by Ken McNab
Even before hoovering up James and Silver’s thirty-two per cent shareholding, ATV owned three per cent stock in the company. So now they controlled around thirty-five per cent, only sixteen per cent short of the magical fifty-one per cent needed to guarantee Grade majority control of the company and grant him authority over history’s most lucrative song catalogue. As far as everyone at Apple understood, The Beatles’ stockholding collectively amounted to around twenty-nine per cent. The deal between Northern and ATV valued the shares at just over thirty-seven shillings – just under £2 in 1969 and approximately £23 today – a far cry from the seven-shilling (35p) valuation placed on the shares when the company floated on the stock market in 1965.
Grade felt confident enough to announce his intention to mount a full-blown takeover of Northern Songs. ‘We are determined to buy Northern Songs,’ he warned on Saturday, 12 April. ‘Music is an essential part of our business and there’s no denying the brilliance of The Beatles as musicians.’ The company was valued at £10m by Grade’s moneymen, a miserly appraisal according to the City’s most seasoned observers. But Grade was not the type to spend one pound unless he could get five in return. Nor, in many ways, was Klein, who had been summoned back to fight the good copyright fight by Lennon and McCartney.
This unexpected crie de coeur stuck in McCartney’s throat, as it saw him abandon his steadfast principle to never do anything for the benefit of Mr Klein or let him represent him. But for some, his reluctant gesture equated to Klein being his de facto manager in the war to come over Northern Songs. Privately, he wondered when someone would rip off Klein’s mask to reveal what really lay beneath. On Sunday, 13 April, he had his answer.
The Sunday Times’ fearless investigative team, Insight, published an excoriating profile of Klein’s business activities. Over two broadsheet pages it dragged the American’s dark past out into the light. Headlined ‘The Biggest Wheeler-Dealer in the Pop Jungle’, it pilloried him over a string of dodgy deals.
The story raised questions over alleged dubious share dealing involving the Cameo-Parkway record label (the forerunner of ABKCO), and disclosed that he faced a string of court cases in New York and was being investigated by the US tax authorities. But the top line concerned the claim that Klein had pocketed a $1.25m advance he had won for the Rolling Stones from Decca Records in 1965.
Much of the content had been leaked to the paper by an old foe. In February, during the bitter stand-off over the purchase of Nems, Leonard Richenberg, the pugnacious chairman of Triumph Investment, had secretly commissioned a Bishop’s Report on Klein, the corporate equivalent of a private investigation into someone’s business activities.
The Insight article was the opening that Lee Eastman had been waiting for. Proof that his son John, and McCartney, had been right all along about Klein and his nefarious business practices, and that The Beatles – and Lennon in particular – were being taken for suckers.
Eastman was a man accustomed to getting his own way. He was furious with Klein for the way he had apparently bullied his son and son-in-law over Apple, Nems and now Northern Songs. From his point of view, Klein was already a failure: Nems had been lost with twenty-five per cent of The Beatles’ earnings now tied up by faceless merchant bankers. Now Northern Songs was in danger of slipping away, while Apple remained a financial sinkhole.
Eastman senior arrived in London a few days after publication of the Sunday Times piece.
His first port of call was to Richenberg to find out whether there was any way for The Beatles to buy back Nems. But the merchant banker was no keener to do business with Eastman than he was with Klein and had no desire to quickly cash in on so prized an asset.
That same night, Lee Eastman sat down alongside all four Beatles for his first face-to-face with Klein, the two men eyeing each other with mutual loathing. Lennon had already been well briefed by Klein over Lee’s ‘phoneyism’. So when Eastman extended his hand with the words, ‘I’ve always admired your work,’ John could taste the hypocrisy. It was a lamentable blunder. The wafer-thin civility quickly gave way to outright hostility.
A few days earlier, Lennon had, to his glee, discovered that Eastman senior had changed his surname from, of all things, Epstein, to try to mask his Jewish background and help smooth his way into New York society. For Lennon, Yoko and Klein it became a verbal weapon with which to bludgeon Eastman. As the discussions became ever more fraught and angry, Lennon spat it out as only he could: EPSHTEEEN. It would have reeked of anti-Semitism were it not for the fact Klein was also Jewish.
