michael, not to me but to other people.

mM

Q. Because he was a novice in the business?

A. Yes. But a believer. A novice but a believer.

Te a

Q. Okay. So okay. So let's move up a little bit to the winter-spring of 2009. Can you tell us about the first meeting you had with John Branca, when he expressed interest in working with Michael?

w.

A. I ran into John, actually Dr. Tohme was with me. We were at the Clyde .... what is called the Clyde Davis party at the Grammys. It's tomorrow night.

ww

Judge Holmes: Who's Clyde Davis?

n.c om

lJa ck so

A. Clyde Davis is a very famous .... he's in his late 80's now, but he's one of the real icons of the recorded music business. He was the president of Columbia Records for many, many years. He signed artists like Bruce Springsteen and Janice Joplin, and then he founded Arista Records, which one of his most famous artists there was Whitney Houston. But he's one of these .... he's one of like the classy spokespersons for the entire industry. It doesn't matter what artist is on what label. They all looked up to him. So we were at the dinner at the Beverly Hilton in the ballroom, and John was there and I introduced Tohme and John at that thing, and then they made arrangements to get together for either lunch or breakfast, I don't remember.

Mr. Musen:

Q. Did John ever mention at that point that he wanted to work with Michael?

ich

ae

A. Yes, yes. He told me. He said, you know, it kills me that I'm not representing him, you know, because you're in the middle of this comeback and stuff like that. I really have so much to offer. I know so much about his life, his catalogue, all of that. I would very much like to be involved again, basically that.

Q. Okay. So you brought, introduced John to Tohme Tohme?

mM

A. Uh-huh, yes.

Q. And then what happened next?

Te a

A. They met, and then according to Dr. Tohme, he told Michael he had had lunch or breakfast with John Branca, and then Michael reacted negatively to him on that.

Q. He who?

w.

A. But that was secondhand from Dr. Tohme. I don't know much of that or what the tone of that was or anything.

ww

Q. He reacted negatively to him, him being?

lJa ck so

Q. Okay. So then what happened?

n.c om

A. Meaning to the idea of John becoming his lawyer again.

ae

A. Then Dr. Tohme and Michael had a falling out over a guy named Darien Julian of Julian's Auctions, where Michael had tons of junk, and you know, I hate to think it was junk, but he was paying $150,000 a year in storage fees, and Dr. Tohme, trying to do the right thing, and Michael was involved in this, had arranged for Julian's Auctions to auction off the memorabilia as memorabilia. And when it went on the Internet and they posted the lots and all that, Michael got very embarrassed by it. In his mind, it looked like he was so broke he had to sell things to survive and stuff like that, which wasn't far from the truth. But in this case, it was even more about the cost of storing the stuff. So I think Tohme was acting in a very fiduciary role. But Michael went .... I was on the phone with the two of them for like an hour trying to mediate the dispute, and that was the beginning of the crack in the relationship between Tohme and Michael, was over that auction.

ich

Q. Okay, and eventually John Branca met Michael Jackson in his dressing room at the Forum?

mM

A. Yeah. Well there's a .... he also then met he met with Frank DiLeo again.

Q. Again Frank DiLeo is?

ww

w.

Te a

A. Frank DiLeo was Michael's manager during the heyday, and is kind of a famous guy in the business because of Michael with the big cigar and he's a little short, heavy-set guy. His profile is like known by everyone because he was Michael Jackson's manager, and through all the big hits and all that. So they have a history. They had a promotion of Epic Records and actually broke Michael's Off the Wall album in the singles. So he goes back that far with him. He's deceased now. But so anyway, so he was the .... he met with Branca. The two of them met, and kind of buried the hatchet from the past because at one point, when Michael decided to let Frank go, it's obviously always the lawyer, the business manager who delivers the bad news, and never the artist. So they kind of patched up their differences, and then I needed a film lawyer, a film firm to chop the concert DVD and stuff with those kinds of relationships, and John was that, plus he had a relationship with Sony in terms of clearances and stuff, and he still owned a piece of the Mijac with the Sony/ATV catalogue. So I said to Michael, I said look, we need to bring a lawyer in to do this. We can't do these deals. My company wasn't qualified to do that, and would you take a

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meeting with John, and he said well I don't want to do it at the house, but have him come down to rehearsal, and that's how John ended up in the rehearsal room with Michael, in his dressing room.

A. To be his lawyer again.

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Q. So is that .... what role was John Branca trying, applying for?

Mr. Weitzman: Objection. That calls for speculation the way it's phrased.

Mr. Musen: To your knowledge.

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Judge Holmes: That one's stricken, but you can .... you may answer it.

ich

A. Yeah. My assumption is he wanted to be his attorney again. John was never his manager. He was always his attorney.

Mr. Musen:

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Q. Was there any other competition at that moment?

