In today’s New York Times, Bill Carter lays out the economics for the production of television dramas, both for broadcast and cable networks, as well as their potential upsides.
Cable dramas are produced for less, licensed for less, have their costs shared almost immediately by international syndication, run on cable networks that get revenue for both subscriber fees and advertising revenue and so can exist on lower ratings. However, since they can’t typically be re-sold into syndication on other US cable networks, their upside is limited.
Broadcast dramas cost more, are licensed for more, but still have larger upfront shortfalls which have typically not been recouped until 88-100 episodes are produced and the show can be sold into US ad supported cable syndication. However, when that milestone is reached a veritable landslide of money can await.
Typical production cost: $2 million / one hour episode
Typical license fee from a cable network: $1 million / episode
Shortfall: $1 million / episode
Typical shortfall funding source: International syndication.
Typical production cost: $3 million / one hour episode
Typical license fee from a broadcast network: $1.5 million / episode
Shortfall: $1.5 million / episode
Typical shortfall funding source: Typically none initially. After 88+ episodes, US ad supported cable syndication (although NCIS:LA given as a notable early syndication exception).
Upside: Potentially huge.