Entertainment Industry

Category: CKX

CKX and Apollo detail kill fees tied to acquisition deal in regulatory filing

CKX, the parent company of "American Idol" producer 19 Entertainment, which struck a deal Tuesday to be acquired by private equity firm Apollo Global Management for about $509 million, filed its agreement with the Securities and Exchange Commission.

The deal has already been blessed by the CKX board of directors and company founder and former Chairman Robert Sillerman, who remains the largest individual shareholder with 20.6% of the stock.

However, in the unlikely event that the deal falls apart, things could get costly. Per the regulatory filing, there is a $20-million fee that CKX could have to pay Apollo if it found another buyer. There are also conditions that call for Apollo to pay CKX if the deal does not close.

The purchase price of $5.50 a share was seen as low by one analyst who follows the company.

"We think $5.50 per share is pretty cheap," said Mark Argento, an analyst with Craig-Hallum Capital Group.

Over the last few years there were other suitors for CKX, including Sillerman, "American Idol" creator Simon Fuller and most recently Alec Gores, who heads The Gores Group private equity firm.

However, with the backing of the board, Sillerman and other shareholders, a competing bid seems unlikely.

"The probability of someone else coming over the top is fairly remote," Argento said.

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'American Idol' parent CKX to be sold to Apollo Global Management

-- Joe Flint

'American Idol' parent CKX to be sold to Apollo Global Management

American-idol

CKX Inc., the parent of "American Idol" producer 19 Entertainment, has struck a deal to sell itself to a private equity firm.

The company, which has been on the block for years, Tuesday morning announced a deal with Apollo Global Management valued at about $509 million.

Under the terms of the all-cash deal, CKX shareholders will get $5.50 per share. The CKX board said it would recommend that its shareholders accept the offer.

Apollo said it had the support of CKX's two key shareholders -- company founder Robert F.X. Sillerman, who is now a consultant to the company, and The Promenade Trust, the company's partner in Elvis Presley Enterprises, whose sole beneficiary is his daughter, Lisa Marie Presley.

Besides 19 Entertainment, which also produces Fox's "So You Think You Can Dance" and owns a management business, CKX operates Elvis Presley's Graceland mansion and an 80% interest in licensing rights to the name and image of Muhammad Ali.

Last year, when suitors were circling the company, offers were between $550 million and $600 million.

However, although there were three separate groups kicking the tires of CKX, including "American Idol" creator Simon Fuller and Sillerman, no agreements could be reached. The third bidder was One Equity Partners, a private-equity arm of JP Morgan Chase that had teamed up with Hollywood veteran deal-maker Allen Shapiro, who is president of Mosaic Media Group.

The slow pace and tone of the talks led CKX to say in October 2010 that it "did not receive any proposals that it felt were in the best interests of shareholders."

More recently, the Gores Group, which is billionaire Alec Gores' company, made an offer to buy CKX that the board ignored.

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-- Joe Flint

Photo: "American Idol" judges Steven Tyler, left, Jennifer Lopez and Randy Jackson pose with host Ryan Seacrest. Credit: Reuters

Gores Group making play for 'American Idol' parent CKX

CKX Inc., the parent of "American Idol" producer 19 Entertainment, may be back on the block.

The Gores Group, which is billionaire Alec Gores' company, made an offer to buy CKX, a person with knowledge of the situation confirmed.

The terms have not been disclosed, and although CKX received the offer over a week ago, it has yet to disclose it in a Securities & Exchange filing. Neither CKX Chief Executive Michael Ferrel nor a spokesman for the company returned calls seeking comment. A spokesman for Gores declined comment.

Last year when suitors were circling the company, the offers ranged between $550 million and $600 million.

However, although there were three separate groups kicking the tires of CKX, including "American Idol" creator Simon Fuller and CKK founder Robert FX Sillerman, no agreements could be reached. The third bidder was One Equity Partners, a private-equity arm of JP Morgan Chase that had aligned itself with Hollywood veteran deal-maker Allen Shapiro, who is president of Mosaic Media Group.

Frustrated by the slow pace and tone of the talks, CKX ended them in October 2010, saying it "did not receive any proposals that it felt were in the best interests of shareholders."

A wild card for Gores is Sillerman, who holds a chunk of CKX stock and could get in the way of any deal.

There had been concern that the exit of Simon Cowell from Fox's "American Idol" would hurt the show and also CKX. However, with new judges Steven Tyler and Jennifer Lopez on board, the music talent show has performed surprisingly well. Its numbers are down from the glory days, but it is doing much better than most industry observers expected.

