Core Media Group, the production company behind "American Idol," is suing 21st Century Fox Inc. and Apollo Global Management LLC over claims that the two companies effected "a merger and change of control ... designed to strip Core of its remaining cash, transfer Core's corporate opportunities to its competitors, and ultimately leave Core to default on its obligations to its lenders."
Apollo in 2011 acquired Core Media's corporate parent for $510 million, and entered into two new lending agreements that required Core to repay its lenders if Core underwent a control change, and only engage in partnerships and mergers "if the newly-formed entity agreed to assume the obligation on the loans." The restrictions were placed so that Apollo had some stake in the new enterprise and so that it would not be able to take away value from Core or enjoy an exit event in a way that would disrupt the lenders' ability to be repaid by Core.
As per the lawsuit, filed by Core litigation trustee Peter Kravitz in the Los Angeles Superior Court, Apollo partnered with Fox unit Shine USA Holdings Inc. and Endemol to combine Core's operations with Endemol and Shine. Apollo in 2014 acquired a majority stake in Endemol. The joint venture did not provide for the repayment of the loans owed by Core "in an effort to monetize [the] investment in Core while keeping Core's lenders from Apollo's interest in Endemol and Shine." The venture "ultimately benefited Apollo and Fox at the expense of Core and its creditors," the suit alleges.
The suit seeks compensatory damages to be proven at trial, exemplary or punitive damages with the amount to be determined at the trial, costs and expenses related to trial and pre-judgment interest on all damages awarded.