Leon Black’s Apollo Global Management LLC agreed to buy CKX Inc., owner of the “American Idol” television show, for about $509 million in cash.
The New York-based private equity firm is paying $5.50 a share, the companies said in a statement today. The price represents a 40 percent premium to New York-based CKX’s closing price over the past six months and a 24 percent gain over yesterday’s close of $4.45.
“Idol,” which charges the highest ad rates of any U.S. TV series, is winning back viewers in its 10th season, snapping four years of losses, after hiring Steven Tyler and Jennifer Lopez as judges. CKX said a year ago it was in talks with potential buyers.
“This a bet that ‘Idol’s,’ success can continue” Hal Vogel, an independent media analyst in New York, said in an interview. “These assets are showing a much longer life. I expected more deterioration over time.”
Former Chairman and Chief Executive Officer Robert F.X. Sillerman, who left last year to pursue a bid and holds almost 21 percent of the stock, is supporting the agreement, according to the statement.
CKX’s board has approved the accord with New York-based Apollo and will recommend shareholders back the deal, the companies said today. Goldman Sachs Group Inc. is providing a debt financing commitment in connection to the transaction.
“We look forward to working with Apollo,” Michael Ferrel, chairman and CEO of CKX, said in a statement. The firm “will serve as a strong steward for the company’s brands going forward.”
Los Angeles-based Gores Group made an unsolicited offer for CKX, a person familiar with the matter said last month.
“Idol,” the most watched U.S. TV show, is broadcast twice a week on News Corp.’s Fox network. The series has increased its audience by 2 percent this season, averaging 24.8 million viewers nightly after producers brought in new judges and refocused on the show’s music. Among the 18-to-49-year-olds sought by advertisers, viewing is down 5 percent, Fox said.
Gaude Paez, a spokeswoman for Fox in Los Angeles, declined to comment on Apollo’s acquisition of CKX.
Besides “Idol,” CKX has rights to the “So You Think You Can Dance” television brand, and the names and images of Elvis Presley and Muhammad Ali.
Apollo’s offer also has the support of The Promenade Trust, a shareholder whose sole beneficiary is Lisa Marie Presley, the daughter of Elvis Presley, the companies said.
CKX rose $1.01, or 23 percent, to $5.46 at 1:14 p.m. New York time in Nasdaq Stock Market trading. The stock had gained 10 percent this year before today.
Apollo was formed in 1990 by Black, Joshua Harris and Marc Rowan and pursues leveraged buyouts, credit investments and distressed asset purchases. The firm had $67.6 billion in assets under management as of the end of 2010, and has invested in industries from real estate to telecommunications.
Apollo, with investments in Caesars Entertainment Corp. and Realogy Corp., went public this year on the New York Stock Exchange after earlier selling shares on a private exchange managed by Goldman Sachs.
Apollo rose 13 cents to $18.63. The shares have dropped about 2 percent since their March 29 debut.