In addition to "American Idol," CKX produces Fox's "So You Think You Can Dance" and owns a management business, a majority stake in Elvis Presley's Graceland mansion and an 80% interest in licensing rights to the name and image of Muhammad Ali.

Gores has been aggressively looking to acquire entertainment assets for some time. Last year, he teamed up with his brother Tom, who has his own equity firm, Platinum Equity, to make a run at Miramax.

News of Gores' bid was first reported by Bloomberg.

-- Joe Flint



'American Idol' parent CKX takes itself off sales block

IDOL

CKX Inc., the parent of "American Idol" producer 19 Entertainment, said it was ending talks with potential suitors for the company.

In a statement, CKX said its board of directors "did not receive any proposals that it felt were in the best interests of shareholders" and had determined to "discontinue discussions and intends to continue to operate the company on a stand-alone basis."

Among those that were kicking the tires of the company were "American Idol" creator Simon Fuller, former CKX Chief Executive Robert F.X. Sillerman and One Equity Partners, a private-equity arm of JP Morgan Chase that had teamed up with Hollywood veteran deal maker Allen Shapiro, who is president of Mosaic Media Group.

The offers, none which seemed to get a serious response from CKX, were in the $500-million to $600-million range. Sillerman, who owns 21% of the company's stock, had been seen in some circles as the most likely to succeed in landing the company.

CKX is gambling that Fox's "American Idol," which is the biggest revenue driver of the company, still has a lot of life left in it even though Simon Cowell has left his role as judge to launch a rival show called "The X Factor," which will also be on Fox. Also gone are Ellen DeGeneres and Kara DioGuardi. Aerosmith singer Steven Tyler and performer Jennifer Lopez are the new judges on "American Idol."

Besides "American Idol," CKX also produces Fox's "So You Think You Can Dance" and owns a management business and a majority stake in Elvis Presley's Graceland mansion and an 80% interest in licensing rights to the name and image of Muhammad Ali.

-- Joe Flint

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Photo: New "American Idol" judges Steven Tyler and Jennifer Lopez. Credit: Kevin Winter/Getty Images

The Morning Fix: Where'd all the fanboys go? Hulu's IPO a reach? HBO not shaking over Netflix.

After the coffee. Before realizing we're almost in the dog days of August.

Will Wall Street embrace a Hulu IPO? Word that Hulu, the video-sharing site owned by Disney, NBC Universal, News Corp. and private equity firm Providence Equity, wants to launch an initial public offering is raising a lot of questions about whether the timing is right. It appears that Providence Equity may be pushing the move as a means to get out. In the meantime, it remains unclear how Hulu's pay plans will be embraced by its audience. Also, as more programmers try to take control of their online destinies, will Hulu really be able to become the one-stop shop for TV content online, or will there never be such a place? A look at Hulu's plans and reaction from the New York Post, Wall Street Journal, Hollywood Reporter and Los Angeles Times

Did the fanboys get lost on the way to the multiplex? Universal's "Scott Pilgrim vs. the World" had the buzz, but it didn't get the box office in its opening weekend. The movie, based on a graphic-novel series and starring Michael Cera as a teen who has to battle his girlfriend's exes, took in only $10.6 million. Of course, once again the debate is going about whether films based on comic books or graphic novels that are not Batman or Spider-Man can translate into big bucks. Marc Platt, a producer of the movie told the Los Angeles Times that the first weekend was "disappointing" but added that "the film's financial story cannot be written after one weekend "but in weeks and months and years." Let me throw something out there. As adorable as Michael Cera is, he seems to be playing the same role in every movie. He needs to do something different, and casting directors need to find a new lovable geek. More on why Scott Pilgrim didn't save the box office from the Los Angeles Times and Hollywood Reporter.

HBO shrugs off Netflix. All the talk last week about Netflix striking a deal to stream movies soon after they appear on the new pay-TV channel Epix is supposed to be a direct blow at HBO. Only problem is someone forgot to tell the Time Warner behemoth that. HBO says it's not interested in a deal with Netflix nor does it feel threatened by Netflix. The network has some crazy idea that it makes sense to keep the online rights to the content it spends so much on to itself instead of throwing that content all over the Web and let its value be diluted. "There is value in exclusivity,” HBO Co-President Eric Kessler told Bloomberg.

Apple versus Google on the small screen. With search giant Google getting ready to spring Google TV on the world this fall, Apple is looking to beef up its own foundering Apple TV. Both companies want supremacy in connecting the Internet to the TV. USA Today looks at the turf battle and whether the rest of us want one more box next to our television.

