##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from           to
 Commission File No. 000-17436
 CKX, INC.
 (Exact name of Registrant as specified in its charter)
 Delaware
    
    27-0118168(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
 650 Madison Avenue
New York, New York 10022  (Address of Principal Executive Offices and Zip Code)
 Registrants Telephone Number, Including Area Code:
(212) 838-3100
 Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.01 Per Share
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



TABLE OF CONTENTS
 Part I.
    
    FINANCIAL INFORMATIONItem 1
    
    Financial StatementsCondensed Consolidated Balance Sheets at June 30, 2008 (Unaudited) and December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations (Unaudited) for the three months ended June 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Operations (Unaudited) for the six months ended June 30, 2008 and 2007
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2008 and 2007
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    8Item 2
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 4
    
    Controls and Procedures
    
    
    41Part II
    
    OTHER INFORMATION
    
    
    41Item 1
    
    Legal Proceedings
    
    
    41Item 6
    
    Exhibits
    
    
    43EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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CKX, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 June 30,
    
    
    December 31,2008
    
    
    2007(In thousands, except shareinformation)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    72,508
    
    
    $
    50,947Receivables, net of allowance for doubtful accounts of $411 at June 30, 2008 and $832 at December 31, 2007
    
    
    81,506
    
    
    
    42,231Due from related party
    
    
    444
    
    
    
    999Inventories, net of allowance for obsolescence of $729 at June 30, 2008 and $627 at December 31, 2007
    
    
    2,301
    
    
    
    2,092Prepaid expenses and other current assets
    
    
    6,409
    
    
    
    5,337Investment in FXRE
    
    
    
    
    
    
    6,175Deferred tax assets
    
    
    1,401
    
    
    
    1,293Total current assets
    
    
    164,569
    
    
    
    109,074Property and equipment  net
    
    
    46,312
    
    
    
    43,989Long-term receivables
    
    
    3,268
    
    
    
    1,607Loans to related parties
    
    
    1,765
    
    
    
    7,931Deferred production costs
    
    
    810
    
    
    
    635Other assets
    
    
    21,442
    
    
    
    19,223Goodwill
    
    
    159,703
    
    
    
    160,454Other intangible assets  net
    
    
    172,260
    
    
    
    181,872Deferred tax assets
    
    
    845
    
    
    
    670TOTAL ASSETS
    
    $
    570,974
    
    
    $
    525,455LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    23,915
    
    
    $
    14,987Accrued expenses
    
    
    19,922
    
    
    
    20,448Accrued dividend
    
    
    
    
    
    
    6,175Current portion of long-term debt
    
    
    611
    
    
    
    652Income taxes payable
    
    
    15,207
    
    
    
    6,226Deferred revenue
    
    
    22,124
    
    
    
    12,009Total current liabilities
    
    
    81,779
    
    
    
    60,497Long-term liabilities:Long-term debt
    
    
    101,933
    
    
    
    102,418Deferred revenue
    
    
    3,989
    
    
    
    2,778Other long-term liabilities
    
    
    4,180
    
    
    
    4,216Deferred tax liabilities
    
    
    36,879
    
    
    
    38,083Total liabilities
    
    
    228,760
    
    
    
    207,992Minority interest
    
    
    4,999
    
    
    
    4,757Redeemable restricted common stock  1,672,170 shares
outstanding at June 30, 2008 and December 31, 2007
    
    
    23,002
    
    
    
    23,002Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value, authorized 75,000,000 shares:Series B  1,491,817 shares outstanding
    
    
    22,825
    
    
    
    22,825Series C share outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value: authorized 200,000,000 shares,
95,611,609 shares issued and outstanding at June 30, 2008 and
95,402,757 issued and outstanding at December 31, 2007
    
    
    956
    
    
    
    954Additional paid-in-capital
    
    
    375,788
    
    
    
    374,665Accumulated deficit
    
    
    (100,600
    )
    
    
    (123,746
    )Accumulated other comprehensive income
    
    
    15,244
    
    
    
    15,006Total stockholders equity
    
    
    314,213
    
    
    
    289,704TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    570,974
    
    
    $
    525,455
  3




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CKX, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedJune 30, 2008
    
    
    June 30, 2007(In thousands, except share andper share information)Revenue
    
    $
    88,510
    
    
    $
    72,331Operating expenses:Cost of sales
    
    
    33,310
    
    
    
    24,915Selling, general and administrative expenses
    
    
    19,656
    
    
    
    21,156Corporate expenses
    
    
    3,704
    
    
    
    3,711Depreciation and amortization
    
    
    5,457
    
    
    
    5,526Merger and distribution-related costs
    
    
    1,092
    
    
    
    2,761Other expense
    
    
    58
    
    
    
    295Total operating expenses
    
    
    63,277
    
    
    
    58,364Operating income
    
    
    25,233
    
    
    
    13,967Interest income
    
    
    327
    
    
    
    253Interest expense
    
    
    (1,424
    )
    
    
    (923
    )Income before income taxes, equity in earnings of affiliates and minority interest
    
    
    24,136
    
    
    
    13,297Income tax expense
    
    
    11,515
    
    
    
    9,105Income before equity in earnings of affiliates and minority interest
    
    
    12,621
    
    
    
