Dialogue: CKX chief Sillerman
EmptyCKX Inc. has been flying under the radar despite owning stakes in some of the biggest pop culture icons of our time, including "American Idol," Elvis Presley, Muhammad Ali and soccer star David Beckham. Chairman and CEO Robert F.X. Sillerman recently spoke with The Hollywood Reporter business editor Georg Szalai about the company's strategy, its financial and stock outlook and potential future deals.
Related story: Sillerman's trip from SFX to CKX
The Hollywood Reporter: "American Idol" and David Beckham have been in the news and creating buzz early this year. But CKX has been staying out of the spotlight. Does that bother you or is this by design?
Robert Sillerman: One of our responsibilities to our partners given that they are the stars is that we don't think it's important to be front page. I don't think the average person or soccer fan really cares who was responsible for expediting David Beckham's move to the U.S. Nobody's going to watch "American Idol" because we own it. We're pretty sanguine about that.
THR: Does all the buzz bode well for CKX's financial performance and stock performance this year?
Sillerman: We don't issue forecasts. But clearly, what "American Idol" has demonstrated beyond any reasonable shadow of a doubt is that it's part of the American culture. I'm not so bold as to say as we're heading into Super Bowl XLI (that) we'll see "American Idol XLI." But I sure wouldn't be surprised. And that sort of staying power has to bode well for our company. Similarly, on the David Beckham deal, we are partners with David on virtually all revenue streams. It is a spectacular deal for David, and it's also a meaningful event for CKX. Does that bode well for the performance of the stock? Who knows what contributes to stock prices these days. But this certainly bodes well for the revenue and the income of the company. That's for sure.
THR: Last year, your stock was down despite the success of "Idol." What do you think drives your stock? And how do you fit into the landscape of entertainment stocks?
Sillerman: I don't know how to compare us to other companies, because frankly there really isn't anyone that is set up quite like us. Certainly, we're a pure content company, and consequently those people who have acquired our stock believe, as we do, that in this increasingly splintered, fragmented world, premiere content, that class AAAA content, is going to be increasingly more valuable.
THR: The first two letters of CKX stand for "Content is King." Is that mantra even more the case in the digital world?
Sillerman: The definition of what it takes to be a hit these days, to have continuity in this marketplace, is becoming smaller and smaller and smaller. It's also axiomatic that in an environment where there are so many choices, the things that don't need to be explained (have an advantage). If Fox introduces a new TV show, they have to explain it. If there is a new sports star, he has to position himself. If you say "American Idol," virtually anybody in America knows what you mean. If you say Elvis Presley, you say Muhammad Ali or in the rest of the world, you say David Beckham, instantly people know what that represents. We have the advantage of being in business where there is no time wasted on defining them.
THR: Tell us a bit more about Beckham's reported $250 million five-year deal and how CKX benefits financially.
Sillerman: It actually has the possibility to be even bigger than as reported. He could well turn out to be the most highly paid (team) athlete of all time. We're partners with David and Victoria in their business deals. We announced today a fragrance with David and Victoria that is a his and hers perfume so to speak, which is a pretty intriguing thing. There's more and more to come.
THR: Do you expect any film or TV deals for the Beckhams?
Sillerman: I wouldn't rule anything out. Nothing specific (I can say).
THR: There are no analysts covering CKX on Wall Street. Why?
Sillerman: There was a conscious decision on the company's part. When it came out, it was a very small company. We made a conscious decision to actually not engage Wall Street analysts in conversation. As we were getting to know the company and understand the assets, even though we paid good money for them, we didn't really think we knew them well enough to be able to discuss what we thought the future possibilities were. We did have some plans, but we really didn't have enough. I think in the next six months, you're actually going to see Wall Street analysts pick up coverage of the stock. We have been responsive to their inquiries, whereas throughout 2005 and 2006, we did not engage them.
THR: Many companies have been going private as they have obviously seen no benefit in being public. What about CKX?
Sillerman: In our case, we think the opposite. With some of the things we have done and some of the things we're about to do, there is actually a value in having a public currency. So, for the time being, we think that there is value. It does give us access to capital.
THR: And when you say currency, you mean you could use stock in some kind of deal ...
THR: You previously mentioned the Beckham fragrance. How is the trend for branded entertainment and celebrity endorsements helping your business? Is this a growing revenue stream?
Sillerman: I absolutely think it is. The days of just somebody holding up a can of something and saying "I consume this" still exist. But we are all seeing the trend where someone is actually doing the George Foreman grill or the David Beckham fragrance. I think that's a better use of celebrity. It probably has gone too far down the food chain, where there are people who are trying to do that who probably don't have the visibility or recognition to do it. We have access to people who can do it.
THR: CKX has taken stakes in some of the biggest celebrity icons ever. How do you decide what to pay and in whom to take a stake?
Sillerman: With our definition, it really is two relatively simple things. First of all, they have to have achieved recognition beyond just the area, in which they ply their trade. Muhammad Ali is not a boxer, David Beckham is not a footballer, "American Idol" is not just a television show or talent contest and, obviously, Elvis Presley is not just a rocker. They mean something. Second of all, they have to have a broad enough presence, so that they have not only gone beyond the boundaries of where they have achieved their fame, but that extension has to be broad and ubiquitous. There is no numerator for that. I can't say that they have to be known by 50% or 80% or 90%. It's sort of like the definition of pornography. I don't know what it is, but I know it when I see it.