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NEW YORK — For most people, the big dispute at American Idol is whether Kris Allen or Adam Lambert should win the singing competition tonight as TV's No. 1 series ends its eighth season.
Yet those who track Idol's TV, music, concert and licensed merchandise business face a more important question: Does the 8.4% drop in the average audience this season — to about 25 million, according to Nielsen — suggest that the Idol phenomenon has peaked?
Advertisers spent $903.3 million on Idol last year, according to TNS Media Intelligence. But it "has begun to show signs of wear," analyst Brian Hughes of ad buyer Magna says in a report.
Meanwhile, CKX (CKXE)— the entertainment marketing firm that controls the rights to most Idol business ventures — reported that revenue from the show fell 14.3% in the first quarter from first quarter 2008, to $24.7 million.
Still, CKX chief Robert F.X. Sillerman says, "The franchise is in great shape. The laws of physics say that there's no such thing as a perpetual-motion machine. But we may end up proving Albert Einstein wrong."
The debate is important as Idol's biggest star, Simon Cowell, decides what to do after the 2010 season when his contract expires. If he leaves Idol, he could try to import The X Factor, a hit talent show overseas that he controls.
Sillerman wants to negotiate a new contract this year and says, "My focus is to make sure that we continue to be in business with Simon Cowell."
Idol backers say the ratings data are misleading: Almost all broadcast TV shows are down. It's better to look at Idol's lead over the competition, Fox (NWS) Entertainment President Kevin Reilly said this week. It attracted a 69% larger audience than the No. 2 series, Desperate Housewives, up from 56% last year.
Idol's revenue fell, Sillerman says, because two sponsors, reeling from the economy, dropped out at the last minute. Idol "will be up modestly" by year's end, he says.
He'll be helped by sales of licensed merchandise and tickets to The American Idol Experience attraction, which opened in February at the Walt Disney World Resort in Florida.
"We're not seeing a slowdown," says David Luner, who oversees the Idol licensing business at FremantleMedia Enterprises, although he declined to disclose figures. He hopes to drive sales next year by striking a deal with a retailer to showcase Idol products.
Idol could hit the jackpot if it creates a star as popular as Kelly Clarkson, Carrie Underwood, Daughtry, David Cook or Jordin Sparks.
CKX will exercise its option to sign record deals with Allen and Lambert. Sillerman adds, "I would not be surprised if … we signed more than two."
Posted By: Holly
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