CKX Inc., owner of 19 Entertainment, which is the owner of American Idol, is being sold to Apollo Global Management. Is this a case of CKX selling out at the top?

Idol is getting pretty long in the tooth. The show badly misses Simon Cowell. Last year Idol generated fully a third of CKX's revenue -- $91 million of $273 million, according to financial statements. Idol revenue -- including show revenue, tours and merchandising, did grow from $79 million in 2009. Presumably margins will be higher for 2011 now that Cowell's huge salary is no longer on the books.

But the show's financials look to be trending down. Revenue was up last year largely because there were more hours of programming -- 56 in 2010 vs. 50 in 2009. Ryan Seacrest is getting more expensive. The 10K refers to a "reduction in the ratings bonus, a reduced producer fee and reduced revenue from sponsorship deals. Television ratings for American Idol declined in 2010 by approximately 10%. Cost of sales for American Idol increased $13.9 million due to $15.0 million of costs arising from Ryan Seacrest's services agreement and Simon Fuller's consulting fee, partially offset by lower touring costs due to fewer tour dates."

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CKX also has a big piece of the Elvis empire. And Elvis's gross profit margins (profits minus cost of production but not counting operating expense, interest, taxes etc.) are higher than Idol's! Idol's gross margin was 64 percent last year. The gross margin at Graceland was 84 percent. (You can't tell net profits for Idol because the operating costs for 19 Entertainment include those for other shows.)

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