'American Idol' owner Core Media gets reorganization plan approved
U.S. Bankruptcy Judge Stuart Bernstein has signed off on Core Media Group's plan for reorganization after the company filed for Chapter 11 upon the cancelation of American Idol and a fight with Idol creator Simon Fuller.
With nearly $400 million of debt, Core declared bankruptcy in April and began negotiating with lenders including Tennenbaum Capital Partners, Crestview Media Investors, Bayside Capital and Hudson Bay Capital Management. The process occurred as Core Media produced the thirteenth season of its other big Fox competition show, So You Think You Can Dance.
Ultimately, Core — whose subsidiaries produce other unscripted fare like Man v. Food, Extreme Couponing and My Crazy Obsession — was able to make deals that de-levered its debt by more than $385 million. TCP and Crestview, gaining equity stakes, would also reinvest about $18 million in the reorganized company, according to court papers supporting the plan.
Although all of the biggest creditors voted to approve the plan, it nevertheless drew objections from Dick Clark Productions, seeking assurances that agreements would be assumed, as well as a range of former Idol stars including Carrie Underwood, Adam Lambert, Kellie Pickler and Philip Phillips (who continues to be in litigation with the company).
Perhaps the most vocal objector was Simon, whose demand for payments and threat of winding-up proceedings on Core affiliate 19 Entertainment helped spur the Chapter 11 case in the first place.
Simon has been eyeing fraud claims, and his motion for discovery prompted Core to get the judge to agree to terminate consulting agreements that gave him a 10 percent profit share from Idol (which still is on air in international territories) as well as So You Think You Can Dance.
Judge Bernstein reportedly gave his nod to the reorganization plan at a hearing on Thursday when the attorneys revealed a deal allowing Fuller a $6 million claim on obligations from his consulting deals.
"Today's confirmation is the culmination of many months of negotiation, compromise and collaboration," said Core CEO Peter Hurwitz in a statement. "As with any complex process, this bankruptcy required skillful navigation which was achieved with minimal disruption to our business. We are incredibly proud of the work we have accomplished, the continued success of B17 and Sharp Entertainment and 19 Entertainment's iconic franchises, American Idol and So You Think You Can Dance. We are grateful for the focused, tireless dedication of our employees, board, current and new shareholders, and the many professionals on all sides of this transaction, without whom none of this would have been possible. We set out to expeditiously move through this restructuring and will shortly emerge with a streamlined balance sheet and the financial wherewithal to achieve our goal to become one of the preeminent content creation companies."