TV Producers -- how do they make money?

Cafe Society
1

In this thread, I asked about how the production deal for The Apprentice works, but I think my actual question is more general than that.

Here’s what I understand about TV production (and, obviously, anyone who knows about this should start by correcting anything I get wrong):

A producer thinks up an idea for a show.

She puts together a pilot and shops it to the networks. (Let’s leave out syndication here for the moment.) Expenses for the pilot come out of her pocket or the pocket of her investors.

If the network wants the show, the producer agrees to make X number of episodes for $Y per episode. One source of income is just selling the show for its original run (a cost to the network that they cover by selling advertising).

The expenses for the show are borne by the producer. Said expenses for any show include crew salaries [camera people, writers, etc.], film, editing, etc. For scripted shows, there are expenses for sets, costumes, props, etc.; for unscripted (“reality”) shows, there will be travel costs, prize money, etc., and a different set of crew (logistics people setting out the race course, for instance).

These costs are covered by the producer and her investors; some are also covered by product placement payments (as discusssed in the link provided by SmackFu in the link; or, for instance, the “winning this leg of the race” prizes they have many weeks in TAR).

So the producers make their money by network payments to buy the show, and, possibly, product placement payments. Anything they clear after expenses is profit, and it goes into their pocket?

It seems so simple laid out like that …

Okay, so when there are multiple production companies listed on a show, as there often are – we should infer that the secondary companies (like Trump Productions for The Apprentice) are effectively investors who put up money and take a share of the profits?

(And why am I seeing Max Bialystock explaining this to Leo Bloom?)

2

I’ve got to imagine that the producers of Seinfeld, Frazier, Cheers, Will and Grace, etc., are making a fortune through syndication.

3

TV/Radio major in college speaking:

Yep, it’s syndication.

In most cases, the producer knows that he will be losing money at the outset. By the end of the series, with a little luck, he’s broken even or maybe even made a buck or two. But it’s in syndication (where there are no production costs) that the real money is made.

Nowadays, you have the added bonus of DVD sales as well.

Zev Steinhardt

4

As far as syndication (and DVD sales) are concerned – it is my understanding that the big bucks are there since the expenses have all been covered and it’s pure profit from that point out. (Other than office costs or whatever.)

What about shows that are direct to syndication, like Jeopardy! or Baywatch? Are there upfront costs that are significantly different in terms of distribution or whatever than selling a show to a network?

5

Game shows and talk shows are very cheap to produce.

For shows like Baywatch, direct syndication works because instead of selling to one customer (NBC, for example), you sell the show to different markets around the world. Lots of little fees add up. And, you can continue to syndicate even after you stop production.

Zev Steinhardt

6

Thanks, Zev – very helpful!