'Idol' Faces Another Painful Reboot

Budget cuts loom as ratings and ad rates dwindle amid a new search for judges. Can TV's former top dog reinvent itself again?

Money has never been an issue for American Idol. After its inaugural run was an out-of-the-gate hit in 2002, Fox and production partners FremantleMedia and 19 Entertainment were swimming in profits. With a track record as a starmaker (Kelly Clarkson, Carrie Underwood) and with a stable panel of judges (Simon Cowell, Paula Abdul and Randy Jackson), the show's ratings climbed to an astonishing 35 million viewers in 2005 as ad rates hit $700,000 for a 30- second spot. By 2008, the show was bringing in more than $900 million in ad revenue to Fox, according to TNS Media Intelligence.

But the Idol of 2012 is in a much different place. Averaging 20 million viewers for season 11 -- still among TV's most-watched shows but no longer the clear No. 1 -- its May finale was the show's lowest-rated. And despite the addition in 2010 of expensive music stars Jennifer Lopez and Steven Tyler to replace Cowell, Ellen DeGeneres and Kara DioGuardi as judges (Lopez was commanding slightly less than $20 million in her second year), ad rates by season's end had dropped to as low as $468,000 -- by no means a fire sale but evidence that despite the high cost structure (producers spend $1.5 million to $2 million per episode), the expense wasn't translating into the profit bonanza of the show's heyday.

So the news that Tyler and Lopez are leaving -- a well-placed source insists that at least Lopez wasn't fired -- isn't a surprise to Idol insiders. But the once-Teflon franchise faces questions not previously seen in its amazing 11-year run. As its average viewer age has risen to 54 and contestants have failed to connect, where does the show go now? To the chopping block, of course.

Sources tell THR that one of the first steps in retooling the program will be to cut production budgets and staff, including the exorbitant salaries for judges. (Fox declined comment for this report.) That doesn't bode well when it comes to competing in a talent marketplace where Britney Spears is receiving $15 million to judge Cowell's The X Factor and Christina Aguilera is only a few million behind on NBC's The Voice. Nick Cannon, who hosts America's Got Talent on NBC and is married to Mariah Carey, a top contender for the Idol job (in part because Jackson is her manager), already has raised the money issue. "If they gave J.Lo $20 million, they might have to double that!" he has said.

That seems unlikely. X Factor scored Disney star Demi Lovato for the bargain price of $1 million, evidence that talent show paydays can vary drastically.

So who's available for the more reasonable price tag of, say, $5 million? Contenders include Nicki Minaj, Fergie, will.i.am and even alums like Underwood and Adam Lambert, who have a unique perspective on the show. "Whoever it is, he or she should be young," says one Idol insider, referencing the show's "fogey factor" -- contestants as young as 15 being made to sing '60s songs and disco tunes, favorites of executive producers Nigel Lythgoe and Ken Warwick. The producing team is likely to stay with the show. Says a Lythgoe rep, "He's in the process of negotiating his contract and will hopefully come to a resolution in the next week." But insiders say subtle changes might creep into the competition.

"It's next to impossible to regain past glory and relevance as the franchise has had more than its moment in the sun," says Jeff Rabhan, chair of NYU's Clive Davis Institute of Recorded Music and a former manager of Idols Clarkson, Elliott Yamin and Clay Aiken. "But if they were to change a small dynamic or update the competition by changing the rules, it could possibly invigorate the fan base. And if nothing else, viewers will tune in to see which celebrity judges have been hired."

That phenomenon occurred in 2010, when Lopez and Tyler joined the show and ratings increased -- at first. Fox and producers were commended for handling the transition from Cowell, who had been the centerpiece for nine seasons, to a kindler, gentler Idol panel. So there is no reason to believe the show can't be invigorated again -- with the right judges. "Another option would be to change the judges every week," suggests Rabhan. "Musicians who have records being released that week would appear, and you'd get a cross-section of genres."

Most suspect Idol will be unwilling to shake things up too much. Some believe Interscope head Jimmy Iovine will take the reins of the music department, possibly bringing in friend Mary J. Blige to freshen things up. Using the judge shakeup to introduce new ideas is the right idea, says an insider: "This might be the best thing that happened to Idol."