Many companies file for bankruptcy out of pure necessity or simply due to it being the most viable financial path open to them in view of their circumstances. Of course, the stakeholders of any company filing for bankruptcy are invested in the proceedings but the filing doesn’t always make the news. However, one bankruptcy filing did make the news recently because it is associated with the popular television show American Idol.
American Idol recently ended it’s successful run of over a decade as one of America’s most popular television shows, producing such stars as Kelly Clarkson and Carrie Underwood. However, Core Media Group. which produced the show, filed for Chapter 11 bankruptcy protection.
That filing, made in New York, says that Core Media Group owes $398 million. This amount is distributed across multiple third parties, with American Idol Simon Fuller being the primary unsecured creditor. He is owed $3.37 million. Crestview Media Investors, Tennenbaum Capital partners, Hudson Bay Capital Management, and Bayside capital are also owed substantial sums. A payment demand from Fuller on April 11 was one of the reasons that Core Media Group filed for Chapter 11 bankruptcy.
The company was first set up to manage intellectual property of Muhammad Ali and Elvis Presley. In 2005, it acquired 19 Entertainment, the company that was founded by American Idol creator Fuller. It still has recording rights for songs by Kelly Clarkson and Carrie Underwood.
However, the ratings of American Idol declined over the years and so did its revenues. That, along with mounting debt, led to the Chapter 11 bankruptcy filing. This company will now need to decide how to restructure and move forward. Such decisions are best made in consultation with an experienced attorney.
Source: The Hollywood Reporter, “‘American Idol’ Owner Files for Chapter 11 Bankruptcy,” Eriq Gardner, April 28, 2016
