Off-network syndication revenues
Determinants of off-network syndication revenues of network primetime series
Sora K. Park
Research Fellow
Korea Press Foundation
Korea Press Center Bldg 12F
Taepyongro Chungku, 1-GA, #25
Seoul Korea
100 745
[log in to unmask]
Abstract
This study analyzes factors that determine off-network syndication revenues of
television programs that were first aired on the broadcast networks. The
analysis of off-network broadcast and cable programs show that the performance
during the network runs are the most important factor that contributes to the
license fees of programs when the shows are syndicated.
The most significant factor that influences the license fees for off-network
syndicated shows is the performance during network airing reflected in ratings.
Broadcast and cable syndication markets affect the network license fees in a
different way. For programs syndicated on the cable networks, the timeliness of
the program is important. Also, major studio programs received higher license
fees when syndicated.
Determinants of off-network syndication revenues of network primetime series
The syndication marketplace has grown substantially during the past decade. For
advertisers, syndication sometimes serves as an alternative to network
primetime. Although syndication is closely linked with network television in
several ways, it has been rarely studied. But recent studies indicate the
importance of syndication to the broadcast industry.
Fletcher (1993) analyzed the important assets needed by programs in order to be
syndicated. The principal value for off-network series is the popularity of the
series during the network run and the "star" value of featured performers. In
particular, ratings across demographic groups are the most important factor.
In a research report on the syndication market, Haley (1989) projects a
significant increase in the syndication market, both in program volume and in
revenues. Syndication has become a major player in the television industry and
is expected to be the largest growth area among all segments of that industry in
the 1990s.
Wildman's (1994) study on intertemporal intermedia flow shows that mass media
products flow in one direction among distribution channels over time. This
sequential release strategy can be explained in terms of commercial responses to
differences among audiences in their demand for public goods. Windowing in the
motion picture and television industries is the most studied sequential release
strategy for media products. The release in each sequence is generally exclusive
to that window during a limited time. This is to maximize the sum of profits
realized from the audience as a whole. People have different preferences and are
willing to pay different prices for a certain media product. Media sellers take
advantage of selling the product to high-value audiences first. Usually the
budget of a television program or movie is determined by which entry point it
chooses among the downstream windows.
Robinson (1993) examined the factors that influence the success of a program in
the off-network syndication marketplace. Her empirical study shows that certain
program characteristics and market characteristics determine a program's success
in syndication. In another study, Robinson (1996) provides an extensive
historical and empirical examination of the syndication industry. There has been
tremendous growth in the outlets for syndicated programs, such as independent
television stations and cable networks, during the past few decades. The
syndication market has become a significant downstream window for network
television programs as well as a unique market in and of itself. Robinson
explores the links between the network broadcast and syndication performance of
off-network syndicated television shows and found that previous network program
performances as measured by ratings and the cumulated number of episodes can
predict syndication performance very well. However, adding the genre, market
competition, and the availability of time slots as the independent variables
improves the prediction of the performance of first-run syndicated programs. She
also tested an empirical model of the relationship between time slot
availability in local markets and the number of programs in syndication. For
first-run shows, the availability is highly correlated with the performance of
program in syndication, whereas for off-network shows there isn't such a
correlation.
Wildman & Robinson (1995) created a network producer bargaining model, which
shows that program types that do well in syndication are favored by the networks
in programming. With this model, they suggest that the growing syndication
market contributed not only to the demise of primetime game shows in the 1970s,
but also, the rise of sitcoms during the 1970s and 1980s. Thus syndication
affects the types of programs that the networks will exhibit during primetime.
Also, the timing of series cancellation can be explained largely by the value it
has in the syndication marketplace. The declining marginal contribution of new
episodes to a value of a series in syndication reduces the profits generated for
both the network and producers and can eventually lead to its cancellation, even
though its ratings remain high. Off-network series in syndication are usually
stripped daily, which means a year's worth of network episodes lasts about a
month in syndication without repetition. Viewers easily tire of repeated
episodes, and thus each additional episode increases the value of a program in
syndication. The marginal value, however, while always positive, falls as the
number of episodes increases. As the number of episodes increases and the
contribution of a new episode to a series' syndication value falls, the minimum
license fee acceptable from a network will rise. Eventually the network's margin
on the continuing series will decline to the point where a new series will be
financially more attractive.
Waterman and Grant (1992) analyzed 22 national cable broadcast networks'
programming for types, origins, and viewership of programs. Results show that
cable networks are predominantly serving as an aftermarket for theatrical movies
and network television programs, both in the amount of programming and in
viewership. Cable television's dominant production role has essentially become
that of a co-producer of programs created with the intention of serving
audiences in a variety of media over time. The marginal productivity of
increasing budgets of broad appeal programs is greater for cable networks than
the productivity of creating new, more narrow-focused programs.
