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Sold: American Idolby Sting7 -- 03/20/2005
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As the search for the newest Idol intensifies, there is a new boss for all involved to answer to. Robert F.X. Sillerman has announced that his company, Sports Entertainment Enterprises Inc., has bought Britain-based 19 Entertainment from Simon Fuller. The price? A mere $211 million!
The deal for 19 Entertainment includes $124.4 million in cash, about 1.871 million shares – which quickly jumped from a value of $31.6 million to $50 million – and an additional $36.9 million in either cash or stock after audited financial results for the fiscal year ending June 30 are delivered.
Sillerman had the money to burn. Five years ago, he sold his own company, SFX Entertainment, to American radio giant Clear Channel Communications for $4.4 billion dollars. With the new acquisition, his Sports Entertainment Enterprises Inc. will be known as CKX Inc. The stockholders in CKX Inc. appear to be thrilled to have Simon Cowell on the payroll. CKX stocks soared to $26.73 per share, jumping $9.82, or 58 percent upon the announcement.
Sillerman is no stranger to high-price acquisitions. He paid about $100 million in a deal that included tour operations at Graceland mansion in Memphis, and rights to the singer's name, image, likeness, and some recordings.
Despite the constant assertion that reality television is bound to burn itself out, Sillerman has made taken this bold step without fear: "I believe that reality TV is real, and will continue to prosper and evolve into a continuing genre," Sillerman said. Speaking of evolving, American Idol, was derived from UK’s Pop Idol, but since then it is reported that a version of the Idol is on in 30 countries. Currently, it's the top-ranked program in Australia and it has just debuted in India.
And guess who may be joining Clay Aiken and Ruben Studdard at the company picnic? The Beckhams – as in soccer superstar David and former Posh Spice, Victoria Beckham, both of whom Simon Fuller managed. Sillerman said he has plans to market the Beckhams to Americans.
Simon Fuller is not completely handing over the reigns, however. He has agreed to continue running the Idol franchises. "When it comes to vision, I can't think of anyone who surpasses Simon Fuller," Sillerman told the Daily News.
Sillerman’s goals are to expand the American Idol franchise TV and record deals. He noted his "access to capital," is enabling Fuller to do things he could not have done as easily on his own.
By assembling a group of strong media properties under one roof, Sillerman is hoping to strike tougher bargains with the buyers of content, like TV and cable networks and records companies.
Sillerman said he believes entertainment firms are becoming more powerful thanks to the explosion of new technology. He's betting that will give him more leverage in signing deals, including striking a better deal for American Idol when Fox starts negotiations to renew its contract for the upcoming TV season.
"Fox should be happy that Simon Fuller has a well-financed partner," he said. "I'm hopeful they will acknowledge that."
Sting7 has been a respected published writer for many years, as a music editor, entertainment critic, columnist, and interviewer. He also has a curious love for pro-wrestling! You can email Stinger at firstname.lastname@example.org.
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