Why Simon Cowell Couldn't Save 'X Factor' (Analysis)

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Simon Cowell

After a last-minute approach to NBC, the reality mogul heads back to Britain as insiders debate his "grumpy uncle" appeal in a changed TV landscape.

A version of this story first appeared in the Feb. 21 issue of The Hollywood Reporter magazine.

Weeks before Fox officially lowered the curtain on The X Factor, sources say its creator and star Simon Cowell quietly reached out to NBC to find a new home for his TV baby. "Simon himself was involved in this process," says an executive familiar with the approach on behalf of Cowell's Syco production company and partner FremantleMedia. (A Cowell source vehemently denies a pitch was made, adding, "Fox and Syco/Fremantle looked at plausible other options in the U.S. without him but decided these weren't viable.") But NBC already has The Voice and the Cowell-produced America's Got Talent -- and, more importantly, X Factor was damaged goods. 

In fact, now that the show was canceled Feb. 7, observers are divided on Cowell's future on U.S. television as well as the steps Fox will take to replace its failed franchise.

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When the bombastic singing competition launched to much fanfare in 2011, Cowell -- whose pay was reported to be tens of millions of dollars because of his ownership stake -- boldly told THR he expected 20 million viewers a night for its twice-weekly broadcasts. But by its third season, after an overhaul that included slashing per-episode costs to what a source says was a still-pricey $2.5 million an hour, X Factor delivered only 6.7 million viewers a week in live-plus-7-day numbers (with younger viewers 18-to-34, it was down 45 percent). At the same time, ad revenue plummeted. X Factor raked in an estimated $500 million during its first season, according to Kantar Media, plus a lucrative two-year, $60 million sponsorship deal with Pepsi. But by season two, that ad money had declined more than 20 percent to $386 million. And during the first 11 months of 2013, X Factor generated slightly more than $139 million, compared with American Idol's $596 million and Voice's $565 million (the latter airs two cycles a year). Making matters worse, Pepsi declined to renew its sponsorship deal for X Factor's third season, as did Chevrolet, though Fox sales execs lured Honda and Procter & Gamble to replace them.

The harsh reality was addressed head-on during 21st Century Fox's earnings call Feb. 6, with president and COO Chase Carey noting that the show's ratings were "disappointing" and "fell faster than we hoped." At the TV critics press tour in January, Fox Broadcasting Co. chief Kevin Reilly said that if X Factor returned for a fourth season, it "would not be in the current format we have." Reilly and his team are said to have discussed options for months, with Cowell noting in December that the show -- which critics have knocked as tacky and too over-the-top for mainstream U.S. audiences -- could shift to a one-night-only format. At the time, Cowell, who once ruled TV as the star judge on Idol, acknowledged that increased competition, including from Voice, was taking its toll: "It's getting to be probably too much."

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The 54-year-old Cowell, who on Feb. 11 told a U.K. publication that it was always "[the] plan to do three years" of X Factor in the U.S., isn't out of the TV business, of course. X Factor continues to air in 45 countries, and Cowell said that he will return to the judges panel on the U.K. version. "The plan is for [Cowell] to have homes in London and New York and to say goodbye to L.A. for now," another source tells THR. Such a move would also bring him closer to girlfriend Lauren Silverman, who lives on the East Coast, with whom he's expecting a child in February.

In addition, adds an industry insider, the exit allows Cowell an opportunity to return to his other income source: label boss. "Simon's a businessman first and foremost, which is why he created these TV shows in the first place," says the source. "But he's running a worldwide entertainment business when he's not at the judging desk, and he has to make long-term decisions. Simon doesn’t shy away from making difficult decisions. …  He knows when to make changes and he would rather take a show out of the market than compromise it."

Still, the Fox cancelation does leave him off American TV with no immediate plan for the first time since Idol hit big in 2002. Few deny his magnetism, particularly when playing the role of "grumpy uncle you love," says one top unscripted executive. Others add that he's one of few names in the genre that are bigger than any single brand and that he easily could jump into another show. Still, one network executive questions whether Cowell's "acerbic style fits into the mood of the culture anymore," noting that singing competitions -- including Cowell's old home, Idol -- now focus more on support and encouragement than on tearing people down. (In the U.K., Cowell in 2013 had a ratings dud on ITV with the cooking show Food Glorious Food, which debuted with an average of 2.7 million viewers, his lowest-rated launch to date.)

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Already, Cowell's team is said to have floated the idea of him joining America's Got Talent. Although its judge lineup -- Howard Stern, Mel B, Heidi Klum and Howie Mandel -- is signed through the summer, Cowell, an executive producer on the New York-based show, could join the following year. Indeed, Got Talent might be his most enduring legacy. Airing in 193 countries, the U.K. version -- which launched the career of Susan Boyle (21 million albums sold) -- saw a peak audience of 13 million tune in for its 2013 premiere, its best season launch to date, and drew 17.4 million to its finale. "Simon Cowell has managed to have his finger on the pulse of world television entertainment for the last decade," says former Idol collaborator Nigel Lythgoe. "He is an extremely driven person, and if he remains motivated, I see no reason that his success will not continue."

X Factor's demise leaves three hours on Fox's fall schedule up for grabs. Although no formal decisions will be made until its upfront presentation in May, Reilly has been retooling the network in a bid to have a competitive year-round schedule. He has amped up investments in scripted entries, with several straight-to-series orders including the Batman prequel Gotham and fantastical drama Hieroglyph, and will look to program projects that begin in the summer and bleed into fall. Among other offerings in the wings: a high-profile unscripted "social experiment" series, Utopia, developed under new unscripted chief Simon Andreae.

As Carey told investors, "We've got to continue to try and find and build that next hit franchise."

Twitter: @LaceyVRose; @shirleyhalperin