Los Angeles Acting blog by David August: TV Financing Is Getting Creative

Wednesday, October 01, 2014

TV Financing Is Getting Creative

We see an opportunity to make content that does not necessarily fit the studio model.

(from The Unique New Way for TV Shows to Get Financed, thanks to Aaron Kaiser for pointing me to the article).

Before you ask what does this have to do with me, I'm an actor remember that this is how we get paid too; actor salaries come from the financing. Plus, if you ever want to produce something yourself it is more than indirectly your business how things get financed. Different business models for the projects we do mean different types of projects become possible.

Right now, most network television (as in broadcast, which in the US means ABC, CBS, Fox and NBC) is made with the need to hit certain ratings. Those ratings are what the advertisers were promised by the networks back when the ads were sold to them. If a show's ratings go below certain numbers, then the network has to refund money the advertisers paid. That can sometimes make certain plots or premises seem like a bad idea; they can't risk losing audience. If they do, then the network has to write a check they really don't want to write.

Shows for other markets, like cable or internet, typically don't have the same guarantee of ratings: networks usually promise certain minimum numbers when they presell ads in May for shows that starting airing in September. Internet and premium channels typically don't manage their ad inventories that way. Networks configure themselves and their business to make big expensive shows. Non-broadcast venues don't.

That means that non-broadcast networks usually don't have to capture the attention of quite so many viewers, and therefore can sometimes do riskier material, they can risk having a smaller audience. Or at least they can take more risks with the material because the financial obligations are not as huge. For non-ad supported TV (think pay channels like HBO and Showtime, and some internet platforms) the number of viewers in ratings may not only not be the key to keeping things financially afloat, but ratings may not even get publicly shared (like House of Cards on Netflix).

Show business has historically almost always used the gathering of people together to sell them things as its basic business model, whether it was the show itself, or the products and services sold near it. But with the fragmentation of today's audience into different groups, and the explosion of new outlets and technologies makes more diverse types of shows possible because of these new forms of financing. These new versions of the business model mean we can have new forms of entertainment. News that causes some people anxiety: we can't just do business the way we always used to. But the good news for everyone: new things can thrive.