The Kyle Phoenix Blog: What makes syndicated TV shows so profitable? Answered by Kyle Phoenix

What makes syndicated TV shows so profitable?

Kyle Phoenix, Writer and student & Instructor at Columbia University

SynFin syndication finance is broad but simple. There are two kinds, first run and repeat. TMZ is in syndication, it is a produced show that is then shopped around to markets/affiliates by their owners -parent company independently or as part of a package.

Acme Production says to Nebraska Channel Five Affiliate Station: I'll rent/lease TMZ to you.

500 episodes in 100 pack chunks, to air five days a week, so each pack will cover 20 weeks and you can freely repeat each 1, once, within the 20 week window.

A morning and late nite episode.

Then a rate is set, lower rate based on how many packs you purchase upfront.

Lets say $10k per episode, $5 million to be paid in ten payments over 100 weeks...weekly, monthly, generally within in 30-60 window because Acme might need that money to produce the episodes----Acme raised cash to cover 100 episodes but needs revenue for the additional 400.

The total 500 episodes might cost Acme $500 million so Nebraska, channel 5 is one of 220 affiliates we'll be selling to.

We still need to raise a total package of $500 mil , so that's at least 100 affiliates BUT some are part of a Network that might hold say 25-50 affiliates in its swath so there might be a manager for each affiliate but a regional manager who buys for an entire state, we don’t have to knock on 100-200 doors, maybe only two dozen.

There's an annual event in Vegas where everybody with a show, station/affiliate, network and stars meet to cluster fuck, schmooze and make deals.

There are about 250 TV affiliates in the US. (Think of them as “regions” of connected television stations.)

So in example one:

multiple buyers,
one product
and perhaps more stringent caveats in the contract on time,
allowable repeats,
non compete clauses with other Acme shows.
There's a massive board at Acme mapping the country essentially.
Sometimes Acme cares more for certain areas than not,

NY, La, Chicago, Florida for TMZ
but not maybe Idaho

(so while the profit might seem greater it might not be worth the trouble to try to get all 250 affiliate stations because Idaho maybe can't afford 500 episodes or the ratings are so low in that market for that kind of show that they'll be an incomplete purchase of maybe 200 episodes on a 500 episode contract but Acme just spent more on the show thinking another 3$ million was coming in. Better to go for ripe low hanging fruit in gold demographic areas first.)

The second kind is say:

Roseanne the TV show.
9 seasons,
190 episodes in the can for resale (pre 2018),
family friendly,
woman friendly,
sitcom,
can be repeated in multiple iterations. As much as four times a day on a channel or more.
So the station could have Roseanne weekends, 48 hours, close to a hundred episodes twice a month plus five times a week regularly.
You could damn near see her every day if the right package is purchased from Acme.

Everybody Gets Paid Differently Based Upon Their Mentors, Value and Knowledge of Deal Negotiation GOING IN

Now Roseanne herself says she gets about 10-20% of royalties because she was a comic with no TV syn fin experience or mentors.
Oprah got 50% per episode, divvied up with King World because Bill Cosby advised her to get an ownership deal of show...as an owner you now have to build or rent studio for production and pay for it out of your half but once you build or rent once, costs of operating level out.
Oprah had owner reinvests revenues from affiliates after paying off a four year loan to build studio.

Studio costs 30$ million.
Her show was in 230 affiliates around country ,
negotiated, delivered and distributed/monitored by King World.
So each is paying $2 million a year for 200 episodes with 1 repeat right as first run and say half for repeats generally.
King World gets $230 million a year,
Oprah gets $230 million a year.
Oprah then multiple times at contract re-up time re-negotiated with King World to get cash, stock to keep their distribution contract alive
she’s able to say instead of delivering 200 shows every year this go around it’s 190, next time 175, then 150, then 132.
In the beginning she had to deliver 220 episodes, by the end, 25 years later, 132---the proportional value of the shows went up and there was less cost each show by a factor of almost 50%.

Each has to maintain their operating systems and staffs but after say two years all debts are paid and $230 million+ is still coming in to just pay production/staff overhead.

Roseanne gets $23 million on the above deal, Oprah gets $230 million.

Roseanne might wear out its welcome for an affiliate in five years (1000 episode broadcast), Oprah can say every year: I'll have new fare, I won’t get stale for years...approximately 4800 episodes----hence her exclusive syndication deal with Discovery that includes new shows, half ownership etc.. She's literally her own producer and purchaser and profiteer with the Discovery deal and most importantly, she could streamline, sell facility in Chicago lease small space and still bring in company revenue without repeats of shows being the only revenue. (Which she has as of 2016 to 2018 and then the subsequent production/development deal with Apple)

Cosby gets upward of 25-50 % on all of his shows,
Seinfeld 25% (which is why Jerry Seinfeld is worth over $800 million and Larry David over $250 million)
Cheers cast/[producers 25–50%,
I Love Lucy Ball/Arnaz—50% at least if not more, because Lucille Ball, Mary Pickford and Oprah Winfrey are the only women so far to have owned their own production/TV/movie studios
Golden Girls their parent companies get about 25%. (the actors got their paychecks and would get residuals (depending on your number of episodes it could be as little as pennies or if the show is successful it could be a working/livable salary of $30-$75k a year---which is why The Cosby cast was upset at his show being pulled, it's like a form of a 401k for actors)---which is like a micro paycheck off of every time the episode they are in is replayed. It used to be that 10 airings of the episode were all you'd get residuals for but the Brady Bunch/Gilligan's Island cast changed that after their shows were hugely successful and in constant re-run syndication and they no longer got residuals.)

Actors get residuals on each episode but only for a certain amount of repeats per deal, DVDs (Roseanne gets 25% off of the DVD sales), Video on Demand downloads of 1 to 3%, maybe ten times, maybe perpetuity. Brady Bunch and Gilligan Island cast got it ten times then never again. So they were shut out of revenue stream within a few years, hence bad reunion movies. Same thing for Star Trek. Which is why actors want big salaries up front at first because they might only get paid once and then micro checks in five, ten years. All of their syn fin money might equal the same as that first paycheck but be re years apart.

It's a process that works best as an owner but you have to have the weight to get a piece as a production partner and not talent. And then the financing to open a production facility and absorb some of the upfront costs.

An excellent book on this---you know I gots to drop the knowledge receipts---is Jeff Ulin's The Business of Media Distribution, Second Edition: Monetizing Film, TV and Video Content in an Online World (American Film Market Presents)