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A much-delayed but high-stakes lawsuit that examined some of the dealmaking behind American Idol and other reality shows appears to be coming to an end.
When Idol was still being broadcast on Fox and was still tops in the ratings, private equity giant Apollo Global Management acquired Idol producer Core Media in 2011. The acquisition was financed by lenders putting up about $360 million.
Three years later, Idol‘s ratings began cratering, and Apollo came to a deal with 21st Century Fox for a joint venture called Endemol Shine Group, which would hold rights to Idol and other shows including So You Think You Can Dance. Apollo and Fox each had a 50 percent stake in the venture.
By 2016, Core Media was in bankruptcy, allegedly robbed of cash and assets and saddled with substantial debt. The lenders, including TCP and Crestview, took over Core and began looking to the 2014 deal as the cause of the company’s woes. Specifically, they asserted that the Apollo-Fox transaction was designed to evade debt obligations and amounted to a scheme to strip Core of its opportunities in the television marketplace.
According to the litigation trustee for Core, the maneuvering by Apollo, Fox and Endemol effectively changed control of Core and triggered the repayment of loans. A lawsuit sought $240 million in compensatory damages and more in punitive damages.
In response, Fox’s lawyers told a judge that the case provided the “paradigm for lenders seeking to blame others because they made high risk loans that did not pan out,” with Apollo asserting that the terms of the lending agreement hadn’t been breached because Fox didn’t acquire more than 50 percent of Core and there wasn’t any merger since Core remained a separate entity at all times. In short, the defendants suggested that the lenders had made a bad bet on Idol (now broadcast on ABC).
The dispute has bounced around multiple different courts plus been delayed by the recusals of several New York judges.
On Friday, the parties were scheduled to have an oral hearing on the motion to dismiss, but instead, they informed the court of an agreement reached in principle that would settle all claims. The parties anticipate executing the settlement before the end of the month. No terms were publicly released, and an attorney for the litigation trustee hasn’t yet responded to a request for further information.
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