Eastman swallowed the bait, giving way to his volatile side and branding Klein a ‘swine’ and a ‘louse’. Klein stayed on the ropes and let Eastman punch himself out. ‘I didn’t think it was right to retaliate,’ he later said wryly.
Lennon recalled that meeting in typically forthright terms: ‘We arranged to see Eastman and Klein together in a hotel where one of them was staying. For the four Beatles and Yoko to go and see them both. We hadn’t been in there more than a few minutes when Lee Eastman was having something like an epileptic fit, and screaming at Allen that he was “the lowest scum on earth”, and calling him all sorts of names. Allen was sitting there, taking it, you know, just takin’ it. Eastman was abusing him with class snobbery.
‘What Eastman didn’t know then is that Neil [Aspinall] had been in New York and found out that Lee Eastman’s real name was Lee Epstein! That’s the kind of people they are. But Paul fell for that bullshit, because Eastman’s got Picassos on the wall and because he’s got some sort of East Coast suit, form and not substance. Now, that’s McCartney.
‘We were all still not sure and they brought in this fella, and he had a fuckin’ fit. We had thought it was one in a million but that was enough for me, soon as he started nailing Klein on his taste. Paul was getting in little digs about Allen’s dress – who the fuck does he think he is? Him talking about dress! Man, so that was it, and we said, “Fuck it!”
‘I wouldn’t let Eastman near me; I wouldn’t let a fuckin’ animal like that who has a mind like that near me. Who despises me, too, despises me because of what I am and what I look like. This was supposed to be the guy who was taking over the multi-million dollar corporation, and it was going to be slick. Paul was sort of intimating that Allen’s business offices on Broadway were not nice enough – as if that made any fuckin’ difference! Eastman was in the good section of town. “Oh, boy, man, that’s where it’s at!” And Eastman’s office has got class! I don’t care if this is fuckin’ red white and blue, I don’t care what Allen dresses like, he’s a human being, man.
‘The more we said “no” the more (Paul) said “yes”. Eastman went mad and shouted and all that. I didn’t know what Paul was thinking when he was in the room; I mean, his heart must have sunk.’
Indeed it must have.
Ronnie Schneider, Klein’s nephew, had been riding shotgun to his uncle at Apple and was convinced that in the battle with the Eastmans there would only be one winner. He recalled: ‘I sat in a few of these meetings between John, Allen and the Eastmans and they were not pleasant because, you know, the attitude was competition. And Allen attacked competition.’
John Eastman later doubted that a simple case of name-calling would have been enough to spark his father’s notorious temper. Rather, he reckoned his old man had reacted the way any father would when his son’s reputation was trampled on by bullies. Years later, he preferred to draw a veil over some of the more lurid accounts that have been painted of this summit but out of personal and professional loyalty to Paul he kept his own counsel for more than forty-five years.
But in 2016, with McCartney’s approval, he broke cover to deny the long-held allegations that the two camps tried to outdo each other by piling obscenity upon obscenity. Hard though the repudiation is to believe, he told McCartney’s unauthorised biographer Philip Norman: ‘We were in opposition right from the beginning. I’m a pretty patient sort of guy. In all our arguments, I never raised my voice once.’
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A few days earlier, Lennon, McCartney, Klein and Yoko had met with Apple’s merchant bankers, Henry Ansbacher & Company, to draw up plans to win control of Northern Songs. On paper, it looked a fairly even fight, and the bank’s Bruce Ormrod was detailed to look after the interests of its celebrity clients.
