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The Booming TV Rerun Syndication Cash Cow
Help is wanted. As cable TV try to fill their schedules with rerun TV shows that attract large audiences with proven hit shows. Most of the TV rerun shows come from the broadcast channels, such as, ABC, NBC, CBS and Fox. Because viewers are fragmented and watching other outlets for entertainment, the pool of desired shows (those proven to be a hit) that draws a large audience has shrunk. This creates a boom for their owners as prices skyrocket for them.
It is no different than bidding on Ebay for an item that several really want. The price increases and desire clouds what the item is actually worth. I mean, who would pay $15,000 for a 1975 Chevy Vega? Unless, a few bidders really wanted it.
The TV syndication rerun business is BIG business. The cable bidders include TNT, TBS, USA. which are the largest cable stations with programming like broadcast channels. These cable companies want large viewership because this lures much more advertising and ad revenue. Having a TV show that attracts less viewers decreases ad revenue. Without ad revenue, the station cannot survive. Some cable stations have tried to create their own shows, which is risky. They cost a lot to make and many fail. Netflix has scored twice, their Orange is the New Black and House of Cards are huge successes.
The problem begins with the broadcast stations who also want a hit show for the same reasons. Yet, only 29% of the new shows are renewed for a second season (usually 13 episodes). These failures never get into the rerun mill or offered to cable networks because cable is wanting a TV show with 90-100 episodes. This is their minimum that allows them to run them daily without repeating them twice.
How much are we talking about?
The current hot show in syndication, Modern Family, was sold in 2010, and each time the show flashes across the TV screen, the seller receives $1.4 million. The old standards, like Friends or Seinfeld, sold in 1996 and are watched by 24 million viewers, receives $300K per show. These shows ran for well over six years. My favorite, Big Bang Theory, has 23 million viewers and receives $1.5 per episode. Oddly enough, Breaking Bad, which ran over five years and just ended its run. It quickly went into syndication for much lower amounts because its audience is more specific. The same applies for Sex and the City, which targets women. Comedy appeals to a much wider audience and that is what cable networks are looking for to buy. Hit shows are in short supply.
To show this, take TBS cable, 20% of its programming is Big Bang Theory, 40% is filled by other sitcom comedies, 22% is movies. The remaining portions are sports or originals.