MILLS MUSIC TRUST (MMTRS) stock intrinsic value fair value estimate & owner earnings analysis

Mills Music Trust is a passive trust formed in 1964. It receives a contractual share of the royalties that EMI (now administered by Sony) collects on the old Mills Music catalogue of more than 12,000 songs. It has no employees, no debt and no assets other than this payment right, and it pays out everything it receives after trustee, audit, legal and administrative costs. In 2025 the two biggest earners were Sleigh Ride and The Little Drummer Boy, which together produced about 45% of the gross royalties of the top songs. Most of the rest came from jazz and pop standards such as It Don't Mean a Thing, Caravan, In a Sentimental Mood, Stardust and Minnie the Moocher. Earnings record. The trust keeps its books on a cash basis, so its cash earnings are simply receipts from EMI less expenses. Excluding two one-time audit settlements ($1.0 million in 2019 and $0.5 million in 2025), ordinary receipts rose from $833,000 in 2016 to $1.29 million in 2024. They then fell to $1.07 million in 2025, when EMI paid about $148,000 less than the trust believes it is owed under a long-running disagreement over how the payment formula works. Cash earnings ran $2.14 to $3.09 per unit from 2016 to 2023, with a median of about $2.85 over 2016-2025 excluding the settlements. They fell to $2.37 in 2024 and to just $0.55 in 2025 (before the settlement), because legal and audit costs climbed from about $230,000 a year to $633,000 in 2024 and $917,000 in 2025 during the audit fight with EMI. That fight was largely settled on October 30, 2025: EMI paid $500,000, agreed to cap the fee its foreign affiliates may deduct at 25%, and narrowed the copyright-renewal costs it can offset, starting with the July 2025 quarter. The disagreement over the formula itself was not settled for periods after 2024. The first half of 2026 shows the improvement: receipts were $650,000 against $464,000 a year earlier, and expenses fell to $211,000 from $326,000. Including the settlement, 2025 cash earnings per unit fell 1%; excluding it, they fell 77%. Our base case starts 2026 at about $2.70 per unit, which is higher, because the settlement ended the costly audit and the two 2026 quarters already confirm lower costs and higher receipts. Part of the 2026 receipts, $89,963, is a payment EMI calls a computational error and says it will deduct from future payments, so every case deducts it in 2027. A wasting asset. Every song eventually loses copyright, so this is an income stream that runs down, not a permanent business. We credit no growth in royalties in any case: gross royalties on Sleigh Ride roughly doubled and on The Little Drummer Boy rose about 50% between 2021 and 2025, but the trust's own receipts did not follow. The key uncertainties are when the big songs lose U.S. copyright and how much they earn afterwards. EMI's song listings are inconsistent. The 2021 listing dated The Little Drummer Boy to a 1958 copyright protected through 2053, while the 2025 listing uses a 1937 date expiring after 2032, the same date it gives to Volare and other songs written decades later, which looks like a placeholder. Songs that have already lost U.S. protection have kept earning: I Can't Believe That You're in Love With Me, in the U.S. public domain since 2022, still produced $85,000 of gross royalties in 2025, consistent with foreign copyrights that typically last 70 years after the last writer's death. Cases. All cases are discounted at 6%. The trust owes nothing and holds essentially no cash, so in every case the value of the business and the value per unit are the same. Bear case, $6.40 per unit: receipts stay at about $1.05 million, the 2025 level, because EMI's reading of the formula prevails. EMI's 2025 expiry dates are taken as correct, so songs earning roughly a quarter of royalties lose U.S. protection in 2028 and The Little Drummer Boy in 2033. Expired songs keep only 30% of their income, and all foreign income ends by 2045. Legal and administrative costs stay near $425,000 a year, rising 2% annually, as the formula dispute continues. Cash per unit falls from about $2.10 in 2026 to about $1.00 by 2030 and to almost nothing by 2033, as costs absorb what is left. Base case, $24.90 per unit: receipts of about $1.15 million a year from today's catalogue, in line with 2026 so far once the disputed payment is removed. Expiry dates follow the more specific 2021 listing where the 2025 listing appears to use placeholder dates (The Little Drummer Boy after 2053; Sleigh Ride and Sleigh Ride Promenade after 2045), and EMI's 2025 dates elsewhere. Expired songs keep 60% of their income from foreign and residual royalties until about 2060. Costs are about $375,000 a year, rising 2% annually. Cash per unit is about $2.30 in 2027-2028, $2.15 in 2030, $1.90 in 2033 and $1.45 in 2045, then drops below $1 once Sleigh Ride loses U.S. protection in 2046 and reaches zero around 2059. Bull case, $44.70 per unit: receipts of about $1.25 million, close to the $1.29 million received in 2024, supported by the new 25% cap on foreign fees. Costs return toward $300,000 as the dispute quiets, expired songs keep 90% of their income as the record since expiry suggests, and foreign protection lasts into the 2060s. Cash per unit stays around $3.00 through the 2030s and is still about $2.00 in 2060. Not included in any case: recovery of the $147,742 the trust says EMI underpaid in 2025, or a win on the formula dispute going forward. Either would add value, but neither has happened. Changes since our previous estimate. We previously valued the units at $8.00 (bear), $17.40 (base) and $33.40 (bull). The base and bull values are now higher and the bear value lower. We now value each top song's expiry and its income after expiry explicitly instead of applying a flat decline, we use the same 6% rate in every case, and the first half of 2026 shows costs falling and receipts rising after the settlement. The bear case is lower because it now lets legal and administrative costs absorb most of the remaining income after the 2028 and 2033 expirations. What would make this wrong: the copyright dates come from EMI, have changed between listings, and the trust cannot verify them independently. The trust also sees EMI's books only through expensive audits, and its income depends on EMI's reading of a 1964 agreement. Foreign royalties are not broken out, so how much income survives each U.S. expiry is an estimate from a handful of songs. Margin-of-safety price. This is a small, thinly traded, shrinking royalty stream with a live dispute with its only payer and uncertain expiry dates, so the margin-of-safety price sits well below the base case. At $10 per unit, the base case implies roughly 25% a year from distributions alone, while the bear case implies a loss, which is why the margin-of-safety price is set no higher than $10.