Global 'Idol' Singing Competition? Delaware Judge Shrugs Off Such a Possibility
A court ruling declines to adjust the $509 million price paid by Apollo Management for the former owner of "American Idol" and "So You Think You Can Dance."
Currently in its 13th season and suffering from sagging ratings, American Idol might be suffering from some viewer fatigue with the singing competition reality TV format. Nevertheless, has the show's owner really exploited all revenue opportunities on the franchise?
The issue came up in a ruling this week by a Delaware Chancery Court judge tasked with determining whether the $509 million price tag paid by Apollo Management for CKx Inc. was fair. The lawsuit came from some of CKx shareholders, who thought that owing properties like American Idol and So You Think You Can Dance was worth more than $5.50 a share.
Last November, after a trial, Delaware judge Sam Glasscock issued an opinion finding the merger price generated from an arm’s length sales process was the best available indicator of the fair value of CKx.
But the judge also agreed to hear more evidence about how other factors -- like realized synergies -- might adjust the price either upward or downward. On May 8, the parties gathered for an oral hearing, and on Monday, the judge issued his decision.
After consideration, the judge won't adjust the price.
One interesting issue had to do with so-called "unrealized revenue opportunities," potentially of relevance now that 21st Century Fox has a preliminary agreement to create a joint venture involving assets of Apollo.
According to the ruling (read here), at one point, Apollo identified in a memo some of these opportunities. Under the category of "what-if," here they are:
- Merchandise and music purchasing during American Idol voting over the phone
- [So You Think You Can Dance] dance clinics, with contestants as instructors
- A permanent American Idol live event in Las Vegas
- International Idol competition with winners from each country, plus tour with top contestants
- American Idol website managed or hosted by a third-party provider, such as Yahoo! or AOL
Ultimately, none of these supposed missed opportunities necessitated giving shareholders more. The judge rules, "There is no indication that the information upon which plans for the 'unexploited revenue opportunities' were based was not provided to other bidders conducting diligence. Based on that evidence, I find that what was available to Apollo was available to the market at large... such that the merger price reflected the value of those business opportunities."
New management can now decide whether the idea for some kind of Olympics-like event pitting Idol superstars from around the world might revitalize the brand, plus earn some money in the process.
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