A. There was another lawyer, Joe Katz who was doing some work for him. But no, he didn't have .... at that point he didn't have any ....

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Q. Him being Michael Jackson?

A. Michael Jackson did not have a lawyer who was his day to day lawyer.

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Q. Okay. So then bring us to that meeting in the Forum.

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A. Okay. They, Michael said bring him down to the Forum. There were a couple of people in the dressing room at the time. DiLeo was there, this gentleman David Loughler who worked for

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me, who I wanted .... I had him stay with Michael to make sure he ate. Michael was so absentminded that I was worried about the weight, and so Dave's job was to make sure that here was a meal in front of him and stuff like that at all times. And I was in the room and I don't remember who else .... Joe Katz was in that room and John and Michael, okay, and there was the makeup artist. I can't remember her name, and they got along. It was like old times, you know, kind of. I left the room. John brought an engagement letter with Michael, because one thing John knew better than anyone was how flaky Michael could be. Not intentionally, but just who he was. So he brought an engagement letter for him to sign, and Michael asked me to read it. I read it, Joe read it. It was fine, and he signed it. But there was only one copy. So I went outside the room to the production office to make a copy so that Michael had it. And so I don't know what they might have said to each other in that room, but that's the nature of that meeting.

Q. Besides that engagement letter, did John bring anything else?

ich

Q. No agenda of possible projects?

ae

A. No, not that I know of. Not that I'm aware of.

mM

A. Yeah, no. He had, I don't know if he had them written down or he had them in his head, but he talked to him about places to go for films and also for the concert DVD and Sony, and what we would need to get clearances. The one thing John had, which I think is one of the reasons why he's been as effective post- death in managing the Estate is he had more knowledge of Michael, of Michael, Inc. than anyone else in the business, because he was with him for so long.

Q. Did Michael have any projects that he wanted to do?

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A. Yeah. He wanted to make movies in the worst way. He thought he was an auteur. An auteur means, you know, like Woody Allen. He could act in them, he could write them, he could make them and it would all be commercially fantastic. Not necessarily something I share the view of, but you know, he wanted to make movies more than he wanted to tour. He thought that was his future, was to be a film maker.

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Q. Did he want to do this Ghost movie at that point?

Q. And was there a 3D version of Thriller that he might want to do?

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A. Yes, yes.

Q. When was that?

A. Part of the tour deal.

Q. That was part of the tour deal?

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A. Tour deal, yeah.

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A. That was what we put up the million dollars to develop, was a 3D Thriller.

ich

Q. Okay. So and AEG wanted, there would be plenty of cash to do that?

mM

A. Yes, because when Michael agreed to do the 50 shows, part of the agreement was that we find an estate with 16-1/2 acres, rolling streams and horses, because he didn't want to be trapped with the kids in the hotel suite, even if he had a whole floor in London. And he specifically said he wanted like a gatehouse or a guest house for the writers to be working on the movie while he was doing the shows at the 02.

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Q. So you mentioned Frank DiLeo, Tohme Tohme, John Branca. Does Michael stick with any manager for any length of time? How does it work with Michael and managers to your knowledge?

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A. You're asking if he has attention deficit disorder like every artist I know? Yeah, probably. I mean he had .... he sat with Tohme, because when Tohme explained the deal and the tour and stuff like that, Tohme had a ton of meetings with him. You know, DiLeo less so because it was a shorter period of time. But you know, they had .... his house was open to DiLeo, and then Branca was the shortest, because it was right before he passed away that he got back involved.

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Q. Michael passes on June 25th, 2009. Do you know anything about the Internet reaction to that?

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A. I was there at the hospital the whole time and then with the family. Frank and I had to tell his mother and the kids, which is probably the worse memory I have of this business, in our business, a business where we're taught the celebration of life, not death. It was just hard, the wailing and stuff like that. So I wasn't on the Internet, you know.

Q. You mentioned earlier that there was a meeting at Mr. Chow's and another one in John Branca's office right after the memorial service, and that there's some topics that were discussed, including ways of making money. Did you have a project with the tickets from the 02 concert?

A. Yes, yes.

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Q. Can you explain to the Court a little bit about that?

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ich

A. Yes, yes. Because the 02 was billed as like "This Is It". It will never happen again. It was Michael's idea to call it "This Is It". He also did not want to tour anymore, you know. So I had a big job ahead of me, you know, if we were going to go around the world and come here. But what we did is to make it a real event, okay. In the UK, unlike here where you print your tickets at home and no one cares what the hell the ticket is, they just want to get into the building, in that case we made what are called lenticular tickets. And there .... do you remember as a kid they were called flickers or something where you move them?

