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Apollo Global Management to buy 'American Idol' owner CKX

The private equity firm's agreement to acquire CKX for about $509 million in cash ends a period of uncertainty for the company.

May 11, 2011|By Joe Flint, Los Angeles Times

The nation's most popular television show — "American Idol" — will be owned by private equity.

Apollo Global Management has struck an all-cash deal to acquire CKX Inc., the parent of 19 Entertainment, producer of Fox's hit show, for $5.50 per share, putting the purchase price at about $509 million, a 25% premium from where CKX stock closed Monday.

The sale, which is expected to close within the next two months, would end a period of uncertainty for CKX. In the last few years, several suitors including "American Idol" creator Simon Fuller, CKX founder and former chairman Robert F.X. Sillerman and Hollywood dealmaker Allen Shapiro have each made overtures at CKX only to come away empty-handed. Last month, Gores Group, a private equity firm led by billionaire Alec Gores, made an offer to buy CKX.

Besides 19 Entertainment, which also produces "So You Think You Can Dance" for Fox, CKX owns the licensing rights to the names and images of Elvis Presley and Muhammad Ali and operates Graceland, the last home of Elvis Presley and a tourist attraction drawing more than half a million visitors annually.

The $509-million price is lower than the $600 million Fuller's group offered and the $550 million that Shapiro dangled last year. But Fuller, Shapiro and Sillerman failed to persuade CKX that they had the wherewithal to seal a deal. The CKX board ignored the Gores Group bid.

Still, some wish CKX had held out for a better offer.

"We think $5.50 per share is pretty cheap," said Mark Argento, an analyst with Craig-Hallum Capital Group, one of the few firms that follows the company. But Argento noted that there is a short list of potential buyers for CKX and that Apollo will have the capital to grow it.

It is unlikely a rival bid will emerge as Apollo said it has not only the support of the CKX board, but also of Sillerman, who holds 20.6% of the company's stock, and the Promenade Trust, the trust of Presley daughter Lisa Marie and CKX's partner in Elvis Presley Enterprises.

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

Apollo Global, whose holdings include gambling and hotel giant Caesars Entertainment Corp. and Norwegian Cruise Line as well as major stakes in theater chain AMC Entertainment Inc. and cable company Charter Communications Inc., declined to comment on the deal or its future plans for CKX.

The other partner in "American Idol" is FremantleMedia Ltd. CKX and Fremantle are equal partners in the U.S. version of the "American Idol" show, while CKX owns two-thirds of the "Idol" brand, which includes licensing, merchandising and touring revenue.

"American Idol" has had something of a renaissance this season. There was concern that the departure of Simon Cowell as a judge would lead ratings to stumble. Instead, the audience has grown 2% to 24.8 million viewers per episode and is down just 5% among the coveted 18-to-49 demographic.

Fox has already struck a renewal deal to bring "American Idol" back next season, a Fox spokeswoman said.

CKX stock closed Tuesday up $1.01 at $5.46.

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