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Music Industry Financier Buys 'American Idol'


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Music Industry Financier Buys 'American Idol'

By Ben Sisario

Robert F. X. Sillerman, the music industry baron who recently bought Elvis Presley Enterprises, added another big prize to his vault of media holdings yesterday, acquiring the British company that owns "American Idol" and its many lucrative franchises around the world.

His company, which is in the process of changing its name to CKX, said it would pay up to $161 million and 1.87 million CKX shares to purchase 19 Entertainment Ltd., a private company based in London.

The announcement, coming amid rising viewer interest as "American Idol" moves into its final rounds, drove shares of Mr. Sillerman's company, Sports Entertainment Enterprises, up more than 58 percent, to a close of $26.73 on Nasdaq.

In a telephone interview, Mr. Sillerman did not reveal specific plans for the "American Idol" franchise but said his aim at CKX was to assemble an arsenal of entertainment content with an eye to emerging distribution technologies like on-demand television and hand-held devices.

"I can imagine years from now something being distributed through cellphones, BlackBerries, computers, whatever," he said. The notion that video entertainment should "only go through a TV set is as archaic as the thought that music can only be distributed on a CD."

Besides the "American Idol" television show, which grew out of the British "Pop Idol," the acquisition of 19 Entertainment includes all of that company's management contracts with current and former "American Idol" and "Pop Idol" contestants as well as the Spice Girls, Annie Lennox, and the British soccer star David Beckham and his wife (and former Spice Girl) Victoria Beckham.

Now in its fourth season on Fox, "American Idol" remains one of the most popular shows on television, and its ratings continue to increase. On Wednesday nights, for example, the show this season has been seen by an average of more than 26 million viewers each week, an increase of 8 percent over last season and 20 percent above the season before, according to Nielson Media Research.

It also continues to churn out money-making acts. While no "American Idol" winner has sold in the league of Britney Spears or Usher, most of the albums by "American Idol" winners have been significant hits.

Clay Aiken, the runner-up in the show's second season, has sold three million copies of his debut album, "Measure of a Man," and one million of his holiday album from last year, "Merry Christmas With Love." "Free Yourself," by Fantasia Barrino, last year's winner, has sold 1.2 million copies since its release in November. But Diana DeGarmo, last season's runner-up, has sold only 141,000 of her "Blue Skies." All "Idol" winners' albums have been released by RCA Records.

As part of yesterday's deal, Simon Fuller, who created the "Idol" franchise, will remain president of the company for six years. Bear Stearns, the New York investment bank, lent Sports Entertainment $109 million to finance the acquisition.

"No TV show goes on forever," Mr. Sillerman said. "But somebody could say the Super Bowl is not going to go on forever and the Final Four is not going to go on forever, yet they continue to get bigger and bigger. 'American Idol' has become part of the fabric of America."

Mr. Sillerman has had plenty of experience in bundling entertainment companies and content. He built SFX Entertainment into the biggest concert promoter in the country in the late 90's, buying regional promoters as well as theaters, ticketing companies and artist-management firms.

He sold SFX in March 2000 to Clear Channel Communications for about $3 billion. Later, he set out to take over another artist-management giant, the Firm, based in Los Angeles. After that deal fell apart, Mr. Sillerman was largely out of the public eye until he announced in December that he was buying an 85 percent stake in Elvis Presley Enterprises, the business that controls Presley's name and likeness.

In naming his companies, Mr. Sillerman chooses enigmatic three-letter abbreviations that include his second middle initial, X.

"Management believes that a short name consisting of three letters is an easy way to create brand identification," the company explained in a Securities and Exchange Commission filing explaining its name change. "They have chosen 'C' and 'K' to stand for 'Content is King.'"

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 "I can imagine years from now something being distributed through cellphones, BlackBerries, computers, whatever," he said. The notion that video entertainment should "only go through a TV set is as archaic as the thought that music can only be distributed on a CD."

I don't exactly agree we are going to turn to cellphones, hand held PC's, or even desktop ones for most of our TVtv style entertainment. Maybe I am still not in the 21st century as much as I think. but I just don't see it happening.

While I do have a DVD-rom on my computer, I have never used it. I prefer the big screen for movies.

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