The link between television program markets within an economic framework is
quite new to the field of mass media studies. However, the significance is great
when considering the changing environment of the television market. For viewers,
there are more options to choose from since there are more channels available.
However, the actual increase in the diverse range of programming options is
questionable.
In this paper, I attempt to explain the link between the market segments,
specifically the network and off-network syndication markets. I study the
factors that contribute to the revenues of programs that were first aired on
network primetime and later syndicated in the off-network market.
Producers of network primetime programs produce shows at a financial deficit
with the hope that within a few years some of them will be picked up in the
off-network syndication market and make profits. Thus, for the producers, it is
crucial for shows to be syndicated in the off-network market. However, on
average, considerably less than half of the series (dramas and comedies) that
premiere on the networks enter off-network broadcast syndication.
Therefore, the ability to predict whether a network show will be syndicated in
the future, at what price, is a valuable asset for the producer of the show.
Robinson's (1996) analysis shows that a number of factors affect the syndication
probability of a program and its performance once the show is available for
syndication. Program characteristics and performance history were the most
significant explanatory variables for off-network syndicatability and
performance. On the other hand, the competition in the syndication marketplace
and the available time slots for syndicated programs were not significant
factors in explaining off-network broadcast syndication.
Empirical Model
In this paper, I explore the factors that determine the license fee of programs
for off-network broadcast and cable syndication. The anticipated profit of a
program determines its value in the off-network syndication market. In other
words, the revenue of a syndicated program depends upon the number of viewers
the program is expected to attract. Moreover, certain program characteristics
determine the performance of a program. The market size of the year when the
program enters syndication will also be accounted for.
The model can be expressed as:
S = f(X, T, M)
S is the syndication revenue. X are factors contributing to the performance of a
program in syndication (ratings on networks, production budget, syndicator,
genre). T is the timeliness of syndication or the age of a program, gauged by
the years it took to be syndicated. M is the size of the program market gauged
by the size of the broadcast syndication and cable markets.
Data and Variables
Programs that went into off-network syndication during the years 1984 to 1997
are included.[1] These shows include all programs that were originally broadcast
on ABC, CBS, NBC and FOX. Programs that were syndicated on both broadcast and
cable markets, such as Beauty and the Beast, are counted as two separate cases,
one for each market, since each market is treated separately in the analysis.
Both cases are included in the analysis.
Primetime program price (license fee), budget and the data on the suppliers were
obtained from various issues of Channels (1986-1990), Variety (1990-1992) and
The International Television and Video Almanac (New York: Quigley Publishing,
1987-1993). For the primetime ratings across 52 weeks of each year, I consulted
Nielsen Media Research, Year-end report on network primetime programs (1986 -
1996) and Nielsen Media Research, Nielsen Television Index Prime evening season
ranking (1986 - 1996) sheets[2]. The lists of off-network syndicated programs
were obtained from the November issues of Nielsen's ROSP (Report on Syndicated
Programs, 1984-1997), and cross referenced with Variety (1984 to 1997, various
issues). Off-network and cable syndication price data were obtained from Paul
Kagan & Associates, The Economics of Television Programming and Syndication
(1994). Data on the number of episodes syndicated were obtained from Nielsen's
ROSPs (Report on Syndicated Programs, 1984-1997) for broadcast syndicated
programs and Paul Kagan & Associates, The Economics of Television Programming
and Syndication (1994) for cable syndicated programs. The years on the network,
genre, broadcast network and other program characteristics were obtained from
Brooks & Marsh (1995). The advertising revenues for the network market and
off-network broadcast syndication market were obtained from Television and Cable
Factbook (1997). The basic cable programming costs were obtained from Paul Kagan
& Associates, The Economics of Television Programming and Syndication (1994).
Variables
MAJSTU
To see if production by a major studio has an effect, the dummy variable MAJSTU
is included in the analysis. Lorimar TV, Warner Brothers Television, Columbia
Pictures Television (Embassy and TriStar), Paramount Network Television,
Universal Television (MCA TV), Twentieth Television Corporation, Disney
(Touchstone TV, Buena Vista) are coded as 1, all others as 0. The Broadcasting
magazine (1988, July 11 and August 1) made a distinction between major suppliers
and less significant suppliers. Their major studios include the seven
traditional major studios and Lorimar-Telepictures. I use the term "major
studio" as the eight major suppliers described in the article.
