CKX Inc. CEO Bob Sillerman says the company has reached a multi-year deal with Fox Broadcasting to extend “American Idol.” He’s also upbeat about the new line-up of judges.
“We do expect to announce, I would say before the end of the month, if not sooner, a long-term extension with Fox that confirms what we had been saying all along – that ‘Idol’ has elevated its status to the point that it is quite a bit more important than any individual. And as talented as Simon Cowell is, let’s make no mistake about that, that he is an incredibly talented fellow, that Idol’s future is, with the announcement of this long-term extension, guaranteed and demonstrates both Fox’s commitment in that it will be the third long-term extension for Idol, which is absolutely unprecedented,” Sillerman said Tuesday in a conference call with Wall Street analysts.
Sillerman noted the strong ratings of the premier week of the new season of Idol on Fox. New judge Ellen DeGeneres got a thumbs up from the CKX CEO, saying the reports of her tapings, which began just last week, “have been just astounding.”
Sillerman offered no financial details of the soon-to-be completed deal with Fox, but CKX has filed with the SEC financial details of its recently concluded negotiation to let Simon Fuller leave CKX subsidiary 19 Entertainment to launch a new venture.
Under a consultancy agreement, Fuller will be paid a quarter million British pounds as a signing fee, and then 10% of the net profits that 19 Entertainment receives from “American Idol,” “So You Think You Can Dance” and “If I Can Dream.” For each year after 2010, Fuller will receive an advance against those profits of $5 million – $3 million for each year that Idol remains on the air and $2 million for each year that Dance remains on the air. More immediately, Fuller is to receive one and a half million pounds for consulting 19 Entertainment for the next six months.
As announced, CKX has an option to invest in Fuller’s new venture. The SEC filing details that CKX paid a half million pounds for the right to acquire 10-33% of the shares of the new company, XIX Entertainment. That option expires March 15, 2010.
In addition, CKX is paying Fuller just shy of a million pounds for terminating his employment with 19 Entertainment and accelerating his vesting in CKX shares.
With Fuller’s departure, Sillerman indicated that 19 Entertainment will be reducing its overhead. CKX will now be free to pursue deals with other program producers.
Agreeing with analysts that he is disappointed in the stock price of CKX, Sillerman indicated that the future may hold new partnerships and acquisitions to grow the company. But he also said his primary concern is producing shareholder value, so he didn’t rule out the sale of the company or some of its key assets – assuming that someone is willing to pay more for them than the value that CKX can achieve.
That, of course, raises the question, how much might News Corporation be willing to pay to own 19 Entertainment, rather than pay it for the rights to air Idol and Dance?