Over the next week or so, a counter-proposal was presented to the Stock Exchange by Ansbachers. The Beatles were prepared to buy back 1,000,000 shares in Northern Songs, a move which, if successful, would push The Beatles’ current thirty-five per cent shareholding over the magic fifty-one per cent line they needed to keep the company out of Lew Grade’s grasp. They had no intention of seeking an outright buyout. That would leave both sides looking to snap up fifteen per cent of shares they required to declare victory. The idea was fine in theory, looked good on the bank’s headed notepaper and scanned well in the column inches of the next day’s Financial Times. There was just one problem. The Beatles would need to fork out the then eye-watering sum of £2m – money that they just didn’t have. Their royalties from EMI continued to lie fallow in a High Court escrow account due to the ongoing litigation between Apple – or more accurately Klein – and Triumph over the still unresolved battle for Nems. The battle for control of Northern Songs opened the door for avaricious traders to move in and, possibly, just possibly, hold the short-term balance of power – and get rich in the process. Chances were that in the weeks ahead the share price would inevitably rise. So the idea would be to buy low and sell high to either The Beatles or Grade when the time was right. Enter, then, a tripartite bloc of City financiers known collectively as the consortium who owned around fifteen per cent of Northern shares – the precise figure both parties required. The consortium consisted of clients of three leading London brokers, Astaire & Co., W.I. Carr and Spencer Thornton and included theatre owners Howard & Wyndham, the Ebor Unit Trust, the Slater Walker Invan Trust and merchant bankers Arbuthnot Latham. For The Beatles, it then came down to a question of personal cash. In order to find the money to counter Grade, Lennon and McCartney were forced to conduct an audit of their own financial reserves. This mainly included the shares they held in Apple, their film production company Subafilms as well as the cash value of their own shares in Northern Songs. Twenty-four hours after the row with Lee Eastman, they were back round the table at Ansbachers to tally up how much money was in the kitty – and how far or far apart they were to finding the money needed to take on Grade.
Klein wanted everyone to pool their various shareholdings as collateral. McCartney, however, on the advice of Lee Eastman, refused to throw in his shares, deeming it a risk too far. Klein had already anticipated that McCartney would continue to play for time. So, as a sign of good faith, he announced that he would put up £640,000 worth of MGM shares held through his own company ABKCO Industries to boost the pot. The unexpected – and entirely out-of-character – act of altruism blindsided McCartney and the Eastmans.
But Klein’s next comment exploded a chain of events that arguably did more than anything to sever the bond between Lennon and McCartney. Almost casually, he let slip the fact that John owned 644,000 shares in Northern Songs, worth around £1.25m. Then he dropped the bomb: Paul’s shareholding had been tallied at 751,000 and was valued at £1.4m. There followed a few seconds of silence before all hell broke loose.
Lennon, unaware of Klein’s clandestine machinations over McCartney’s secret shareholding, quickly joined the dots and felt an overwhelming sense of betrayal. The man who for the past month had been preaching global peace flew into a red-faced rage at his songwriting partner, calling him a ‘bastard’.
Various accounts over the years have suggested the two men almost came to blows. One unverified report has the volatile Lennon shaking his fist at Linda McCartney with Klein holding him back. Sheepishly, McCartney tried to defend his underhanded actions: ‘I had some beanies and I wanted more.’
Lee Eastman, for once, had no comeback. On paper, it may not have mattered. At that point the combined shareholding of Lennon and McCartney could simply have been added together to be used as a shared purpose against a common foe, had McCartney not reneged on that proposal. But Klein’s jaw-dropping revelation about Paul’s insider dealings had left Lennon badly wounded.
It was a betrayal that cut deep, especially since their song publishing was the one thing about The Beatles Lennon felt most nostalgic about. Yes, there had been bitter fall-outs in the past, even when they were not much older than kids. But in the main these disagreements had been about music and, occasionally, Yoko. This was truly the day trust died between John Lennon and Paul McCartney.
In the months ahead, they would continue to work in the studio and fine-tune each other’s songs. But Lennon would never forget the pain. ‘It was the first time any of us had gone behind the other’s back,’ he recalled.
McCartney, in contrast, felt – and still does – that he had done nothing wrong. Yet it looked to any impartial witness that he was guilty of playing both ends against the middle. Like Lennon, he hated the idea of ATV getting its hands on his songs, but he wasn’t offering any credible alternative. Lee Eastman’s instruction to sit tight only further isolated McCartney in Lennon’s eyes. After all, it was his recommendation that Paul clandestinely buy up Northern shares that had now created an almost fatal rupture.