    4,192Equity in earnings of affiliates
    
    
    445
    
    
    
    224Minority interest
    
    
    (678
    )
    
    
    (546
    )Income from continuing operations
    
    
    12,388
    
    
    
    3,870Loss from discontinued operations
    
    
    
    
    
    
    (979
    )Net income
    
    
    12,388
    
    
    
    2,891Dividends on preferred stock
    
    
    (456
    )
    
    
    (456
    )Net income available to common stockholders
    
    $
    11,932
    
    
    $
    2,435Basic income per share:Income from continuing operations
    
    $
    0.12
    
    
    $
    0.04Discontinued operations
    
    
    
    
    
    
    (0.01
    )Dividends on preferred stock
    
    
    
    
    
    
    Basic income per share:
    
    $
    0.12
    
    
    $
    0.03Diluted income per share:Income from continuing operations
    
    $
    0.12
    
    
    $
    0.04Discontinued operations
    
    
    
    
    
    
    (0.01
    )Dividends on preferred stock
    
    
    
    
    
    
    Diluted income per share:
    
    $
    0.12
    
    
    $
    0.03Average number of common shares outstanding:Basic
    
    
    97,045,279
    
    
    
    96,857,748Diluted
    
    
    97,090,538
    
    
    
    96,949,853
  4




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CKX, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2008
    
    
    June 30, 2007(In thousands, except share andper share information)Revenue
    
    $
    153,747
    
    
    $
    121,929Operating expenses:Cost of sales
    
    
    50,381
    
    
    
    36,469Selling, general and administrative expenses
    
    
    37,160
    
    
    
    40,466Corporate expenses
    
    
    8,301
    
    
    
    8,681Depreciation and amortization
    
    
    11,089
    
    
    
    11,098Merger and distribution-related costs
    
    
    1,683
    
    
    
    2,761Other (income) expense
    
    
    (159
    )
    
    
    365Total operating expenses
    
    
    108,455
    
    
    
    99,840Operating income
    
    
    45,292
    
    
    
    22,089Interest income
    
    
    1,105
    
    
    
    543Interest expense
    
    
    (3,041
    )
    
    
    (1,339
    )Income before income taxes, equity in earnings of affiliates and minority interest
    
    
    43,356
    
    
    
    21,293Income tax expense
    
    
    19,880
    
    
    
    13,914Income before equity in earnings of affiliates and minority interest
    
    
    23,476
    
    
    
    7,379Equity in earnings of affiliates
    
    
    1,657
    
    
    
    601Minority interest
    
    
    (1,075
    )
    
    
    (754
    )Income from continuing operations
    
    
    24,058
    
    
    
    7,226Loss from discontinued operations
    
    
    
    
    
    
    (979
    )Net income
    
    
    24,058
    
    
    
    6,247Dividends on preferred stock
    
    
    (912
    )
    
    
    (912
    )Net income available to common stockholders
    
    $
    23,146
    
    
    $
    5,335Basic income per share:Income from continuing operations
    
    $
    0.24
    
    
    $
    0.07Discontinued operations
    
    
    
    
    
    
    (0.01
    )Dividends on preferred stock
    
    
    
    
    
    
    Basic income per share:
    
    $
    0.24
    
    
    $
    0.06Diluted income per share:Income from continuing operations
    
    $
    0.24
    
    
    $
    0.07Discontinued operations
    
    
    
    
    
    
    (0.01
    )Dividends on preferred stock
    
    
    
    
    
    
    Diluted income per share:
    
    $
    0.24
    
    
    $
    0.06Average number of common shares outstanding:Basic
    
    
    97,036,692
    
    
    
    96,804,899Diluted
    
    
    97,085,647
    
    
    
    96,957,605
  5




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CKX, INC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007(In thousands)Cash flows from operating activities:Net income
    
    $
    24,058
    
    
    $
    6,247Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    11,089
    
    
    
    11,098Impact on cash of discontinued operations
    
    
    
    
    
    
    979Unrealized
foreign currency gains and losses
    
    
    (72
    )
    
    
    365Share-based payments
    
    
    1,124
    
    
    
    654Equity in earnings of affiliates, net of cash received
    
    
    (474
    )
    
    
    147Deferred income taxes
    
    
    (857
    )
    
    
    (2,791
    )Non-cash interest expense
    
    
    331
    
    
    
    569Provision for inventory and accounts receivable allowance
    
    
    (34
    )
    
    
    361Minority interest
    
    
    1,075
    
    
    
    754Changes in operating assets and liabilities:Receivables
    
    
    (40,805
    )
    
    
    (25,658
    )Inventory
    
    
    (306
    )
    
    
    (156
    )Prepaid expenses
    
    
    (1,072
    )
    
    
    (1,129
    )Prepaid income taxes
    
    
    
    
    
    
    7,014Other assets
    
    
    4,470
    
    
    
    (3,576
    )Accounts payable and accrued expenses
    
    
    9,053
    
    
    
    10,857Deferred revenue
    
    
    11,326
    
    
    
    772Income taxes payable
    
    
    8,981
    
    
    
    8,417Other
    
    
    (16
    )
    
    
    (66
    )Net cash provided by operating activities
    
    
    27,871
    
    
    
