The transmission slots occupied by Fame Academy have to be filled by something. I would imagine that, relatively speaking, Fame Academy is cheaper to produce (particularly as - I assume - the competitors are donating their time) than many other types of programme.
What I dislike is the constant screaming and shouting from the audience (ditto Strictly Come Dancing). In fact, more than one Fame Academy contestant had said words to the effect, "I'm sorry I didn't sing well, but I couldn't hear myself because of the audience". I don't think that is sour grapes.