A Delaware Court of Chancery vice chancellor declined to modify his November decision declaring the $509 million price offered for “American Idol” owner CKx Inc. was fair market value. The opinion, authored by Vice Chancellor Sam Glasscock III, made headlines last year when the judge broke from the Chancery Court’s tradition of using discounted cash flow to determine a company’s value.
In Huff Fund Investment Partnership v. CKx, Glasscock ruled in November that the $5.50 per share offered by an affiliate of Apollo Global Management LLC to acquire entertainment conglomerate CKx Inc. was the most relevant evaluation because no comparable transactions or reliable cash-flow projections exist. Typically, the Chancery Court relies upon DCF to evaluate a corporation, but Glasscock concluded the method was unreliable because no one could accurately predict the outcome of CKx’s negotiations with Fox Broadcasting Co. to renew “American Idol” for upcoming seasons.