    14,858Cash flows from investing activities:Purchases of property and equipment
    
    
    (3,990
    )
    
    
    (9,050
    )Transaction costs related to acquisition of FXLR
    
    
    
    
    
    
    (306
    )Net cash used in investing activities
    
    
    (3,990
    )
    
    
    (9,356
    )Cash flows from financing activities:Borrowings under revolving credit facility for acquisition of FXLR
    
    
    
    
    
    
    100,000Debt issuance costs for amending the revolving credit facility
    
    
    
    
    
    
    (92
    )Exercise of warrants
    
    
    
    
    
    
    243Distributions to minority interest shareholders
    
    
    (850
    )
    
    
    (900
    )Principal payments on debt
    
    
    (526
    )
    
    
    (613
    )Dividends paid on preferred stock
    
    
    (912
    )
    
    
    (912
    )Net cash (used in) provided by financing activities
    
    
    (2,288
    )
    
    
    97,726Effect of exchange rate changes on cash
    
    
    (32
    )
    
    
    600Net increase in cash and equivalents
    
    
    21,561
    
    
    
    103,828Cash and cash equivalents  beginning of period
    
    
    50,947
    
    
    
    36,610Cash and cash equivalents  end of period
    
    $
    72,508
    
    
    $
    140,438Supplemental cash flow data:Cash paid during the period for:Interest
    
    $
    2,636
    
    
    $
    785Income taxes
    
    
    11,736
    
    
    
    1,170
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Supplemental Cash Flow Information
 The Company had the following non-cash investing and financing activities in the six months
ended June 30, 2008 (in thousands):Distribution of final 2% ownership interest in FX Real Estate and Entertainment Inc.
    
    $
    6,175Accrued but unpaid Series B Convertible Preferred Stock Dividends
    
    
    456The Company had the following non-cash investing and financing activities in the six months
ended June 30, 2007 (in thousands):Accrued but unpaid Series B Convertible Preferred Stock Dividends
    
    $
    456Dividend of 50% of CKXs interests in FX Luxury Realty LLC to the Distribution Trusts (as defined)
    
    
    50,339
  7




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##### Table of Contents



CKX, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
 1.  Overview
 General
 IDOLS American Idol IDOLS American Idol
  2.  Merger Agreement
   
    
    19X will pay each CKX shareholder $12.00 per share in cash;
    
    The outside deadline for closing the transaction is October 31, 2008; and
    
    Stockholders holding at least 73% of the Companys outstanding shares must vote in
favor of the deal for the deal to be approved.
  8




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##### Table of Contents



Affiliated Elements of Transaction
  3.  Transactions Involving FX Real Estate and Entertainment Inc. and FX Luxury Realty, LLC
   9




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##### Table of Contents



Investments in FX Luxury Realty and FX Real Estate and Entertainment Inc. and Distributions to CKX
Stockholders
       10




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##### Table of Contents



FXRE Financial Condition
   Accounting for the Investment and Distributions
 Accounting for Non-monetary Transactions Accounting for Impairment or Disposal of Long-Lived Assets
 License Agreements
      11




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##### Table of Contents



Discontinued Operations
 Accounting for Non-monetary Transactions, Accounting for Impairment or Disposal of Long-Lived
Assets
 Period fromJune 1, 2007 toJune 30, 2007Revenue
    
    $
    Total costs and expenses, net of minority interest share
    
    
    1,481Equity in losses of unconsolidated subsidiaries
    
    
    (2,460
    )Income taxes
    
    
    Loss from discontinued operations, net of income taxes
    
    $
    (979
    )
 CKX Loan to FXRE
  Shared Services Agreement
     12




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4.  Accounting Policies
  Impact of Recently Issued Accounting Standards
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations Noncontrolling Interests in Consolidated Financial Statements
 5.  Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    12,388
    
    
    $
    2,891
    
    
    $
    24,058
    
    
    $
    6,247Other comprehensive income:Unrealized loss on marketable securities
    
    
    
    
    
    
    (142
    )
    
    
    
    
    
    
    (142
    )Foreign currency translation adjustments
    
    
    317
    
    
    
    4,710
    
    
    
    238
    
    
    
    5,111Comprehensive income
    
    $
    12,705
    
    
    $
    7,459
    
    
    $
    24,296
    
    
    $
    11,216
  13




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6.  Earnings Per Share/Common Shares Outstanding
 Earnings Per Share
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Basic common shares
outstanding
(including
redeemable
restricted common
stock)
    
    
    97,045,279
    
    
    
    96,857,748
    
    
    
    97,036,692
    
    
    
    96,804,899Incremental shares
for assumed
exercise of stock
options (and
warrants in 2007)
    
    
    45,259
    
    
    
    92,105
    
    
    
    48,955
    
    
    
    152,706Diluted common
shares outstanding
(including
redeemable
restricted common
stock)
    
    
    97,090,538
    
    
    
    96,949,853
    
    
    
    97,085,647
    
    
    
    96,957,605
 7.  Intangible Assets and Goodwill
  Weighted
    
    
    Gross
    
    
    Accumulated
    
    
    NetAverage
    
    
    Carrying
    
    
    Amortization
    
    
    CarryingRemaining
    
    
    Amount
    
    
    
