‘American Idol’ Sheds Debt as Bankruptcy Plan Is Approvedby
Apollo and 21st Century Fox’s equity stake to be canceled
Company resolved objection from Idol creator Simon Fuller
The producer of “American Idol” won court approval to shed hundreds of millions of dollars of debt, and cleared a path toward working with Simon Fuller, the creator of the franchise, after it exits bankruptcy.
Core Entertainment, which has continued to produce television programs including "So You Think You Can Dance" while in bankruptcy, won approval of a plan Thursday that includes a settlement with a committee of creditors and the cancellation of equity that had been owned by Apollo Global Management LLC and Twenty-First Century Fox Inc, according to court papers.
U.S. Bankruptcy Judge Stuart Bernstein in Manhattan court approved the plan Thursday, after hearing that most creditors had voted in favor, and all written objections had been resolved before the hearing, including one from Fuller.
The reorganization removes more than $385 million in debt from the company’s balance sheet and includes an agreement from two of the company’s largest lenders, Tennenbaum Capital Partners LLC and Crestview Media Investors LP, to reinvest about $18 million under a rights offering, Core Entertainment said in court filings. The deal’s general terms had already been approved in August, promising senior lenders equity in a new company as well as new debt and cash. They would recover about 47 percent of what they were owed, while lower-ranking creditors would recover about 2 percent.
Core Entertainment, creator of what was once the most popular television show in the U.S., filed for bankruptcy in April with nearly 50 affiliates. Its "American Idol" series ran for 15 years and allowed viewers to vote for the aspiring entertainers they liked most.
Fuller, the creator of Idol-branded shows and “So You Think You Can Dance,” had objected to the reorganization plan, saying it discriminated against creditors in his class. He was an unsecured creditor with a claim of more than $10 million related to a profit share, and said in court papers he sought to investigate pre-bankruptcy loans to an affiliate called 19 Entertainment.
Lawyers for the company told Bernstein in court Thursday that Apollo had voted to reject the plan. The private-equity firm held equity in the company, split 50-50 with Twenty First Century Fox, under a 2014 joint venture. Court records show that Apollo Global Securities LLC, was an unsecured creditor with $1.7 million in claims.
In June 2011, an affiliate of Apollo Global Management bought the company, formerly named CKX and founded in 2005, according to court papers. The assets at that time included ownership of 85 percent of Elvis Presley trademarks, the operation of Graceland as an attraction, and Muhammad Ali Enterprises, which owned 80 percent of trademark rights for the boxing legend.
The company planned to divest the rights and expand into new content development, which included “Euros of Hollywood” for Bravo Media LLC, a division of NBC Universal, and “Prison Wives Club” for Lifetime Entertainment Services LLC, a subsidiary of A&E Networks.
“To date, the company’s new content development and production efforts have not been profitable,” the company said in an Aug. filing.
The case is AOG Entertainment Inc., 16-11090, U.S. Bankruptcy Court, Southern District of New York