Do Big Phil and Shiny Simon have the X Factor?

The king of the talent show is raking it in while saving ITV. But that's not enough. Now, reports Richard Northedge, Simon Cowell is forming a joint venture with a real billionaire, Sir Philip Green
Click to follow

When Simon Cowell controversially refused to kick John and Edward off The X Factor last weekend, he cost Welsh teenager Lucie Jones a £1m recording contract and added at least as much to his own value and that of ITV. The presenter-producer-promoter is keeping the television broadcaster alive single-handedly.

His contract with ITV ends next month and he is currently renegotiating his terms – just as The X Factor reaches a climax that could see 20 million viewers tuning in to watch who wins. Last weekend's show, when Cowell left it to the viewers to choose who came back for this weekend's programme – Jones or the Irish twins who sing like John Sergeant dances – drew The X Factor's highest audience to date – 16.6 million. ITV's sales force has gone into overdrive selling advertising space for the remaining episodes.

The programme has saved ITV. Ad revenues were down 12 per cent in the first nine months of the year. Then Cowell's talent show was back on the box and bookings soared. The outlook is so improved that the company announced its trading statement early. December's revenue will be 4 per cent above last year's and 30-second slots during the final are priced at £250,000, earning ITV £6m an hour.

"That's the first increase since the first half of 2008 and the strongest monthly performance since the back end of 2007," says ITV's chief operating officer, John Creswell. "We took a decision in the summer to keep our firepower for a peak in the autumn and we've invested in The X Factor, splitting it across Saturday and Sunday. That was a conscious decision."

Yet ITV does not make The X Factor, or the equally successful Britain's Got Talent. Both programmes are made by Cowell and Fremantle Media, a subsidiary of RTL, the channel Five owner that is itself 90 per cent owned by Germany's Bertelsmann Media Group.

ITV pays a fee of £6.5m a year to Cowell for hosting the shows and making his trademark caustic comments about competitors, plus a fee to the production companies. Cowell receives a further fee as co-producer, through his Syco television company, but he has so many fingers in so many pies that – like its contestants – The X Factor is only his route to greater fame and fortune.

And controversies like the rejection of Jones when the public chose "Jedward" only help – just as the hullabaloo over Susan Boyle's performance on Britain's Got Talent last May ensured almost 20 million people watched her sing in the final. It was the biggest entertainment programme audience in a quarter of a century.

While Dancing on Ice audiences declined and I'm a Celebrity viewing wobbled, the two Cowell shows' popularity has rocketed. Britain's Got Talent averaged 13.3 million viewers compared with 10.2 million in 2008, giving ITV a 53 per cent audience share and domination of the key 18-34 age group. But the effect spins off into other media. The 3.3 million watching Britain's Got More Talent gave ITV2 its highest audience ever with video views on jumping 250 per

cent as 13 million people watched 50 million clips.

The X Factor is faring even better, boosted by its Sunday results show, and the BBC retimed Strictly Come Dancing rather than compete.

But Cowell's empire extends beyond the UK shows. He has presented eight series of American Idol on Fox, the most watched entertainment programme in the US – and produces America's Got Talent for the rival NBC. Fox pays him £20m a year though Cowell does not share the profits. Other US television shows have included American Investor – a sort of Dragons' Den with a $1m prize – and Celebrity Duets.

The "Got Talent" formula has been sold to 25 countries while The X Factor is seen in 16 local versions and Cowell makes money from them all. RTL's chief executive, Gerhard Zeiler, reported falling turnover and lower profits last week but, like ITV, sees those shows as his stars. "Got Talent is a hit with audiences around the globe," he says. It has just started in India while Das Supertalent is breaking records in Germany. "The X Factor remains one of the biggest hits on UK television and in the UK, Britain's Got Talent became the highestst-rated entertainment show this decade."

The shows produce sponsorship income – TalkTalk is said to pay £500,000 to put its name on The X Factor while Domino's Pizza sponsors Britain's Got Talent – and Cowell shares in phone revenues of an estimated £1m from viewers' votes.

They also have 50 suppliers given namechecks for providing products such as drinks, cosmetics and furniture. The X Factor list includes bottled water from the US, Scotland and Yorkshire, and, besides suppliers of candies, jelly beans and other snacks, has an official cosmetic dentist. There is also merchandise from T-shirts to mugs.

And the shows generate talent for Syco Music, now also part of Bertelsmann but with Cowell sharing profits as he does from other Syco companies. Susan Boyle's debut album is due in December and The X Factor winner is virtually certain to get this year's Christmas chart-topper, just like Alexandra Boyle and Leona Lewis in past years. There have been 10 X Factor number ones.

Cowell then mixes the components so that Boyle appears on America's Got Talent, for instance, while singer Sinitta is a UK judge. A TV documentary on Boyle is on the way too. Then comes The X Factor tour, 33 live dates across Britain next spring.

Now Cowell has teamed up with a real billionaire in a joint venture to create a group to take on the global entertainment giants. Sir Philip Green, who organised Cowell's 50th birthday party last month, will be his partner and the Hitchcockian Syco name will change to Greenwell Entertainment.

Details are under wraps but the plan is to inject Cowell's interests, including the television rights and his acts, into a new venture based in London and Los Angeles. Sir Philip, owner of Topshop, is contributing his business skills, negotiating to raise Cowell's £20m American Idol fee, and looking at merchandising opportunities. A modelling version of the talent shows is under consideration to provide a catwalk for Green's fashions.

Cowell was worth £120m according to The Sunday Times Rich List and Forbes magazine reckons he earned £45m in the past year – half from American Idol but with record deals contributing £7m and the UK shows £9m. Paying £21.7m income tax might mean he earned even more. "Whatever you think he's earning you can probably double it," said one close adviser.

Simon Cowell: The making of a starmaker

Success for a Sinatra fan in the music business

Brighton-born Simon Cowell attended Dover College – where Jeffrey Archer once taught – but left at 16 to work in the postroom at EMI. His father was an executive of the record company and the teenager soon started helping its A&R staff.

In the 1980s, he set up his own music company, making five Top 40 singles, and joined Fanfare, which had to be rescued by Bertelsmann at considerable cost to Cowell. His artists included the Teletubbies, Robson & Jerome and Westlife.

His turned to Max Clifford for guidance. "When he first approached me for help in raising his profile he was a successful but relatively unknown 37-year-old A&R man," says the publicist. "He already had success firmly in the bag but was by no means the global superstar and household name he is today."

Cowell's first television venture was Pop Idol in 2001. From that talent show he developed The X Factor in 2003, America's Got Talent in 2006 with the British version a year later – plus a flop, the show seeking stars for the stage musical Grease. His record sales are estimated at 150 million.

The suntanned star, still single, has owned racehorses and fast cars and this year bought a $22m Beverly Hills house to add to his properties in Britain. His own musical tastes emerged on Desert Island Discs – Sinatra, Sammy Davis Jnr and Charles Aznavour.