TV Programming Business Model Has Dramatically Changed

The rise of cable networks generates increased original series production, but the decline in sitcom hits reduces station syndication prices

Big network hits such as “Lost,” “Desperate Housewives,” “CSI: Crime Scene Investigation” and “CSI: Miami” have delivered record licensing deals overseas. That success has not spread to lesser hits, however, spelling modest overall revenue growth for the entire industry.

SNL Kagan’s research reveals that the TV programming business model has dramatically changed since the beginning of this decade. International markets are again seeking out U.S. programming after years of looking to local sources for their content. Over the next 10 years, international revenues from television series could increase at an annual rate of about 4.3%. New revenue streams have also evolved and matured, including DVD, Internet and digital media such as iTunes.

This latest SNL Kagan report explores how cable networks have become an important distribution outlet for producers of TV shows. Cable networks are increasingly ordering scripted and reality series, while paying big license fees for off-network one-hour series such as the “CSI” franchise. The downside has been station syndication.

“Station syndication has lacked off-network sitcoms to choose from, because no big hits (like ‘Seinfeld’ or ‘Friends’) have developed recently,” says Deana Myers, senior analyst for SNL Kagan. “As a result, deal prices are not as high as they were five years ago, but on the flip side, we are seeing much higher prices on secondary cycles of ‘Seinfeld’ and ‘Friends.’”

The 2007 edition of Economics of TV Programming & Syndication contains off-network license fee studies, worldwide TV projections and basic cable network projections. It also includes data and analysis on broadcast network prime-time license fees and broadcast network economics.

A wide range of content producers and distributors depend on this data to benchmark themselves against competitors. Equity analysts and investment bankers rely on the report for more granular company and industry data than is available in public filings. The study provides data on going rates for TV series on networks and in syndication.