"American Idol" producer Nigel Lythgoe said on Friday that Lopez must decide whether to sign up as a judge for a third year or go off in a new direction.

In what some industry watchers saw as a negotiating ploy, Lopez sparked a media frenzy this week when she said she wasn't sure about renewing her contract, and sources close to her said she was "just too busy" to commit to the show. She made similar comments a year ago before signing a new one-year deal.

Lythgoe told reporters on a conference call Friday that all three "Idol" judges - Lopez, Steven Tyler and Randy Jackson - had busy careers outside the talent show, but he would be happy to have them all back.

He said "Idol's" long schedule of nationwide auditions, plus four months of live shows, was tough for everyone to juggle. Tyler's band Aerosmith has a new album coming out and a summer tour.

"It's got to fit everybody, and it's difficult. You have got to start making decisions. Do I want to carry on doing this? Do I want to go off and make movies?.

"She (Jennifer) has had a wonderful resurgence - world's most beautiful woman (for People magazine), two No. 1 records - she is doing brilliantly. She is going to have to balance everything up, as is Steven Tyler too. It's not just Jennifer," Lythgoe said.

For her part, Lopez denied media reports that she had already decided to quit the show after the current season ends on Wednesday.

"There is no truth to reports that say I am definitely leaving 'Idol'," the pop singer Tweeted on Thursday. "All I said was I haven't decided what I am doing next year."

Lopez, who was dropped by her record company in 2010, was named the most powerful celebrity in the world by Forbes this week, citing record sales, multiple product endorsements and social media buzz. She starts a North American tour in July and has three movies coming out in the next 12 months.

Speculation over her future has overshadowed next week's "Idol" finale, which pits 16-year-old ballad singer Jessica Sanchez against guitar-playing indie artist Phillip Phillips, 21.

Lythgoe on Friday called both finalists "very quiet people" off stage, but said they were very focused on winning the title and a guaranteed recording contract.

He said Sanchez, who was saved from elimination by the judges in April after getting the fewest votes from the public, "needs a song that is going to have a magic moment, that she hits that note, that she grabs us."

Phillips, who has an army of young female fans, should leave aside the mid-tempo, lesser known numbers he favors for next week's three-song performance finale in Los Angeles.

"He has got to go out there and do something that grabs that audience and makes them stand up and pick up a telephone at home and vote for him ... I think he needs to find a song that people know," Lythgoe said.

The two-part "American Idol" finale will be broadcast on Fox on May 22 and 23.

(Reporting By Jill Serjeant; Editing by Bob Tourtellotte)

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