One Equity Partners is nearing a deal to acquire CKX Inc. (CKX), the publicly traded company behind brands like American Idol and So You Think You Can Dance, according to the Wall Street Journal.
CKX's current CEO would retain his stake in the company. The company was close to a deal to sell for $13.75 per share back in 2007, but the credit crunch nixed it. Now, the stock trades right around $6 per share, suggesting that the value of the American Idol franchise has tanked in value over the past couple years.
According to the Journal, "One issue for the company is that it is costly to keep the talent happy. The company, for example, recently paid Ryan Seacrest $15 million to retain him for future projects and to market his name and image, according to analysts."
But the other problem is that, while American Idol is still a popular show, its ratings have been in decline. Last week USA Today reported that "The final rounds of American Idol opened Tuesday with 22.9 million viewers, down 10% from last year's equivalent episode. Wednesday's results show drew 20.5 million." Back in February, the series lost in the ratings for the first time in six years.
And the decline is not a new phenomenon. Even back in 2008, there were media reports about the series' falling popularity in key demographics.
The combination of falling ratings and increased expenses spells "lower stock price."