Rupert gets revenge for Obama causing L.A. traffic jams. News Corp., the media conglomerate headed by Rupert Murdoch, gave $1 million to the Republican Governors Assn., according to Politico, the D.C. website that tracks Capitol Hill. A News Corp. spokesman told Politico that the company is in lock step with the association's "pro-business agenda."

Inside the Los Angeles Times: Patrick Goldstein on Hollywood's aging business model. Officials of CKX, parent of "American Idol" producer 19 Entertainment tells potential suitors to show them the money. Developer Hal Katersky, whose no stranger to controversy, has big plans for Hollywood.

-- Joe Flint

It can't all be Hollywood. Follow me on Twitter for all your Redskins news: Twitter.com/JBFlint

Robert F.X. Sillerman says he is prepping bid for CKX, owner of `American Idol'

Robert F.X. Sillerman, the founder of CKX Inc., inched closer to making bid on the company, whose biggest asset is "American Idol."

In a filing with the Securities and Exchange Commission, Sillerman said he was preparing a cash offer for CKX that would be between $5.50 and $5.75 per share. Sillerman resigned from his position as chairman and chief executive in May and said he was considering a bid on the company. Besides 19 Entertainment, a producer of Fox's "American Idol" and "So You Think You Can Dance," CKX's assets include licensing and merchandising rights to the images of Elvis Presley and Muhammad Ali. It also operates Graceland, Presley's former home in Memphis, Tenn.

If Sillerman actually follows through on a bid he will join an already crowded list of potential suitors. Simon Fuller, the creator of "American Idol" and founder of 19 Entertainment has also indicated he would like to buy the company, as has One Equity Partners, the private equity arm of JP Morgan Chase & Co., which aligned itself with Hollywood deal-maker Allen Shapiro.

However, for all the talk about wanting to own CKX, so far no real offers have emerged, leaving some analysts wondering if any of the suitors can put the money where their mouth is. CKX declined to respond to Sillerman's latest rumblings about making a bid. Sillerman did not respond to an e-mail seeking comment.

Wall Street has treated all the interest in CKX with a shrug. The stock closed Tuesday at $5.36 and is down more than 12% since the end of March when the company first acknowledged it had been in talks with potential buyers.

Meanwhile, the future of "American Idol" continues to be a hot topic in the TV industry. The show still has not named replacements for Simon Cowell, the lead judge who left in May, and Ellen DeGeneres, who quit the show just a few weeks ago after one season. Jennifer Lopez and Steven Tyler, the lead singer of Aerosmith, are the names most bandied about to join the show as judges, but no deals have been wrapped up yet.

-- Joe Flint

CKX, owner of 'American Idol,' in play

Forget about figuring out who will replace Simon Cowell on "American Idol." The real question is who will end up owning "American Idol."

CKX, the parent company of "American Idol" producer 19 Entertainment, is in play. The suitors are "Idol" creator, Simon Fuller, and Hollywood deal maker Allen Shapiro. Lingering in the background is Robert F.X. Sillerman, the founder and former chief executive of CKX who holds more than 20% of the company's stock and left the firm in May to contemplate making his own bid.

SHAPIRO Shapiro is teaming up with One Equity Partners, the private equity arm of JPMorgan Chase & Co. Fuller, former owner of 19 Entertainment, has joined hands with former Barclays Capital banker Roger Jenkins. People close to the parties said the Fuller group has offered $600 million, while the Shapiro team bid $550 million.

All the attention is barely causing a ripple on Wall Street. CKX's stock is actually down nearly 20% since word of offers for the company first surfaced in March, and it currently trades around $5 per share.

"Nobody has shown up with the dough yet to get the deal done," said Mark Argento with Craig-Hallum Capital Group, one of the few analysts to follow the stock.

One challenge for any potential owner is determining how much value there is to be milked out of "American Idol," which is still the No. 1 show on television, although its ratings may have peaked. 

Though the show is a cash cow for Fox, CKX and Fremantle, the other producer of "American Idol," the potential upside down the road may be limited because of the agreement Fox has for the hit program.

A story in Tuesday's Los Angeles Times details the chase for CKX as well as just how Fox pays for "American Idol" and why that may limit a big payday for the show's owners.

-- Joe Flint

Photo: Allen Shapiro. Credit: Starla Fortunato.

CKX signs new deal for its new chief executive

CKX Inc., parent of "American Idol" producer 19 Entertainment, has signed its new chief executive, Michael Ferrel, to a contract that runs through 2013.

Ferrel, who succeeded CKX founder and Chief Executive Robert F.X. Sillerman, has signed a deal with a minimum base salary of $1 million per year through February 2013. Details of the accord were disclosed in a Securities and Exchange Commission filing by CKX. Ferrel had been a senior CKX executive several years ago who returned as acting chief executive in May after Sillerman resigned.