    
    
    
    AmountUseful LifeDefinite Lived Intangible Assets:Presley record, music publishing, film and video rights
    
    11.6 years
    
    $
    28,900
    
    
    $
    (6,382
    )
    
    $
    22,518Other Presley intangible assets
    
    13.7 years
    
    
    13,622
    
    
    
    (4,627
    )
    
    
    8,99519 Entertainment IDOLS television programming, merchandising and sponsorship
relationships
    
    3.8 years
    
    
    80,798
    
    
    
    (36,768
    )
    
    
    44,03019 Entertainment other artist management, recording, merchandising, and
sponsorship relationships
    
    1.0 years
    
    
    16,881
    
    
    
    (13,032
    )
    
    
    3,849MBST artist contracts, profit participation rights and other intangible assets
    
    3.5 years
    
    
    4,270
    
    
    
    (2,166
    )
    
    
    2,104$
    144,471
    
    
    $
    (62,975
    )
    
    $
    81,496
  Balance atJune 30,2008Indefinite Lived Intangible Assets:Trademarks, publicity rights and other intellectual property
    
    $
    90,764
 14




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Gross
    
    
    Accumulated
    
    
    NetCarrying
    
    
    Amortization
    
    
    CarryingAmount
    
    
    
    
    
    
    AmountDefinite Lived Intangible Assets:Presley record, music publishing, film and video rights
    
    $
    28,900
    
    
    $
    (5,408
    )
    
    $
    23,492Other Presley intangible assets
    
    
    13,622
    
    
    
    (3,990
    )
    
    
    9,63219 Entertainment IDOLS television programming, merchandising and sponsorship
relationships
    
    
    80,879
    
    
    
    (30,930
    )
    
    
    49,94919 Entertainment other artist management, recording, merchandising, and
sponsorship relationships
    
    
    16,898
    
    
    
    (11,347
    )
    
    
    5,551MBST artist contracts, profit participation rights and other intangible assets
    
    
    4,270
    
    
    
    (1,786
    )
    
    
    2,484$
    144,569
    
    
    $
    (53,461
    )
    
    $
    91,108
 Balance atDecember 31,2007Indefinite Lived Intangible Assets:Trademarks, publicity rights and other intellectual property
    
    $
    90,764
  For the six months ending December 31, 2008
    
    $
    9,100For the years ending December 31,
2009
    
    
    16,9002010
    
    
    16,1002011
    
    
    14,9002012
    
    
    5,700
  2008ForeignBalance at
    
    
    Currency
    
    
    
    
    
    
    Balance atDecember 31,
    
    
    Translation
    
    
    Other
    
    
    June 30,2007
    
    
    Adjustment
    
    
    Adjustments
    
    
    2008Presley royalties and licensing
    
    $
    14,413
    
    
    $
    
    
    
    $
    
    
    
    $
    14,413Presley Graceland operations
    
    
    10,166
    
    
    
    
    
    
    
    
    
    
    
    10,16619 Entertainment
    
    
    121,328
    
    
    
    (121
    )
    
    
    (630
    )
    
    
    120,577MBST
    
    
    10,097
    
    
    
    
    
    
    
    
    
    
    
    10,097Ali Business
    
    
    4,450
    
    
    
    
    
    
    
    
    
    
    
    4,450Total
    
    $
    160,454
    
    
    $
    (121
    )
    
    $
    (630
    )
    
    $
    159,703
  8.  Debt
  15




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9.  Stockholders Equity
   10.  Income Taxes
        16




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Accounting for Uncertainty in Income Taxes
    11.  Commitments and Contingencies
 Consolidation of
Variable Interest Entities
       17




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12. Segment Information
   Presley BusinessRoyalties and
    
    
    Graceland
    
    
    19
    
    
    
    
    
    
    CorporateSegment Information
    
    Licensing
    
    
    Operations
    
    
    Entertainment
    
    
    Ali Business
    
    
    and Other
    
    
    Total(Amounts in thousands)Three months ended June 30, 2008:Revenue
    
    $
    4,080
    
    
    $
    10,597
    
    
    $
    71,379
    
    
    $
    1,350
    
    
    $
    1,104
    
    
    $
    88,510Operating income (loss)
    
    $
    2,057
    
    
    $
    2,351
    
    
    $
    25,745
    
    
    $
    323
    
    
    $
    (5,243
    )
    
    $
    25,233Depreciation and amortization
    
    $
    646
    
    
    $
    563
    
    
    $
    4,003
    
    
    $
    15
    
    
    $
    230
    
    
    $
    5,457OIBDAN
    
    $
    2,711
    
    
    $
    2,937
    
    
    $
    30,320
    
    
    $
    342
    
    
    $
    (4,810
    )
    
    $
    31,500Three months ended June 30, 2007:Revenue
    
    $
    5,333
    
    
    $
    10,831
    
    
    $
    52,628
    
    
    $
    1,920
    
    
    $
    1,619
    
    
    $
    72,331Operating income (loss)
    
    $
    1,961
    
    
    $
    1,681
    
    
    $
    16,151
    
    
    $
    688
    
    
    $
    (6,514
    )
    
