Music group pacts with 19 Entertainment, Fuller

In a major coup for the Universal Music Group, “American Idol” has switched allegiances from Sony Music Entertainment to UMG as 19 Entertainment and Simon Fuller, creator of the hit Fox talent show, announced a long-term strategic alliance with UMG to handle the development, distribution and marketing of “American Idol’s” musical acts.

The announcement, which comes at a turning point for “Idol,” was made Tuesday by UMG’s chairman and co-CEO Doug Morris and co-CEO Lucian Grainge, who will take over Morris’ day-to-day duties in January, as well as Fuller on behalf of 19 Entertainment.

The lucrative partnership was signed as Sony’s contract with “Idol,” which had been in place since the show’s inception in 2001, expired and Fuller, who has known Grainge for more than 30 years, was looking to inject some fresh blood into the flagging, if still potent, “Idol” franchise. The pact is said to be worth close to $1 billion. Industry sources say “Idol” has generated between $400 million to $600 million in recorded music sales.

According to one source close to the situation, Fuller was not pleased with how Sony was handling the “Idol” franchise.

As part of the new multiyear agreement, UMG’s Interscope Geffen A&M will market, promote and distribute albums globally from “American Idol’s” finalists and winning contestants across a broad array of retail and new media platforms.

“With ‘Idol’ celebrating our 10th season, I wanted to inject some new power and weight behind our brand,” Fuller said in a statement. “We have been quietly delivering hits relentlessly for nine seasons, and Lucian Grainge and Jimmy Iovine’s (Chairman, Interscope Geffen A&M) ambition, commitment and determination to push the boundaries and go even further with ‘Idol’ was very compelling. It is exciting to have the world’s biggest show partnered with the world’s biggest music company.”

Added Grainge: “We like delivering hits and new artists… Pairing the renowned expertise of Simon and Jimmy in developing and marketing musical talent creates a truly winning combination that will allow ‘Idol’s’ artists to realize their fullest potential.”

Despite losing its contract with “Idol,” Sony continues to maintain a business relationship with Simon Cowell and will be the label attached to his new show, “The X-Factor,” when it bows on Fox in 2011. In the UK, the “X-Factor” nudged aside “Pop Idol” and became the top-rated talent competish. In the U.S., the show will feature a broader mix of talent, keeping Sony in a good position to profit.

Sony issued a statement after announcement of the UMG deal, saying it had enjoyed “a successful relationship” with “Idol” and wished Fuller and 19 Entertainment well “in this transitional period for the American Idol franchise. We look forward to continuing our relationships with the many artists on the Sony Music roster who have graduated from the American Idol system, including Kelly Clarkson, Daughtry, Carrie Underwood, Fantasia, David Cook, Adam Lambert, Kellie Pickler, Jordin Sparks and David Archuleta, and we are excited for the upcoming albums later this fall from season nine’s winner and runner-up Lee DeWyze and Crystal Bowersox.”

While “Idol”has remained TV’s biggest draw for the last nine seasons and one of the most globally recognized entertainment brands, its ratings have fallen significantly since their peak in 2006, when viewership averaged more than 31 million. Last season the show averaged just under 25 million.

The makeup will also change dramatically for season 10, with head judge, the acerbic Cowell, having departed to spearhead “The X Factor.” Fellow judge Ellen DeGeneres did not renew her contract after one season and third judge, Kara DioGuardi, is unlikely to return after two seasons.

Also, at least six dates were canceled from the recent “Idols Live Tour” barely a week after its launch July 1, with possibly more to come, due to poor ticket sales.

Still, “Idol” continues its reign as the top-rated show in TV’s most desirable demo, viewers 18-49, in all nine of its seasons. Since its debut in 2001, it has driven sales of more than 100 million units in North America and more than 120 million songs on iTunes and launched the careers of chart toppers such as Clarkson, Underwood, Daughtry and Lambert. Clarkson, the winner of Idol’s first season, went on to win a Grammy and sell more than 23 million records worldwide. Even the runners up have gone on to fame and fortune, including Jennifer Hudson, who won an Oscar for her supporting role in the big screen version of “Dreamgirls” and a Grammy for her eponymous debut album, which sold more than 1 million units worldwide.

In addition to “Idol,” 19 Entertainment has developed and managed such shows as “So You Think You Can Dance,” and its musical clients include Annie Lennox, Underwood, the Spice Girls and “Idol” alumni Chris Daughtry and David Cook.

Market share leader Universal Music Group’s roster includes such best-selling artists as Eminem, Kanye West, Lil Wayne and Lady Gaga, as well as catalog stalwarts like Stevie Wonder and the Rolling Stones among its numerous labels.

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