UPDATE 1-American Idol dumps Sony label for Universal

Tue Aug 3, 2010 4:35pm EDT

* American Idol artists will be distributed on Interscope

* Deal done for at least three seasons -- source

NEW YORK Aug 3 (Reuters) - Entertainment mogul Simon Fuller's 19 Management said on Tuesday it signed up Universal Music Group as the label for artists in future seasons of its hit TV show, American Idol, unceremoniously dumping its Sony Music partner of the last nine seasons.

The new deal will see Universal market and distribute albums from American Idol finalists and winning contestants starting from the 10th season, the first one without acerbic judge Simon Cowell.

Universal, the world's largest music company, which is owned by French media and telecommunications group Vivendi SA (VIV.PA), will distribute the music on its Interscope Geffen A&M label.

The announcement is the first major deal for Universal Music under the stewardship of new chief executive Lucian Grainge. The deal is expected to be for a minimum of three seasons, according to a person familiar with the situation.

The American Idol franchise has had some of the highest ratings on U.S. television since it began in 2001. It has also been very successful in churning out hit records by up and coming artists who find fame on the show.

The TV show had guaranteed Sony Music's RCA label a steady string of hits from top artists such as Kelly Clarkson and Carrie Underwood. 19 Entertainment said American Idol has sold over 100 million music units in North America.

With a lucrative contract being shopped around to different labels, speculation mounted the winning label would pay an upfront fee of up to $100 million to secure a deal.

But the person familiar with the terms said no money exchanged hands upfront and instead cash would be paid as advances per artist album.

More recently, the American Idol show has started to lose some of its magic and the latest season saw a marked drop in viewers, which invariably correlates with lower music sales.

Fuller will be hoping Universal's dominant market power, with over a third of the North American market, will help drive sales through both traditional and new outlets such as mobile phones.

"I wanted to inject some new power and weight behind our brand," said Fuller in a statement. "We have been quietly delivering hits relentlessly for 9 seasons and Lucian Grainge and (Interscope chairman) Jimmy Iovine's ambition, commitment, and determination to push the boundaries and go even further with Idol was very compelling."

Universal for its part is already hoping to rekindle new interest in the show by involving more of its current artists to work closely with the Idol brand next season. For instance performing duets with the contestants. The label is also hoping to bring some of the new artists to its other properties such as online music video site Vevo.

19 Entertainment is a unit of CKX Inc CKXE.O. Sony Music is owned by Sony Corp (6758.T). (Reporting by Yinka Adegoke; editing by Andre Grenon)

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