Robert Sillerman's Sports Entertainment Enterprises will buy 19 Entertainment Ltd. for about $200 million in cash and stock. Sillerman's companies also own an 85 percent stake in the Elvis Presley estate.
Already Sillerman has put TV networks on notice when it comes to "Idol." 19 Entertainment is not its fair share. He told The Daily Variety he wants to "help creators of the best possible content distribute that content on a platform that gives them a fair economic split," adding, "they're not getting that now." "Idol," he said, "suffers from old distribution economics; as successful as it is, the vast majority of revenue goes to Fox."
To many strong TV producers with leverage these days, this could mean not just hiking license fees but taking a piece of growing advertising sales. As Mark Burnett Productions has discovered with shows such as "The Apprentice" and "The Contender," it is a better economic model for its company to sell its own commercial time to advertisers. It then can package deals of product integration and ad time to marketers.
Perhaps "American Idol" wants to take the same path. Originally, the show was going to be sold to Fox on a barter advertising basis. That meant 19 Entertainment, and its partner FremantleMedia, would control and sell some of the advertising time for little or no license fee.
But, at the last second, Fox figured this show would go places and decided to retain all the advertising time and pay the producers a straight license program fee. That proved to be an incredibly smart decision for Fox, as it has major long-term ad deals with Cingular Wireless, Ford Motor Co., and Coca-Cola.
Perhaps Sillerman sees the Burnett model - and as a producer with a lot of leverage - wants the same terms, not just from the U.S. network Fox, but for other TV outlets around the world.
Greed must be good at these companies. "American Idol" already does some $1 billion in business from all its license fees and other merchandising deals around the world.
Sillerman also wants to extend a better financial model for the performers themselves so that they and TV producers of "Idol" can join the chorus of "The Apprentice's" very appropriate 1973 theme song: "For the Love of Money."