Syndication Business in the TV Industry — Keeping old shows profitable!
Introduction
Have you ever wondered why once a TV show becomes old, it is available on local networks almost 5 days a week? Or how do these old TV shows remain profitable? — The simple straightforward answer would be advertisement revenue but how does this industry works, In this blog, we’ll try to understand how the syndication business keeps the old shows profitable.
What is Syndication in the TV Industry?
Syndication is the process of leasing the right of broadcasting a show to multiple television stations without going through a broadcast network (which airs the show in multiple demographic areas from a centralized source). It is quite a common TV distribution method in the USA where a production company makes a show and leases its right of broadcasting to the TV stations. So in this case the production house is called a syndicator who is lending the show rights.
On getting a syndicated show, the TV station in contract with its affiliates broadcast the TV show on the same schedule. TV stations require local independent affiliates to broaden the geographical boundaries of broadcast.
How do they earn money?
Apart from broadcasting rights, the contract between the production house and the TV network can also include some x% age of advertisement slots as well. Rest (100-x)% age of advertisement slot right remains with the production house.
· Upfront Markets
Upfront market is once a year gathering around mid-may where syndicators and broadcasters meet advertisers for selling their advertisement slots for the upcoming season by showing commercial ratings and program ratings. Commercial ratings represent what percentage of the audience is watching commercials during the broadcast and program ratings represent what percentage of the audience is watching the program. This information gives insights to advertisers about the audience skew of the program and whether their product advertisement would make sense on that program’s schedule. For example, a cosmetic brand would prefer showing their ad on a program having a high number of female audiences of a certain age group. Some part of advertisement slots is reserved and later use for last-minute sales at higher prices during the ongoing syndicated show season.
The above image represents the flow of content and money between parties involved in the syndication business. Some of the shows that were initially released into syndication for loss become popular over the years thanks to re-runs and already popular shows continue to make money because of these re-runs and higher advertisement slot prices that depend on viewership.