The Beatles Besieged

A multimillion-dollar business cannot be run on fun and flowers, the Beatles be latedly discovered after the death in 1967 of their canny manager and mentor, Brian Epstein. More interested in gadding about than tending to their enterprises, they left their convoluted corporate empire (see chart) to run on its own momentum. Inertia was not a successful philosophy. Three of the biggest companies in which the Beatles hold stakes have lately tumbled into trouble.

> Northern Songs, founded in 1963 to handle the songwriting business of John Lennon and Paul McCartney, was the object of a takeover bid by Britain's Associated Television, producer of The Avengers. Associated bought up 35% of the stock in March and made a $23.5 million tender offer for the rest; the company now has just over 36% of the shares. Lennon and McCartney, each of whom owns 15% of the company, fought the takeover by calling for help from the other Beatles and making their own tender for 20% of the shares.

> Nemperor Holdings, the successor to Epstein's Nems Enterprises, was sold by his family in February to London's Triumph Investment Trust. Nemperor collects all the fees for the Beatles' record, stage and film performances, then takes a 25% cut and splits the rest between the Beatles and their companies.

Since Epstein was dead, the Beatles reasoned, why not reverse the sequence of payment? When they proposed to take in the gross themselves and disburse Nemperor's 25%, Triumph went to court. Until the fight is settled, Electrical and Musical Industries, Ltd., which produces and markets the Beatle recordings in Britain through the Apple label, has frozen all royalties. The total tied up is now about $3,000,000.

> Apple Corps, wholly owned by the Beatles as their major corporate entity, is a disappointment. It was founded last year with the aim of promoting other talented people and creating businesses in recording, electronics, publishing, films and retailing. But Apple bankrolled stale ideas and supported a film division that never made a movie. Even the Beatles' enormous earning capacities could no longer comfortably carry the load. Last year they closed Apple's mod boutique after opening the doors for a two-day giveaway of more than $100,000 worth of bellbottoms, see-through blouses and other clothes. Then they shut down Apple's film operation. The firm grossed little more than $500,000 in its first fiscal year ending last month. "We tried to be the Ford Foundation," said John Lennon. "It was rubbish."

Talking Their Language. To put their house in order, the Beatles last February called in Allen Klein, 37, a New York City accountant who manages the Rolling Stones and Herman's Hermits. Klein also controls Cameo-Parkway Records, whose stock was delisted by the American Stock Exchange last year because of "an absence of adequate information" about its business dealings. Klein was indicted in New York federal court for income tax evasion in connection with his holding company, Allen Klein & Co. Two weeks ago, he signed a three-year management contract with the Beatles, cutting himself into 20% of their earnings.

Lennon, the senior Beatle, is ecstatic about Klein. As Lennon told TIME Correspondent Charles Eisendrath in Appie's Savile Row headquarters: "He's only been here three months, and he's sorted out seven years of crap. This guy talks our language. He just says, 'Where is it?' and 'When do I get it?' and 'How much do the tax boys take?' It's as simple as that."

Real success, however, is not so simple. Last week the Beatles lost control of Northern Songs when a consortium of financial companies added their 14% to Associated's holdings and made a deal in which it will name four of the six directors. Britain's High Court will decide next month on who should pay whom in the Nemperor case. As for Apple, it is too soon to see whether Klein's pruning will produce profits.

Whatever the outcome, the lads will be free again to pursue lighter pastimes. Since each Beatle is still personally worth $5,000,000 to $9,000,000, they have plenty for the pursuit. As Lennon explains: "The point of Klein is for me not to be a businessman -- to take it off me back so I don't have to worry about the details."

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