The new contract comes at a time when CKX is in play. Currently, there are at least three parties interested in making a run at the company, including Sillerman, who owns more than 20% of the company's stock. Simon Fuller, the founder of 19 Entertainment and creator of "American Idol," has put together a group that CKX said made an offer of $600 million for the company. Also circling CKX is JPMorgan Chase & Co.'s private equity arm, One Equity Partners, which is working with Allen Shapiro, a Hollywood investor who is also chairman of TV Guide Network.

Besides 19 Entertainment, CKX also owns the rights to the names, likenesses and images of Elvis Presley and Muhammad Ali, and manages Presley's Graceland.

According to the terms of the contract, should CKX change owners before February 2011 and Ferrel ends up leaving as a result, he would get a lump sum equal to two years of his base salary as well as $250,000 in a non-compete clause. If the ownership of the company changes after February 2011, then his lump sum payment is reduced by 1/24th for each full month that Ferrel has been employed by the company with a cap at his base salary.

-- Joe Flint

'American Idol' owner CKX adopts poision pill

There is yet another twist to the potential sale of CKX Inc., parent of "American Idol" producer 19 Entertainment.

On Wednesday, CKX said it had adopted a "poison pill" aimed at preventing any potential suitors from trying to team up with Robert F.X. Sillerman, the former chairman and chief executive who resigned earlier this year and indicated he might try to buy the company.

Sillerman owns just over 20% of CKX's stock, and on Tuesday the company received a letter from a third party saying it was in talks with Sillerman.

FULLERThe as-yet unnamed suitor apparently would like to team up with Sillerman so it would not have to buy all of the CKX shares to take control of the company. CKX said Sillerman is "not expected to tender his shares into any such offer."

That said, CKX is going ahead with its protection plan. In a statement, CKX said its board has determined that it isn't in the stockholders' interest to engage in any deal for less than all of the shares of the company. The CKX Stockholder Rights Plan would allow the company to issue preferred shares to protect from "potentially coercive takeover tactics."

Besides Sillerman, there are two other groups that have expressed interest in buying CKX. One offer is from "American Idol" creator and former CKX board member Simon Fuller, and the other is from One Equity Partners, a private-equity arm of JP Morgan Chase. Hollywood entertainment executive Allen Shapiro is involved in that effort. The JP Morgan Chase offer was about $550 million; Fuller's offer is for $600 million.

Fuller and Sillerman have had a rocky relationship as of late. When Sillerman ran CKX, he bought Fuller's 19 Entertainment. The two tried unsuccessfully to take CKX private a few years ago, and this year Fuller resigned after clashing with Sillerman. However, the alliances and friendships in this little corporate drama seems to change daily, so it is not completely out of the realm of possibility that Fuller would try to cozy up with Sillerman again or that JP Morgan Chase would want to woo the former CKX chief to its side.

Besides 19 Entertainment, which also produces Fox's "So You Think You Can Dance," CKX owns a management business and a majority stake in Elvis Presley's Graceland mansion as well as an 80% interest in licensing rights to the name and image of Muhammad Ali.

-- Joe Flint

Photo: Simon Fuller. Credit: Bryan Chan / Los Angeles Times

Sillerman tells SEC he will make play for CKX

Robert F.X. Sillerman, the former chairman and chief executive of CKX Inc., the parent company of "American Idol" producer 19 Entertainment, made official his plans to pursue an acquisition of the company he founded.

In a Securities and Exchange Commission filing, Sillerman, who already holds 21.3% of the company's common stock, said he plans to increase his holdings in CKX either through private purchases or a public tender offer and that he is in talks with a "private financing source" to back his efforts.

Besides 19 Entertainment, which produces "American Idol" and "So You Think You Can Dance" for Fox and also has a management business, CKX has a majority stake in Elvis Presley's Graceland mansion and an 80% interest in licensing rights to the name and image of Muhammad Ali.

There are already a pair of potential suitors circling CKX. Simon Fuller, the creator of "American Idol" who sold 19 Entertainment to CKX several years ago, is teaming up with former Barclays banker Roger Jenkins on a bid of $600 million for the company. Also looking is One Equity Partners, which is the private-equity arm of JPMorgan Chase. Allen Shapiro, president and chief executive of Mosaic Media Group, is working on that effort.

In his filing, Sillerman says his purchases of stock "would be a superior alternative to entry by the Company into a sale or other transaction at current prices or even at a premium to those prices because they would enable those shareholders who wish to continue to hold the company's common stock, and to benefit from potential future opportunities, to continue to do so."

CKX declined to comment.

-- Joe Flint

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