“American Idol” Producer Files Bankruptcy After Show’s Last Episode
Core Media Group files for Chapter 11 Bankruptcy
Sometimes even successful people and companies run into financial problems. Core Media Group, the company behind hit TV shows American Idol and So You Think You Can Dance filed for bankruptcy protection in federal court only days after the final episode of the hit show American Idol.
Fox’s television show, American Idol , once a huge profit maker and ratings topper for FOX, averaged more that 20 million viewers in seasons starting in 2003 (According to Nielsen ratings tracker). So how is it that the company responsible for of a top-rated show (8 consecutive seasons) that reached almost 31 million viewers in 2006 needs to file bankruptcy? All good things come to an end and Idol’s popularity and audiences plummeted and it created financial perils for Core Media Group.
The company Core Media Group, founded 10 years ago, filed Chapter 11 bankruptcy in Federal Bankruptcy Court in New York, claiming it has not found a way to replace the revenue lost when hit American Idol’s ratings and subsequently income declined. Filing Chapter 11 bankruptcy does not mean the end of Core Media Group or that American Idol won’t ever come back. Chapter 11 bankruptcy allows a company to re-organize it’s debts and work with it’s creditors. (Chapter 11 bankruptcy is intended primarily for the reorganization of businesses with heavy debt burdens). Core Media Group should be able to continue operations and come out of this bankruptcy filing in a far better financial situation.
In it’s bankruptcy filing, Core Media Group divulged that it owes approximately $400 million in debt to creditors, including individuals such as Simon Fuller (the creator of American Idol), and other parties like Sony Music Entertainment. The company also owes money to third parties. Core Media Group is claiming $73 million in assets, but less than $10 million cash on hand. A demand for payment in April from the aforementioned, Fuller, was a major contributing factor in the decision to file bankruptcy.
The president of Core, Peter Hurwitz, in a statement about the Chapter 11 filing, cited American Idol’s recent failures as major reason for filing bankruptcy. According to Mr. Hurwitz, “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.”
As goes American Idol so goes Core Media’s profits. After having huge success, ratings fell hard. By the final season, American Idol was no longer America’s top rated show not too mention it wasn’t even number one with it’s own network. The show Empire grabbed higher ratings for FOX. The final episode aired in April 2016. Core Media Group claims that its capital structure is now “unsustainable,” as it is not able to replace a show and a money maker like American Idol. Now that the show is over, evidently Core is thinking about some restructuring and the Chapter 11 bankruptcy filing is a first step.
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