American Idol Owner CKX Posts Lower Third-Quarter Results
Weaker revenue, restructuring costs at 19 Entertainment affect financials
NEW YORK - CKX Inc., the company behind American Idol and So You Think You Can Dance, on Monday said it swung to a third-quarter loss driven by restructuring costs and lower revenue.
CKX posted a loss of $2.4 million, compared to a profit of $11.2 million in the year-ago quarter, as revenue decreased 8.3% to $80.1 million, driven by an 11.4% revenue decline at Idol producer 19 Entertainment and a drop in the firm's Muhammad Ali rights business, partly offset by a gain in its Elvis Presley business.
The biggest part of the overall revenue decline was due to the benefit of a second season of Dance in 2009. Revenue from Idol declined $1.1 million due primarily to lower revenue from sponsorship deals, offset in part by higher touring revenue.
Executive separation costs of $900,000 and severance and restructuring costs of $8.3 million at Idol producer 19 Entertainment also dragged down the bottom line as did a creative consulting arrangement struck with Idol creator Simon Fuller earlier this year.
19 Entertainment's operating profit for the quarter amounted to $2.9 million, down 73.8%, on revenue of $63.3 million.
CKX CEO Michael Ferrel lauded the "major progress with our restructuring of 19 Entertainment, which is increasing our focus on our hit properties while significantly reducing spending on unproductive development projects and general overhead." He said the benefit of $20 million in annual cost savings implemented has already begun to positively impact operating results.
"The announced changes being implemented for the 2011 season of American Idol have been well received," he added, also highlighting that Dance has been picked up for its eighth season in 2011.
CKX recently decided to take itself off the auction block after a process that started earlier this year didn't yield a bid that satisfied the board.
Revenue at 19 Entertainment for the first nine months of 2010 dropped 4.2% as an additional season of Dance in 2009 and another factor was offset by a $10.1 million increase in Idol revenue. Total revenue declined 4.9% to $236.2 million.
Severance and restructuring costs, as well as the impact of a new deal with Idol host Ryan Seacrest and the consulting arrangement with Fuller were drags on CKX's bottom line. The resulting loss of $900,000 in the first three quarter compared to a year-ago profit of $27.3 million.