    $
    13,967Depreciation and amortization
    
    $
    646
    
    
    $
    516
    
    
    $
    4,122
    
    
    $
    13
    
    
    $
    229
    
    
    $
    5,526OIBDAN
    
    $
    2,616
    
    
    $
    2,215
    
    
    $
    20,337
    
    
    $
    705
    
    
    $
    (6,022
    )
    
    $
    19,851Six months ended June 30, 2008:Revenue
    
    $
    8,128
    
    
    $
    16,910
    
    
    $
    124,365
    
    
    $
    2,466
    
    
    $
    1,878
    
    
    $
    153,747Operating income (loss)
    
    $
    4,096
    
    
    $
    1,276
    
    
    $
    50,539
    
    
    $
    597
    
    
    $
    (11,216
    )
    
    $
    45,292Depreciation and amortization
    
    $
    1,291
    
    
    $
    1,115
    
    
    $
    8,193
    
    
    $
    30
    
    
    $
    460
    
    
    $
    11,089OIBDAN
    
    $
    5,406
    
    
    $
    2,431
    
    
    $
    59,371
    
    
    $
    635
    
    
    $
    (10,338
    )
    
    $
    57,505Six months ended June 30, 2007:Revenue
    
    $
    9,092
    
    
    $
    16,993
    
    
    $
    90,034
    
    
    $
    3,293
    
    
    $
    2,517
    
    
    $
    121,929Operating income (loss)
    
    $
    2,592
    
    
    $
    426
    
    
    $
    29,793
    
    
    $
    1,404
    
    
    $
    (12,126
    )
    
    $
    22,089Depreciation and amortization
    
    $
    1,291
    
    
    $
    1,018
    
    
    $
    8,311
    
    
    $
    22
    
    
    $
    456
    
    
    $
    11,098OIBDAN
    
    $
    3,899
    
    
    $
    1,473
    
    
    $
    38,223
    
    
    $
    1,434
    
    
    $
    (11,188
    )
    
    $
    33,841Asset Information:Segment assets at June 30, 2008
    
    $
    85,457
    
    
    $
    74,845
    
    
    $
    236,740
    
    
    $
    59,414
    
    
    $
    114,518
    
    
    $
    570,974Segment assets at December 31, 2007
    
    $
    83,324
    
    
    $
    72,846
    
    
    $
    230,696
    
    
    $
    60,053
    
    
    $
    78,536
    
    
    $
    525,455
 18




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Amounts in thousands)OIBDAN
    
    $
    31,500
    
    
    $
    19,851
    
    
    $
    57,505
    
    
    $
    33,841Depreciation and amortization
    
    
    (5,457
    )
    
    
    (5,526
    )
    
    
    (11,089
    )
    
    
    (11,098
    )Non-cash compensation
    
    
    (810
    )
    
    
    (358
    )
    
    
    (1,124
    )
    
    
    (654
    )Interest income
    
    
    327
    
    
    
    253
    
    
    
    1,105
    
    
    
    543Interest expense
    
    
    (1,424
    )
    
    
    (923
    )
    
    
    (3,041
    )
    
    
    (1,339
    )Equity in earnings of affiliates
    
    
    445
    
    
    
    224
    
    
    
    1,657
    
    
    
    601Income tax expense
    
    
    (11,515
    )
    
    
    (9,105
    )
    
    
    (19,880
    )
    
    
    (13,914
    )Minority interest
    
    
    (678
    )
    
    
    (546
    )
    
    
    (1,075
    )
    
    
    (754
    )Discontinued operations
    
    
    
    
    
    
    (979
    )
    
    
    
    
    
    
    (979
    )Net income
    
    $
    12,388
    
    
    $
    2,891
    
    
    $
    24,058
    
    
    $
    6,247
 13. Related Party Transactions
   19




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##### Table of Contents



FORWARD LOOKING STATEMENTS
 In addition to historical information, this Form 10-Q (this Quarterly Report) contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements are those that predict or describe future events or trends and that do not relate solely
to historical matters. You can generally identify forward-looking statements as statements
containing the words believe, expect, will, anticipate, intend, estimate, project,
assume or other similar expressions, although not all forward-looking statements contain these
identifying words. All statements in this Quarterly Report regarding our future strategy, future
operations, projected financial position, estimated future revenue, projected costs, future
prospects, and results that might be obtained by pursuing managements current plans and objectives
are forward-looking statements. You should not place undue reliance on our forward-looking
statements because the matters they describe are subject to known and unknown risks, uncertainties
and other unpredictable factors, many of which are beyond our control. Our forward-looking
statements are based on the information currently available to us and speak only as of the date on
which this Quarterly Report was filed with the Securities and Exchange Commission (SEC). We
expressly disclaim any obligation to issue any updates or revisions to our forward-looking
statements, even if subsequent events cause our expectations to change regarding the matters
discussed in those statements. Over time, our actual results, performance or achievements will
likely differ from the anticipated results, performance or achievements that are expressed or
implied by our forward-looking statements, and such difference might be significant and materially
adverse to our stockholders.
 20




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Managements discussion and analysis of financial condition and results of operations should
be read in conjunction with the historical financial statements and footnotes of the registrant
included in its Annual Report on Form 10-K for the year ended December 31, 2007. Our future results
of operations may change materially from the historical results of operations reflected in our
historical financial statements.
 General
 IDOLS American Idol IDOLS
  Merger Agreement
  Description of Merger Offer
   
