Core Media Group, home of 19 Entertainment’s “American Idol” and “So You Think You Can Dance,” was expected to file Thursday for Chapter 11 bankruptcy protection in New York.
Core was part of the joint venture that 21st Century Fox and Apollo Global Management created in 2014 with the merger of Apollo’s Endemol and Core with Fox’s Shine Group. But Core continued to operate under a separate capital structure and was never integrated into what became Endemol Shine Group. Moreover, Fox was shielded from liability for Core’s debts as part of the merger agreement as the company’s deteriorating financial condition was evident at the time of the deal. Core was known to be shouldering at least $300 million in debt as of last year but the total amount to be restructured was not immediately clear.
The bankruptcy filing is supported by two of Core’s key lenders, Crestview Partners and Tennenbaum Capital, which will assume ownership of the company from Fox and Apollo following the completion of the Chapter 11 process. Discussions about the Chapter 11 filing have been under way with lenders for about a year, a Core rep said.
Core has hobbled by debt problems for more than two years. The company has missed interest payments on loans during the past year and had its credit rating downgraded by Moody’s and Standard & Poor’s. The rising cost of debt payments dovetailed with the decline in profitability of the company’s core TV franchise, Fox’s “American Idol,” which created a perfect storm. “Idol” bowed out earlier this month after 15 seasons on Fox, although the show remains active in international markets.
Core is home to two active unscripted production companies, Sharp Entertainment and B-17 Entertainment. Both of those companies are not included in the bankruptcy filing and are expected to proceed with business as usual during the reorganization. Sharp and B-17 will be part of Core Media Group post-bankruptcy.
Core Media Group is also the parent of 19 Entertainment, the management-production company founded by Simon Fuller, who is no longer associated with 19. Core predecessor CKX acquired 19 Entertainment in 2005 for about $210 million. Apollo acquired CKX in 2011 for $509 million.
In a statement issued in anticipation of Thursday’s filing, the company emphasized that it expects to undergo a speedy reorganization. It also said that company management will remain intact under the direction of CEO Peter Hurwitz. The company at present has about 22 full-time employees, not counting production staff on its various programs.
“Core Media Group remains firmly committed to our mission as a global content and management company producing award-winning programming,” the company said. “In June 2015, with the changing landscape and one of our flagship shows in transition, we proactively engaged in discussions with our lenders regarding balance sheet optimization alternatives and a strategic restructuring. The actions we are announcing today will help best position the company for the future, allowing for more flexibility and a platform for growth. Core’s operating companies B-17 Entertainment and Sharp Entertainment are not part of the bankruptcy filing, they remain strong and will continue creating a wide variety of popular television shows for more than 30 broadcast, cable and digital networks. We expect to move through Chapter 11 expeditiously and have secured the full support of our first and second lien lenders.”