Core Media Group, the company behind American Idol and So You Think You Can Dance has filed for Chapter 11 bankruptcy protection in New York, reports The Hollywood Reporter.
In the bankruptcy filing, the company says it owes $398 million to third parties, including from two matured loans from Tennenbaum Capital Partners, Crestview Media Investors, Bayside Capital and Hudson Bay Capital Management. The company reports about $73 million in assets but less than $10 million in cash on hand.
Idol creator Simon Fuller is the company’s No. 1 unsecured creditor and is owed $3.37 million. A payment demand on April 11 from Fuller is one of the factors cited in the bankruptcy papers as contributing to the decision to file for Chapter 11. A declaration filed in court says that after Fuller left in 2010, he was given a profit share of his shows and money as a consultant. A statutory demand for payment served by Fuller in the U.K. brought the prospect that he could commence winding-up proceedings on Core affiliate 19 Entertainment.
As the second biggest unsecured creditor, former Core chief Marc Graboff, who is now overseeing studio operations at Discovery, is owed $1.32 million in severance. Sony Pictures has about a $900,000 secured claim after the sale of film rights to Seeing Double, reported in the filing to be in production by a Core entity. Some of the other companies that have profit shares in Core shows include Creative Artists Agency, Dick Clark Productions and Fox Broadcasting.
Now that American Idol is gone, it appears that restructuring is in order. Not that the company was paying all of its bills in the latter years of the show’s decline.
According to a declaration made in the filling, “Despite its long-running success, however, the Company has recently experienced deterioration in its financial performance, primarily attributable to the decline in ratings for American Idol and the corresponding decline in revenues from IDOLS-related broadcast fees, international tape sales for rebroadcasts, touring fees, sponsorships and IDOLS-related merchandise sales.”
Court papers say that in 2014, earnings from the show decreased by $15 million and it suffered a total revenue decrease of $35.6 million for the first half of 2015.
“Additional negative ripple effects included, among other things: a decline in re-broadcast fees due to reduced broadcast hours; the loss of both Coca-Cola and AT&T as main sponsors of American Idol; and the closure of the American Idol Experience theme park attraction at Walt Disney World,” states the court papers. “This decline culminated on May 11, 2015 in FOX announcing that it would no longer air the American Idol series in the United States after its fifteenth season.”
Remember that agreement Core struck with Endemol a few years ago? It was basically an outsourcing agreement to cover administrative costs. The agreement was terminated last year. Core got legal, financial, HR and marketing support while Endemol got $2 million annually and other financial considerations.
Don’t hold your breath waiting for Idol to return–at least until this financial crisis with Core Media is sorted out.
— Nigel Lythgoe OBE (@dizzyfeet) April 28, 2016