    
    19X will pay each CKX shareholder $12.00 per share in cash;
    
    The outside deadline for closing the transaction is October 31, 2008; and
    
    Stockholders holding at least 73% of the Companys outstanding shares must vote in
favor of the deal for the deal to be approved.
  21




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##### Table of Contents



The Failure to Complete the Merger Could Adversely Affect the Business, Prospects,
Results of Operations or Stock Price of the Company.
 Affiliated Elements of Transaction
  22




---



##### Table of Contents



Approval Process
   Transactions Involving FX Real Estate and Entertainment Inc. and FX Luxury Realty, LLC
 Investments in FX Luxury Realty and FX Real Estate and Entertainment Inc. and Distributions to CKX
Stockholders
      23




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##### Table of Contents



FXRE
Financial Condition
   Accounting for the Investment and Distributions
  License Agreements
     24




---



##### Table of Contents



CKX Loan to FXRE
  Affiliated Elements of Transactions
   Approval Process
  Shared Services Agreement
    25




---



##### Table of Contents



Presley Business
       19 Entertainment
  26




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##### Table of Contents



IDOLS IDOLS IDOLS IDOLS IDOLS IDOLS
 IDOLS American Idol 1 American Idol 4 American Idol 4 IDOLS
 American Idol IDOLS
 American Idol American Idol American Idol American Idol American Idol
 American Idol So You Think You Can Dance IDOLS So You Think You Can Dance
  Ali Business
   27




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Other
    Use of OIBDAN
   Consolidated Operating Results Three Months Ended June 30, 2008
 Compared to Three Months Ended June 30, 2007
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    Variance(In thousands)Revenue
    
    $
    88,510
    
    
    $
    72,331
    
    
    $
    16,179Operating expenses
    
    
    63,277
    
    
    
    58,364
    
    
    
    4,913Operating income
    
    
    25,233
    
    
    
    13,967
    
    
    
    11,266Income tax expense
    
    
    11,515
    
    
    
    9,105
    
    
    
    2,410Net income
    
    
    12,388
    
    
    
    2,891
    
    
    
    9,497Operating income
    
    $
    25,233
    
    
    $
    13,967
    
    
    $
    11,266Depreciation and amortization
    
    
    5,457
    
    
    
    5,526
    
    
    
    (69
    )Non-cash compensation
    
    
    810
    
    
    
    358
    
    
    
    452OIBDAN
    
    $
    31,500
    
    
    $
    19,851
    
    
    $
    11,649
 American Idol, So You Think You Can Dance,
 28




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##### Table of Contents



Presley Business  Royalties and Licensing
  Three Months
    
    
    Three MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    Variance(In thousands)Revenue
    
    $
    4,080
    
    
    $
    5,333
    
    
    $
    (1,253
    )Cost of sales
    
    
    (132
    )
    
    
    (547
    )
    
    
    415Selling, general and administrative expense, excluding non-cash compensation
    
    
    (1,237
    )
    
    
    (2,170
    )
    
    
    933OIBDAN
    
    $
    2,711
    
    
    $
    2,616
    
    
    $
    95OIBDAN
    
    $
    2,711
    
    
    $
    2,616
    
    
    $
    95Depreciation and amortization
    
    
    (646
    )
    
    
    (646
    )
    
    
    Non-cash compensation
    
    
    (8
    )
    
    
    (9
    )
    
    
    1Operating income
    
    $
    2,057
    
    
    $
    1,961
    
    
    $
    96
  Presley Business  Graceland Operations
  Three Months
    
    
    Three MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    Variance(In thousands)Revenue
    
    $
    10,597
    
    
    $
    10,831
    
    
    $
    (234
    )Cost of sales
    
    
    (1,633
    )
    
    
    (1,783
    )
    
    
    150Selling, general and administrative expense, excluding non-cash compensation
    
    
    (6,027
    )
    
    
    (6,833
    )
    
    
    806OIBDAN
    
    $
    2,937
    
    
    $
    2,215
    
    
    $
    722OIBDAN
    
    $
    2,937
    
    
    $
    2,215
    
    
    $
    722Depreciation and amortization
    
    
    (563
    )
    
    
    (516
    )
    
    
    (47
    )Non-cash compensation
    
    
    (23
    )
    
    
    (18
    )
    
    
    (5
    )Operating income
    
    $
    2,351
    
    
    $
    1,681
    
    
    $
    670
  29




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##### Table of Contents



19 Entertainment
  Three Months Ended June 30, 2008
    
    Revenue
    
    
    Cost of Sales(In thousands)American Idol(including television production, foreign syndication, sponsorship,
merchandise and touring)
    
    $
    37,109
    
    
    $
    (5,162
    )
    
    $
    31,947Other IDOLStelevision programs (including license fees and sponsorship)
    
    
    2,834
    
    
    
    (34
    )
    
    
    2,800So You Think You Can Danceand other television productions
    
    
    22,226
    
    
    
    (18,757
    )
    
    
    3,469Recorded music, management clients and other
    
    
    9,210
    
    
    
    (7,000
    )
    