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Judge Holmes: Oh, like I Like Ike buttons.

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A. Yeah, yeah, yeah. So that was the ticket. So you moved Michael performed, you know. They did .... and there were eight different ones. So they were all like .... or six different ones. No, I think there was eight. They were like collector's items, because we wanted to create value and a keepsake for people to memorialize this event, and yeah, that was my idea to do that and we were going to make them out to the people. We had everyone's address and we had to .... And the reason I did that was not as altruistic as it sounds. I wanted the database and the addresses of all the buyers.

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Q. Did you ever make any money out of that?

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A. We ended up netting, I think, about $6 million, because when he died, a lot of people didn't want .... they wanted the lenticular. We would have made a lot more than that if we had mailed them out, but he died before we mailed out most of them. So a lot of people wanted to keep them. They didn't care about the 75 pounds or whatever they paid for the ticket. They wanted to keep that. If they got reimbursed for their ticket, then they'd have to send back the ticket. So yeah, it would have been .... had we mailed them before he died, I think the retention rate for the consumer side would have been gigantic.

A. Gianopulos, yeah.

ich

Q. Gianopulos, and he had never ....

ae

Q. Talk about the .... the idea for the movie came from Jim, and I can't even pronounce this right, Gianopulos?

mM

Mr. Weitzman: Pardon me, I just want to object. That misstates the evidence and the testimony. The idea for the movie didn't come from Gianopulos. They ere looking for footage is what the testimony was.

A. Yeah, but ....

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Judge Holmes: But I thought it was that the idea came from him.

A. Honestly, he had the idea of making a theatrical release. We didn't know what we had, you know. So it was his idea.

Mr. Musen:

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Q. He hadn't seen the footage, but he thought it would be a major motion picture?

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A. If we had enough. If we had enough interesting, compelling footage, he thought it could if we got it, and also with the condition that we got it out before Christmas, close to Michael's passing.

A. Uh-huh, yes.

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Q. You said that .... oh. Let's talk a little bit about the bidding war, and it eventually ended up being with Columbia.

Q. Why would all these studios want to bid on this footage, on doing the film if they had all these allegations out there about Michael?

ich

Judge Holmes: You can rephrase.

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Mr. Weitzman: That calls for speculation.

Mr. Musen: To your knowledge.

mM

Judge Holmes: There you go.

Te a

A. Well, the bidding war obviously happened. You have to understand, Michael's death created a perception of demand for anything Michael, which the Estate has capitalized on, like the deal they made with Sony on the catalogue and stuff like that. Had he not died and we put out a concert DVD using that footage as B roll for it, I don't think it would have ever been like "This Is It" became as a motion picture. So you have to look at post-death versus pre-death, or had he still been alive, what the value of that would have been.

Mr. Musen:

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Q. What were the studios that were bidding?

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A. Paramount, Sony, Universal and Fox.

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Q. You said that ownership of the footage and the film was a little acrimonious between AEG and the Estate earlier?

A. Correct.

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Q. Can you explain a little bit about that acrimony?

ich

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A. Yes. Any negotiation in the entertainment business tends to be .... one side wants too much, the other side wants to pay less. So in this case, we felt .... personally we were out $36 million. So the first priority for us was to recoup our out of pocket expenses on that, because that was a significant amount of money for any company to absorb, no matter how rich it was. And we, you know, I wanted a bigger .... we ended up doing a 90/10 with the Estate. The Estate got 90 percent of the proceeds and profits from "This Is It"; AEG got ten percent, but we got back the 36 million first out of the 60 million advance that the studio paid for the rights to the movie, and that was our principle priority. I thought that the deal should have been either a 50/50 or a 60/40 or 70/30 at worst, and Tim Leiweke, who's truly one of the really great guys of the entertainment business, he ended up making the deal with John, because John and I were at loggerheads over the deal. He made the deal and gave it to them, kind of like as if the tour was still happening, you know, like the tour deal so ....

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Mr. Musen: Your Honor, may I just have a moment to confer with the team here?

Judge Holmes: Certainly.

……………………………………………………………

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Mr. Musen:

Q. One last question. When you or AEG broached the subject that you had rights to the footage, what was the Estate's reaction?

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A. That they owned it. Yeah. But you know, possession is nine-tenths of the law. But you know so ....

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Q. I think I learned that in first year property law.

Judge Holmes: Mr. Weitzman, it's back to you.

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Mr. Musen: All right. No further questions. Thank you.

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A. But I can remember, yeah.

REDIRECT EXAMINATION

Mr. Weitzman:

Q. The interest that you perceived dealt with Michael performing; correct?

ae

A. That is correct.

ich

Q. You weren't talking about people interested in making name and likeness deals for Michael at that point in time ....

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Mr. Musen: Objection, beyond the scope. I didn't talk about anything about name and likeness.

