‘Idol’ empire conquers new multimedia worlds

Mike Brunker Projects Team editor • Profile • E-mail

Only those who spent the past five years living in a cave could possibly be ignorant of the phenomenon that is “American Idol.” But even the show’s most ardent fans — the ones capable of reciting Clay Aiken’s Season 2 song list by memory — are likely unfamiliar with the extent of the entertainment empire that has grown up in the long shadows cast by Simon, Paula and Randy.

One mind-bending gauge of the financial success of “American Idol” was provided this month by Advertising Age magazine, which reported that the show’s franchise is “conservatively valued at $2.5 billion” and climbing. If it’s not already, it will soon become the most lucrative multimedia property of all time, it said.

By way of comparison, that figure approximates the gross domestic product of Moldova, which, though it is Europe’s poorest country, is nonetheless a nation of roughly 4.5 million people, not a commercial enterprise.

“Idol,” which returns for its sixth season Jan. 16 on Fox, generates much of its value in traditional ways, earning $500 million a year in TV advertising, and many millions more selling music and managing its stable of stars.

Tapping new revenue streams
But it also has developed into a cottage industry that enables the show’s creator, owner and various affiliated companies to dip into revenue streams that its predecessors could only dream of:

• “Idol” has introduced millions of Americans to text messaging and, in doing so, created a new revenue model. Last year, 64 million votes were cast for favored contestants using Cingular cell phones, more votes than have been cast for any U.S. president.  

• INTERACTIVE ‘Idol’ by the numbers Simon, Paula and Randy help us gauge the show's success

  The show is the runaway leader in television product placement, where advertisers pay to have their product mingle with the judges and contestants rather than be relegated to easily ignored commercial slots. Nielsen Media Research reported that advertisers paid to have their products featured on “Idol” 4,086 times last year, far surpassing runner-up "The Amazing Race," which notched 2,790.
• Freemantle Media, which owns the licensing rights to “Idol,” is aggressively expanding its business. In addition to the 40 licenses already issued, it is working on deals for “Idol” ice cream, “Idol” Monopoly and an “Idol” theme park attraction, Advertising Age reported this month.
• The company also is selling ads to the likes of McDonald’s and MasterCard to accompany an online version of the program that will be streamed over the Internet as soon as the TV broadcast ends, the magazine said.
• The written word also is fair game. “Heart Full of Soul: An Inspirational Memoir About Finding Your Voice and Finding Your Way,” by 2006 winner Taylor Hicks is due out on April 3 (suggested retail price $24.95). Or for some lighter reading, perhaps a subscription to “American Idol: The Magazine,” at just $10 for four issues?

This uncanny ability to identify and exploit new sources of income is not just happenstance.

“Idol” creator Simon Fuller, a Briton who founded the company now known as 19 Entertainment in 1985, had just such a beast in mind when “Pop Idol,” the first version of the show, debuted in the U.K. in 2001.

Spice Girls an ‘Idol’ trial run
It was a vision that he had polished in earlier forays into the entertainment world with the 1990s pop group The Spice Girls and another British teeny-bopper act, S Club 7, which he catapulted to stardom through a television show, much as was done in the U.S. with “The Monkees” in the mid-1960s. Both The Spice Girls and S Club 7 also were managed by Fuller’s company, appeared in movies it made and entered into licensing agreements for spin-off products that it engineered.

The U.S. entertainment marketing firm CKX Inc., which purchased 19 Entertainment for $192 million in cash and stock in March 2005, described Fuller’s vision for all three “properties” in a recent corporate filing:

Stefano Paltera / AP file "American Idol" creator Simon Fuller, shown in 2005, has big dreams for the already successful franchise.

“Each of these was conceived as a multi-platform entertainment property and has experienced substantial success on a worldwide basis, generating multiple revenue streams, including recorded music, music publishing, television, film, merchandising, sponsorship, artist management and promotion.”

Today 19 Entertainment reflects the many facets of Fuller’s business model, with more than 20 divisions devoted to producing television projects, including the “So You Think You Can Dance” and “All American Girl” shows for the U.S. market; artist management; music recording (including a lineup of award-winning writers and producers available for hire); merchandising; and concert touring, among others.

In a recent expansion of its reach, the company has entered the sports arena, signing deals to represent and market Los Angeles-bound soccer star David Beckham and his wife, Victoria (formerly Posh Spice), England’s national soccer team and, beginning this year, Honda Racing’s Formula One team. 

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