    
    2,210$
    71,379
    
    
    $
    (30,953
    )
    
    $
    40,426Selling, general and administrative expenses and other costs, excluding non-cash compensation
    
    
    
    
    
    
    
    
    
    
    (10,106
    )OIBDAN
    
    
    
    
    
    
    
    
    
    $
    30,320OIBDAN
    
    
    
    
    
    
    
    
    
    $
    30,320Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (4,003
    )Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    (572
    )Operating income
    
    
    
    
    
    
    
    
    
    $
    25,745
 Three Months Ended June 30, 2007
    
    Revenue
    
    
    Cost of Sales(In thousands)American Idol(including television production, foreign syndication, sponsorship,
merchandise and touring)
    
    $
    27,169
    
    
    $
    (4,081
    )
    
    $
    23,088Other IDOLStelevision programs (including license fees and sponsorship)
    
    
    2,518
    
    
    
    (67
    )
    
    
    2,451So You Think You Can Danceand other television productions
    
    
    18,742
    
    
    
    (15,461
    )
    
    
    3,281Recorded music, management clients and other
    
    
    4,199
    
    
    
    (2,037
    )
    
    
    2,162$
    52,628
    
    
    $
    (21,646
    )
    
    $
    30,982Selling, general and administrative expenses and other costs, excluding non-cash compensation
    
    
    
    
    
    
    
    
    
    
    (10,645
    )OIBDAN
    
    
    
    
    
    
    
    
    
    $
    20,337OIBDAN
    
    
    
    
    
    
    
    
    
    $
    20,337Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (4,122
    )Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    (64
    )Operating income
    
    
    
    
    
    
    
    
    
    $
    16,151
  30




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American Idol So You Think You Can Dance
 American Idol 7 American Idol 6 American Idol
 IDOLS So You Think You Can Dance
 American Idol American Idol
 American Idol So You Think You Can Dance,
 Ali Business
  Corporate and Other
 MBST
  Corporate Expenses and Other Costs
   Interest Income/Expense
  31




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Other Costs
  Income Taxes
      Accounting for Uncertainty in Income Taxes
    Equity in Earnings of Affiliates
  32




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Minority Interest
  Consolidated Operating Results Six Months Ended June 30, 2008
 Compared to Six Months Ended June 30, 2007
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    Variance(In thousands)Revenue
    
    $
    153,747
    
    
    $
    121,929
    
    
    $
    31,818Operating expenses
    
    
    108,455
    
    
    
    99,840
    
    
    
    8,615Operating income
    
    
    45,292
    
    
    
    22,089
    
    
    
    23,203Income tax expense
    
    
    19,880
    
    
    
    13,914
    
    
    
    5,966Net income
    
    
    24,058
    
    
    
    6,247
    
    
    
    17,811Operating income
    
    $
    45,292
    
    
    $
    22,089
    
    
    $
    23,203Depreciation and amortization
    
    
    11,089
    
    
    
    11,098
    
    
    
    (9
    )Non-cash compensation
    
    
    1,124
    
    
    
    654
    
    
    
    470OIBDAN
    
    $
    57,505
    
    
    $
    33,841
    
    
    $
    23,664
 American Idol, So
You Think You Can Dance,
 Presley Business  Royalties and Licensing
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    Variance(In thousands)Revenue
    
    $
    8,128
    
    
    $
    9,092
    
    
    $
    (964
    )Cost of sales
    
    
    (312
    )
    
    
    (864
    )
    
    
    552Selling, general and administrative expense, excluding non-cash compensation
    
    
    (2,410
    )
    
    
    (4,329
    )
    
    
    1,919OIBDAN
    
    $
    5,406
    
    
    $
    3,899
    
    
    $
    1,507OIBDAN
    
    $
    5,406
    
    
    $
    3,899
    
    
    $
    1,507Depreciation and amortization
    
    
    (1,291
    )
    
    
    (1,291
    )
    
    
    Non-cash compensation
    
    
    (19
    )
    
    
    (16
    )
    
    
    (3
    )Operating income
    
    $
    4,096
    
    
    $
    2,592
    
    
    $
    1,504
  33




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Presley Business  Graceland Operations
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    Variance(In thousands)Revenue
    
    $
    16,910
    
    
    $
    16,993
    
    
    $
    (83
    )Cost of sales
    
    
    (2,568
    )
    
    
    (2,843
    )
    
    
    275Selling, general and administrative expense, excluding non-cash compensation
    
    
    (11,911
    )
    
    
    (12,677
    )
    
    
    766OIBDAN
    
    $
    2,431
    
    
    $
    1,473
    
    
    $
    958OIBDAN
    
    $
    2,431
    
    
    $
    1,473
    
    
    $
    958Depreciation and amortization
    
    
    (1,115
    )
    
    
    (1,018
    )
    
    
    (97
    )Non-cash compensation
    
    
    (40
    )
    
    
    (29
    )
    
    
    (11
    )Operating income
    
    $
    1,276
    
    
    $
    426
    
    
    $
    850
   34




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19 Entertainment
  Six Months Ended June 30, 2008
    
    Revenue
    
    
    Cost of Sales(In thousands)American Idol(including television production, foreign syndication, sponsorship,
merchandise and touring)
    