Judge Holmes: Overruled. We're mashing together direct and cross examination.

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Mr. Weitzman: He's referring to mash...., by the way.

A. I know. He should be one of my DJs in one of the festivals. That's where they mash music. I was told Tax Courts are a little less formal than what I went through in the Michael Jackson suit.

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Mr. Weitzman:

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Q. By the way, sometimes.

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A. Sometimes, okay. The name and likeness, the reality is I wasn't .... it wasn't my job to make name and likeness deals. My job was to get him on that stage and monetize the tour.

Mr. Musen: Objection, leading.

Judge Holmes: Rephrase, Mr. Weitzman.

Mr. Weitzman:

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Q. Well, Michael had not yet made a comeback, right?

Q. Had Michael Jackson made a comeback by the time he died?

ich

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A. In my opinion, no. This was the comeback. When he performed, that in the world I think would have cataclysmically changed in terms of the perspective, because they so respected him as a live performer, idolized him, and I think that whatever the negativity of the past would have been washed away. But it meant he had to perform.

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Q. Do you recall if the Estate needed to get court approval to go forward with the film deal with Columbia?

A. Well, I assume because at the time, as I remember, McClain and Branca were just acting or whatever they were called and I think ....

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Q. Special administrators?

A. Yes, and I think Judge Beshloss....

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Q. Beckloff.

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A. Beckloff, I believe he had to approve everything.

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Q. Do you recall if the family filed objections to our getting the Court's permission to go forward with the film deal?

A. I'm sure one of many, yes.

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Q. The ticket refunds that you were talking about or that part of the business where people didn't get the tickets mailed, did they get refunds on their money?

A. Yes. Just so you know, in the UK they have a very strict policy about how long you can even hold the money when it shows cancelled and how quickly you have to return the money.

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Q. In response to one of the questions you were asked by Mr. Musen, you talked about Michael getting hurt in the Pepsi commercial in 1984. Do you recall that?

ich

A. Yes.

Q. That was the beginning of Michael's addiction to painkillers, wasn't it?

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Mr. Musen: Objection, leading.

Judge Holmes: Sustained.

Mr. Weitzman:

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Q. Did Michael have an addiction to painkillers as a result of the injuries suffered during the time that he was filming the Pepsi commercial?

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A. Based on my ....

Mr. Musen: Back up for a second.

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Judge Holmes: It's still leading. Try again.

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Mr. Musen: Leading and Mr. Weitzman should lay a foundation of personal knowledge.

Mr. Weitzman:

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Q. What did you mean .... what did you mean when you said that if Michael hadn't gotten hurt in the Pepsi commercial in 1984, who knows what would have happened?

A. I meant that there probably would not have been the addiction to painkillers. There would not have been the need for propofol to sleep at night. There would not have been the need for Conrad Murray, you know. Just the series of events that happened, I think Michael would have not been in and out of his career the way he was. I mean he loved music. He loved performing, and all of the sudden after that it became very sketchy for him.

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Q. And when you referenced the '93 and the 2003-2005 incidents, were you referring to the allegations that Michael faced from the Chandler family and then Santa Barbara ....

ich

A. Yeah, correct. I am very aware he was never convicted.

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Mr. Weitzman: May I have a moment?

Judge Holmes: Yes.

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Mr. Weitzman: I don't have any further questions. Thank you Mr. Phillips, and thank you Mr. Musen.

Mr. Musen: No further questions.

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Judge Holmes: You are actually free to go. Thank you very much for your testimony.

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Judge Holmes: Do you have anybody else this afternoon, Mr. Toscher?

Judge Holmes: That's it. What are we looking like on Monday?

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Mr. Toscher: No, Your Honor.

Judge Holmes: Who would that be?

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Mr. Toscher: We're looking at Mr. Wallis on Sony/ATV; Nancy Fannin. We're going to try to do two experts that day. We think we can, we're going to try. We may have a couple of remaining fact witnesses, to try to squeeze them in on a break.

Mr. Toscher: That would be Michael and perhaps Justine, Justine Ruffalo and Zia Modaver ...... We don't know which of the three yet but .... I think the priority will be the experts, Your Honor.

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Mr. Weitzman: To be clear, none of the fact witnesses will take that long.

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Mr. Toscher: Yes sir.

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Judge Holmes: We've got tax affecting and Sony/ATV. All right.

Judge Holmes: And heading into name and likeness on Tuesday you think?

Mr. Toscher: Yes, Your Honor.

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Judge Holmes: All right. We are adjourned. Have an enjoyable weekend.