TV Program Production & Distribution
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Industry Overview
The US TV program production and distribution industry includes about 500 companies with combined annual revenue of about $15 billion. Major companies are NBCUniversal, CBS Television Studios, Disney/ABC, Twentieth Century Fox Television, Warner Bros Television Group, and Sony Pictures Television. TV program production and distribution is part of the motion picture production and distribution industry, which is highly concentrated: the 50 largest companies account for about 80 percent of industry revenue.
Broadcasting of TV programs is covered in the TV Cable, Pay & Broadcast Networks industry profile. Cable TV system operators are discussed in the Telecommunication Services industry profile.
Competitive Landscape
Consumer leisure activity and the general economy drive demand. The profitability of individual companies depends on the marketability of products, mainly their potential to attract advertising revenue for TV networks. Large companies have advantages in financing, distribution, on-staff creative and technical talent, and multiple-year contracts with key performers and directors of popular programs. Small companies can compete successfully by focusing on special topics, niche audiences, or non-mainstream TV channels.
Products, Operations & Technology
Major products and services are the production and distribution of TV programs, commercials, and related products, like DVDs. Program production types (genres) include TV movies; dramas; situational comedies (sitcoms); reality, game, and talk shows; and documentaries, children’s, art, sports, and news programs. Most programs are scripted, though some genres are largely unscripted, including talk and reality shows. First-run programs typically earn less than subsequent releases for reruns (“repeats”); long off-network runs (syndication); and other media like DVD.
Revenue mix from major outlets differs for producers and sole distributors. Distribution to TV networks and stations comprises about 45 percent of production companies’ collective revenue; to cable networks, 15 percent; and to international distributors and syndicates, 7 percent. For TV sole distributors, DVD and non-TV media are significantly more important. Distributors’ business with TV networks and stations accounts for 30 percent of collective revenue; international licensing, 20 percent; and cable, 3 percent.
Creation of a TV program, series, commercial, or other product goes through four phases: development, pre-production, production, and post-production. Large studios and networks often prefer to create on a proprietary basis and own the product. Other producers develop a program concept or a sample episode (pilot) to pitch to studios, networks, cable operators, or other potential sources of funding. For a potential series, funding may be only for one or a few episodes.
After receiving financing, the program goes into pre-production. The producer secures director, cinematographer, and lead actor contracts; finalizes most details of the script; hires a production crew; ensures development of a detailed schedule that identifies timing and need for cast, costumes, equipment, and other production elements; and monitors rehearsals. The production phase is the actual filming and making of the program. Filming (“principal photography”) for a commercial may take a day, but a show may require a few days to several weeks, depending on the length and number of episodes.
Once shooting is complete, the program goes into post-production, which includes in-studio processes and tasks such as editing, music scoring, audiovisual synchronization, special effects, and titles. Post-production finalizes content for the intended broadcasting time, typically a 30- or 60-minute time slot for a show. For a “30-minute” show, the finished product is actually about 22 minutes, allowing time for commercials. The result of the cumulative post-production work is a master negative that will serve as the original source for any subsequent releases or copies.
Few programs and pilots make it to the screen. Backers can kill products at any stage, even after completion, or put them on hiatus for potential future use. After a pilot for a series airs on TV, if the audience is large enough and their reaction is favorable – according to ratings by market research companies like AC Nielsen – the network or station will commit to “pick up” a certain number of episodes. A series pickup is usually for six or 13 episodes. Few aired pilots succeed in becoming an ongoing series. Pilots that don’t launch a series may undergo editing and later appear as a TV movie, a special, or in other media where revenue from advertising or license fees can help recover production costs.
A major production company may have from three to 17 shows actively in production and numerous products under license for short-term repeats or long-term syndication. A small company may do only commercials or short spots, while others may produce from one to a few programs a year. A variety of industry media and organizations track the success of TV producers and individual shows, using metrics such as number of shows in production, on hiatus, canceled, or picked up, and a show’s audience size and advertising revenue. A key demographic metric is viewers 18 through 49.
Distribution of first-run shows includes marketing to networks, stations, and other broadcasters that rent (“license”) programs; obtaining license contracts; advertising; and providing short promotional “clips” and copies of the show. Networks typically specify that broadcasters air a certain amount of network-provided content and commercials. Broadcast stations have more flexibility with non-network content and may contract with producers to shorten the licensed show to run more local advertising, which is more profitable for them on a per-minute basis.
The industry uses advanced technology for business forecasts and production. Computer forecasting models help predict success of projects and decision-support tools help determine marketing and distribution strategy. Many crews use digital cameras to film and specialized computer software for editing. Many productions combine film from shoots on location and in the studio with special effects that are mainly computer-generated imagery (CGI). Digital files enable electronic distribution to customers. With the increase in digital processes, companies use special digital media and distribution management software to manage content internally and with distributors and customers.
