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American Idol judges
The Economics of American Idol
 
Posted July 26, 2009 

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The figures are stunning. Ryan Seacrest inks a three year, $45 million deal to continue on as host of the hit show. Shortly after, the executive producer, Ken Warwick, inked a similarly lucrative three year contract reportedly “well into the eight- figure range,” according to the Hollywood Reporter. The deals make their beneficiaries the highest paid host and producer in television history. Simon Cowell is also reportedly in active negations with Fox execs even though his contract does not expire until next year. All expectations are that his final deal will prove to be equally generous given Seacrest and Warwick’s treatment. There are already rumors that Cowell’s deal will eclipse his judging colleagues’ compensation although he quashed rumors that he is negotiating a deal in the $100million range.  

                                                                   Idol's Economic Indicators

 
 $843 Million 2008 Ad Revenues
 $707, 000        Cost of 30-second Ad on Idol
 77%     Gross Profit Margin
figures by Forbes.com

Meanwhile, Paula Abdul and her newly hired manager, David Sonenberg, are left outside in the cold for now as the network has not opened any serious talks with the pop star despite an expired contract.

Calculating "Priorities"

Despite the rather rude negotiating position the network has taken regarding Paula, this is likely a simple case of economic priorities for Fox. They may feel that they need to secure the most important components of the show first. That would explain why Seacrest, the face of Idol, wrapped up his deal first, and why the guy who keeps the trains running on time and who provides creative direction, reached a deal second, and why the most famous, most controversial judge is in line third.  Whatever Fox will be able to offer Paula will not be apparent until they settle on Cowell’s contract. Paula and Kara, unfortunately will get the money left on the table after that( Randy is out of the equation this year since he has two years left on his contract. )

Understandably, securing a commitment from Paula  is not on the top of the to-do list for Idol producers since the success of the Idol franchise worldwide proves that the winning formula does not center around the judging panel. Indeed, it is the talent and the competition itself that intrigues the millions if not billions of people around the world that watch Idol shows.

 

Saving Paula

Over the last couple of weeks Paula’s quandary has played out in the media with rumors that she is asking for $20million but has been rebuffed by Idol Producers. Her manager has even gone so far to tell the press that “regrettably” Paula will “probably” not be continuing on with the show. A “Save Paula” campaign has sprung up on Twitter, with heavy hitters like Ryan Seacrest, Simon Cowell , and former Idol  producer and judge of “So You Think You Dance,” Nigel Lithgoe, voicing their support. Adding to the drama, other rumors have surfaced that Fox producers offered British singer Cheryl Cole Paula’s seat but she declined. Whether the rumor is true or simply a negotiating tactic, it is clear what contract renegotiation priorities the producers believe makes the most economic sense.

 

While Paula Abdul may not be the most valuable player on the Idol team, she provides a definite, if not strange dichotomy of compassion and scandal to the show. Much has been written about her unintelligible ramblings and periodic lack of lucidity. But even if the rumors of her being an alcoholic or drug addict are true, she is quite possibly the cutest darn addict on television today. Vicious rumors aside, Paula is undeniably the judge that exudes the empathetic sensibility of an artist who has literally “been there,” in terms of the brutality of competition and making it in the music business.  Fox execs undoubtedly have to put a price on Paula’s strange charm. Simon Cowell  perhaps said it best in one of his most tender and sincere moments when he told an entire Los Angeles audience at a charity benefit that Paula is indeed “the heart and soul” of American Idol.

 

 
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