Come Wednesday, American Idol fans will have some juicy allegations to ponder after ABC's Primetime Live airs its "Fallen Idol" segment. The report promises to dig into some of the show's purported improprieties, including allegations of host Paula Abdul's amorous relationships with past contestants.
I'm not here to dissect the nuances of the popular music contest. You're still bummed that Constantine got bumped off last week? Sorry. I can't help you there. However, as investors, we do have some financial layers worth looking into.
For starters, no, I don't think there is a conspiracy. Yes, ABC parent Disney (NYSE: DIS) did blow its chance to air Idol after its executives refused to meet with the show's creators a few years ago. But I don't think this is payback for Fox (NYSE: FOX) making the right move.
However, if you think Fox is the publicly traded company that stands to lose the most if Wednesday's report causes irreparable harm to the show, think again. Pity instead a company that you have probably never heard of -- CKX (Nasdaq: CKXE). Until March, the company was known as Sports Entertainment, and two recent deals have transformed it into what will be a nail-biting corporation later this week.
In February, the company closed on a deal that gave it an 85% interest in Elvis. Now owning Elvis Presley's name, image, and likeness -- as well as running Graceland and other related attractions -- CKX is hoping that The King is still alive, financially speaking.
A month later came CKX's next big catch -- 19 Entertainment Limited. When CKX closes on its purchase of the UK-based entertainment company, it will own American Idol, as well as the show's tweaked versions in more than 30 countries. Run well, Idol can be a lucrative property for the company, even beyond the program itself. How? Well, 19 Entertainment has most of the past contestants under recording contracts, and it even collects some decent pocket change when folks use wireless sponsors to phone in their weekly votes.
That's why CKX will have a lot riding on how the country takes to ABC's expose. Idol has had its share of controversies in the past and has managed to rise above them every time, but you may want to start up some due diligence on CKX, as either a long or a short, because there's a pretty fair chance that the stock will be volatile in the coming weeks.
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Longtime Fool contributor Rick Munarriz has owned shares of Disney since the 1980s, and he has never appeared on American Idol.The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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