Harrison and Starr were equally dismayed by McCartney’s perceived treachery and Eastman senior’s meltdowns. One thing was now clear; they didn’t want Eastman anywhere near them. The next day, 18 April, Eastman received official notification on Apple-headed notepaper that he was outlawed from any future involvement in their corporate activities. The memorandum, a stinging rebuke, was another personal blow for McCartney – and a triumph for Klein.
In the meantime, The Beatles, minus McCartney’s Northern Songs stock, launched their counter-offer in a bid to rally shareholders to their side. It included the veiled threat that Lennon and McCartney would stop composing altogether and not fulfil the six-songs-a-year minimum quota stipulated in their existing contract if ATV prevailed.
The overture to shareholders broke down as follows: The Beatles were prepared to offer 212p per share as opposed to ATV’s offer of 196p per share, though, as with all things business, there were complications when you drilled down into the detail.
Key to the proposal was that Lennon and McCartney would renew their contracts with the company, thus ensuring that their songwriting goldmine would remain fruitful for City prospectors. As expected, Northern’s share price rose as the consortium that held the balance of power sought assurances from both sides.
One overriding point of concern soon became clear – the prospect of Klein sitting on a newly constituted board for Northern Songs. Consequently, Apple was forced to hold a press conference on 28 April giving the City a guarantee that Klein would have no place on the board.
Throughout this period, Klein and Bruce Ormrod, of Ansbachers, continued to diligently woo the consortium of minority shareholders who held all the key cards. At one point, it looked as if the consortium would throw their hand in with The Beatles to give the band a controlling stake in Northern Songs. Then, just as quickly, the tide turned in the direction of ATV, who had set a deadline of 2 May for their offer to be accepted. Alarm bells notwithstanding, the clock was now seriously ticking.
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Lennon was torn between two impulses and the stronger one was to walk away from The Beatles and, especially, McCartney. But twenty-four hours after screaming at Paul and allegedly hurling abuse at his wife and her family, he was, remarkably, talking in glowing terms about writing new songs with his partner. He was still savvy enough to appreciate that it was his day job that financed his increasingly costly lifestyle. He still harboured hopes that the abortive ‘Get Back’ sessions could be salvaged.
When Alan Smith, the editor of the New Musical Express, sat down with Lennon on 28 April, there was no evidence of any lingering fall-out from recent events. Oddly, he was instead extremely upbeat, talk
ing about the band’s next musical adventure, a medley of songs strung together to form a symphonic whole, and about a new song called ‘Because’.
On the subject of business matters, he told Smith: ‘If I could only get the time to myself right now, instead of all this Monopoly and financial business with Northern Songs, I think I could probably write about thirty songs a day. As it is, I probably average about twelve a night. Paul too . . . he’s mad on it. It’s something that gets in your blood.
‘I’ve got things going around in my head right now, and as soon as I leave here I’m going around to Paul’s place and start work. The way we’re writing at the moment, it’s straightforward and there’s nothing weird. Songs like “Get Back”, things like that. We recorded that one on the Apple roof but I’m not sure if that’s the version that went out. We always record about ten versions. You get lost in the end. I’m not really interested in the production of our records.
‘In fact, I wish I didn’t have to go through that whole thing, going through the production and balancing the bass and all that. For me, the satisfaction of writing a song is in the performing of it. The production bit is a bore. If some guy would invent a robot to do it, then it would be great. But all that “get the bass right, get the drums right”, that’s a drag to me. All I want to do is get my guitar out and sing songs.’
He added: ‘Paul and I are now working on a kind of song montage that we might do as one piece on one side. We’ve got two weeks to finish the whole thing so we’re really working at it. All the songs we’re doing sound normal to me, but probably they might sound unusual to you. There’s no “Revolution Number 9” there, but there’s a few heavy sounds.
