When "Cheap" Determines "Success" Should Hollywood Be Worried?

Categories: Featured,TV Business

Written By

July 12th, 2010

ABC's Rookie Blue was renewed today by ABC, after only three episodes have aired. Even though its last airing drew just a 1.5 adults 18-49 rating. The only way that could possibly make economic sense for ABC is if the show was very cheap.

Indeed, Rookie Blue is reported to cost ABC just $350,000 an episode.

That is a fraction of the conventional wisdom per episode license fee to a broadcast network for a  "regular season" hour of a broadcast drama (~$1.5 million) or for a cable network drama ($1 million license fee). It's even less than an hour of The Jay Leno show was reported to cost NBC ($400,000).

At what point does "Hollywood" look at today's news and start to worry about their current business model?

By "Hollywood", I don't mean television networks, I mean production studios, directors, actors, and everybody else that's involved in the production of scripted broadcast television.

Rookie Blue isn't being priced way below cost to eek out a few more episodes for syndication like, for example, the now legendary 'Til Death. Rookie Blue is a show produced and priced to make money for its Canadian production company right now.

Looking at an example near and dear to the hearts of many of our readers (although by no means unique), Warner Brothers' Chuck drew about a 1.9 rating at the end of last season. I guarantee you Warner Brothers' license fee for Chuck to NBC is many times more than $350,000/ episode.

For 0.4 more ratings points...

When cheap unscripted reality was the only threat to scripted broadcast production, it could be easily demonized (and still is!), but what of the threat of cheap scripted shows to the "Hollywood" business model?

It's one thing to primarily compete on ratings (i.e. potential revenue), it's another entirely when cost becomes a major competitive factor.

What is the future result of this combination for broadcast television production?

  • 1.5 adults 18-49 rating
  • $350,000/hour license fee
  • renewal after three episodes
 
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