    $
    65,873
    
    
    $
    (9,924
    )
    
    $
    55,949Other IDOLStelevision programs (including license fees and sponsorship)
    
    
    7,179
    
    
    
    (245
    )
    
    
    6,934So You Think You Can Danceand other television productions
    
    
    22,537
    
    
    
    (20,748
    )
    
    
    1,789Recorded music, management clients and other
    
    
    28,776
    
    
    
    (15,643
    )
    
    
    13,133$
    124,365
    
    
    $
    (46,560
    )
    
    $
    77,805Selling, general and administrative expenses and other costs, excluding non-cash compensation
    
    
    
    
    
    
    
    
    
    
    (18,434
    )OIBDAN
    
    
    
    
    
    
    
    
    
    $
    59,371OIBDAN
    
    
    
    
    
    
    
    
    
    $
    59,371Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (8,193
    )Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    (639
    )Operating income
    
    
    
    
    
    
    
    
    
    $
    50,539
 Six Months Ended June 30, 2007
    
    Revenue
    
    
    Cost of Sales(In thousands)American Idol(including television production, foreign syndication, sponsorship,
merchandise and touring)
    
    $
    47,371
    
    
    $
    (9,590
    )
    
    $
    37,781Other IDOLStelevision programs (including license fees and sponsorship)
    
    
    6,357
    
    
    
    (146
    )
    
    
    6,211So You Think You Can Danceand other television productions
    
    
    19,094
    
    
    
    (16,158
    )
    
    
    2,936Recorded music, management clients and other
    
    
    17,212
    
    
    
    (5,782
    )
    
    
    11,430$
    90,034
    
    
    $
    (31,676
    )
    
    $
    58,358Selling, general and administrative expenses and other costs, excluding non-cash compensation
    
    
    
    
    
    
    
    
    
    
    (20,135
    )OIBDAN
    
    
    
    
    
    
    
    
    
    $
    38,223OIBDAN
    
    
    
    
    
    
    
    
    
    $
    38,223Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (8,311
    )Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    (119
    )Operating income
    
    
    
    
    
    
    
    
    
    $
    29,793
  American Idol 7 American Idol 6 American Idol
 IDOLS So You Think You Can Dance
 American Idol American Idol
 35




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##### Table of Contents



So You Think You Can Dance,
 Ali Business
  Corporate and Other
 MBST
  Corporate Expenses and Other Costs
   Interest Income/Expense
  Other Costs
  36




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##### Table of Contents



Income Taxes
      Accounting for Uncertainty in Income Taxes
    Equity in Earnings of Affiliates
  Minority Interest
  2008
Financial Outlook
 th
 American Idol
 Liquidity and Capital Resources
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##### Table of Contents



Cash Flow for the six months ended June 30, 2008 and 2007
 Operating Activities
   Investing Activities
   Financing Activities
  st
 38




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##### Table of Contents



Uses of Capital
   Capital Expenditures
    Future Acquisitions
  Dividends
   Commitments and Contingencies
  39




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##### Table of Contents



Inflation
  Critical Accounting Policies
  Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations Noncontrolling Interests in Consolidated Financial Statements
 Off Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
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##### Table of Contents



Interest Rate Risk
    Foreign Exchange Risk
    19 Entertainment Put Option
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls over Financial Reporting
  
 Part II  Other Information
 
 Item 1. Legal Proceedings
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##### Table of Contents



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##### Table of Contents



Item 6. Exhibits
 ExhibitNo.
    
    Description2.1
    
    Amendment No. 4, dated May 27, 2008, to the Agreement and Plan of Merger,
dated as of June 1, 2007 and amended as of August 1, 2007, September 27,
2007 and January 23, 2008, by and among 19X, Inc., 19X Acquisition Corp.
and CKX, Inc. (Previously filed as Exhibit 2.1 to the Form 8-K filed May
29, 2008, and incorporated herein by reference.)2.2
    
    Amendment No. 3, dated May 27, 2008, to the Management Cooperation
Agreement, dated as of June 1, 2007 and amended as of July 18, 2007 and
September 27, 2007, by and among CKX, Inc. and each of the stockholders
set forth on Schedule I thereto. (Previously filed as Exhibit 2.2 to the
Form 8-K filed May 29, 2008, and incorporated herein by reference.)31.1
    
    Certification of Principal Executive Officer (Filed herewith).31.2
    
    Certification of Principal Financial Officer (Filed herewith).32.1
    
    Section 1350 Certification of Principal Executive Officer (Filed herewith).32.2
    
    Section 1350 Certification of Principal Financial Officer (Filed herewith).
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##### Table of Contents



SIGNATURES
  CKX, Inc.BY:
    
    /s/ Robert F.X. SillermanName:
    
    Robert F.X. SillermanChief Executive Officer andChairman of the BoardBY:
    
    /s/ Thomas P. BensonName:
    
    Thomas P. BensonChief Financial Officer, ExecutiveVice President and Treasurer
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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNo.
    
    Description31.1
    
    Certification of Principal Executive Officer.31.2
    
    Certification of Principal Financial Officer.32.1
    
    Section 1350 Certification of Principal Executive Officer.32.2
    
    Section 1350 Certification of Principal Financial Officer.
 45