Fox announced today that it has reached a deal that will keep American Idol and sharp-tongued judge Simon Cowell on the air for at least three more seasons beyond the smash-hit reality show's upcoming fifth season.

Last week, The New York Times reported that Cowell had been unhappy about the fact that for the first time since American Idol began four seasons ago, his Sony BMG label would not have the right to sign the eventual winner and runner-up of the show's upcoming fifth season. "Simon is not interested in making a star for another label," one of Cowell's close associates had told The Times.

As a result, although Cowell had willingly given away American Idol 5's signing rights as part of three-season contract extension he signed before 2003's American Idol 3, he was reportedly now seeking to have them included in what the paper termed a "delicate and hugely expensive renegotiation" that would also include an extension for additional seasons.

In addition to suggesting that he might leave the Fox show, Cowell was also said to be threatening to sell another network an American version of The X Factor, a Cowell-created British reality talent show that currently ranks as Britain's most popular television program.

However further complicating the situation was the fact that X-Factor itself was also the subject of disagreement. Idol creator Simon Fuller and his 19 Entertainment company had sued X-Factor producers Fremantle Media (19's Idol production partner) and Simco and Syco (Cowell's production company) for $170 million in Britain, allegedly that X-Factor -- which Fuller and 19 Entertainment have no role in -- was a rip-off of the Idol format that Fuller originally created.

Last week, the parties postponed the court case (which had finally come to trial in London's High Court) indefinitely as they attempted to agree on an out-of-court settlement. A settlement of the lawsuit was announced today, and although the terms of the agreement remain confidential, BBC News is reporting that the settlement involves Fuller and 19 receiving "a minority interest" in X-Factor as well as "other specified rights" in return for Cowell's agreement to sign an American Idol extension.

Last Thursday, Daily Variety had reported that according to the UK's BroadcastNow website, the deal was believed to involve Fuller and 19 receiving 20% of X-Factor's profits in return for Cowell receiving an even bigger percentage -- between 30 and 40% -- of American Idol's profits (in addition to getting to sign the show's winner, Cowell was already reportedly receiving about $8 million a season per the terms of his current Idol contract.)

"I am happy that we have been able to sort out our differences and find an amicable solution to our problems," Cowell stated in a statement released to after today's settlement announcement. "This means we can go forward and concentrate on working together for the next five years on developing other successful projects. Simon and I have shown just how well we work together in recent years. We have remained friends throughout this dispute and I think that it was this friendship that allowed us to settle our differences"

"When Simon and I are focused and working closely together we are capable of great things and I'm looking forward to us delivering more hits around the world," Fuller added in the same statement.

Fox's new American Idol deal -- jointly announced along with CKX, Inc. (19 Entertainment's new corporate parent), FremantleMedia, SonyBMG, and Cowell -- calls for the companies to produce at least four more American Idol seasons, beginning with the fifth Idol season that Fox will premiere in January 2006. The deal also calls for the "automatic renewal" renewal of up to two more Idol editions assuming that the show achieves "certain readily obtainable minimum ratings certain minimum ratings in the fourth and potential fifth years of the deal." Should both renewals be executed, the agreement will take American Idol through its tenth season.

As part of the deal, Fox also announced that it had reached a new five season agreement with Cowell that will keep him on Idol through at least American Idol 9. As part of the joint agreement, Cowell's Sony BMG label will continue to be the designated record label for winning American Idol contestants -- a right that Fox, not Sony, will pay 19 Entertainment $5 million a season for Sony BMG to maintain. In return, 19 Entertainment will begin receiving a larger percentage (a 4% royalty increase) of the recorded music sales revenue of future American Idol artists.

Fox will also pay 19 Entertainment and FremantleMedia "a significantly increased" per season license fee that is "reflective of the previously announced increases in advertising rates for the coming season." In return, Fox (whose Newcorp parent has recently embarked on a billion dollar Internet property buying spree) will (at its own expense) get to build and host, a new official website for the show. 19 Entertainment, FremantleMedia and FOX will work together to develop the site's content and share in its revenue, however 19 Entertainment and FremantleMedia will still retain the exclusive right to develop and offer premium services on the site.
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Fox will also receive "certain wireless telephony rights," including show-related or inspired ringtones, realtones, and video footage. Like the website, 19 Entertainment, FremantleMedia and FOX will share the wireless revenue.

Fox has also agreed to order two new as-of-yet unannounced (and probably as-of-yet uncreated) shows produced by 19 Entertainment and FremantleMedia sometime during the next five years. The two shows will be in addition to So You Think You Can Dance, which Fox renewed by a second season earlier this fall.

Lastly, 19 Entertainment and FremantleMedia have also agreed to produce "certain agreed upon shoulder programming" for TV Guide's TV Guide Channel (in which Fox parent Newscorp is a major stockholder) and Fox's recently launched Fox Reality Channel (a development Reality TV World predicted over a year ago.)

The full financial details of the 19 Entertainment's portion of the joint agreement are available via CKX's most recent SEC Form 8-K filing.