These producers supplied 40% of all primetime series during the years 1986 to
1993. For companies that merged within the years of analysis, each party is
counted as separate entities until the merger occurred. But this does not affect
the analysis since mergers occurred only within the traditional majors during
the years of analysis.
For shows with co-producers, I assume the major to be the most influential party
and counted the program as a major studio production. So if any program had one
of the 8 major producers involved, the program is coded as 1.
DRAMA
Only regularly scheduled series, i.e., dramas and sitcoms are included in this
study. DRAMA is a dummy variable that represents the genre of the program.
Dramas are all coded as 1 and comedies are coded as 0. Certain genres may be
more valuable in syndication markets and thus, producers may have a different
valuation towards certain genres.
ADREVNET
ADREVNET is the advertising revenue of the networks for each year. For the years
1996 to 1991, the figures include only the big three, ABC, CBS and NBC. From
1992 on, the figures include FOX also. The variable is the total advertising
volume in the network market standardized into 100 millions of 1992 dollars.
ADREVSYN
This is the total advertising volume in the domestic syndication market for each
year, standardized into 100 millions of 1992 dollars.
CABCOST
As a gauge of the size of the market for off-network syndicated programs in
cable, the total programming cost of the basic cable networks is used. The value
is standardized into 100 millions of 1992 dollars for each year.
AVEPC
AVEPC is the average production cost while on the networks. Dollars are
standardized into thousands of 1992 dollars per 30 minutes of programming.
AVEDEF
This variable is the average deficit percentage (DEFPER) of the program while on
the networks.
AVERAT
AVERAT is the average ratings (STANDRAT) of the program while on the networks.
Ratings are standardized for comparison.
STSYNFEE
This is the per-episode license fee standardized for comparison. STSYNFEE is the
off-network syndication license fee for the program, standardized into thousands
of 1992 dollars per thirty minutes of programming. For shows that were
syndicated on local broadcast stations, the license fee of each show represents
the total receipts of the syndicator from all local stations that bought the
program. For cable syndication, the license fee represents the receipt of the
syndicator from the cable networks.
SYNEPIS
This is the total number of program episodes that were syndicated when the
program first went into off-network syndication. Therefore, for programs that
were syndicated while they were still on the networks, the SYNEPIS is different
from the total number of episodes available for syndication after network
cancellation.
YRSTOSYN
A variable representing the number of years from first network exhibition until
the first year in off-network syndication, either local broadcast or cable.
SYNBOTH
This dummy variable distinguishes programs that are syndicated first on
broadcast stations and then on cable networks from shows that are syndicated
only on either one. Programs that are syndicated on both broadcast and cable
markets are coded as 1. All others are coded as 0. Seven shows in the database
are syndicated in both markets.
SYNWAIR
A dummy representing programs that were syndicated off-network while the shows
were still on the networks is included. Programs that are syndicated while on
the networks are coded as 1. Shows that are syndicated after cancellation on
network primetime are coded as 0.
YRSONAIR
This variable represents the total number of years the program lasted on the
networks. Of the primetime series in the database, 3 shows are still on air in
the 1998-99 season. This was noted whenever it affected the analysis.
Results and analysis
For the analysis, I included all primetime series that were syndicated
off-network (broadcast or cable) during the years 1984 to 1997[3]. Programs that
were syndicated on both, such as Beauty and the Beast, are counted as two
separate cases, one for each market, since each market is treated separately in
the analysis. However, most programs are not syndicated in both markets. There
are only seven shows out of 119. In all cases, the program is included twice,
one for broadcast syndication and one for cable syndication.
This resulted in 126 cases, 89 on local broadcast stations and 37 on cable.
Programs that were syndicated either on local broadcast stations or the cable
networks during 1984 and 1997 are described in Table 1.
Table 1
Descriptive statistics of syndicated programs[4]
Measure
All shows
Broadcast
Cable
Sig.b
Syndication license fee ($)
781,403
1,241,633
132,898
.0000
Average network lic. fee ($)
552,212
578,708
514,974
.0095
Average network budget ($)
630,842
649,666
604,388
.0365
Average deficit (%)
12.08
10.85
13.79
.1009
Average network ratings
19.43
20.33
17.7
.0012
Average number of episodes
101
112
75
.0000
Years on networksa
5.5
6.0
4.2
.0015
Years to syndication
5.1
5.4
4.4
.2085
Note. All dollar values are in 1992 dollars per thirty minutes of programming.
Ratings are standardized across the years.
a Eighteen shows were still on the networks in the 1997-1998 season and for
those shows, 1998 was counted as the last year of exhibition in calculating the
years on air. Thus, this may have distorted the results. This applies to all
relevant tables in this chapter.
b Test of mean difference between broadcast and cable syndicated shows.
The average number of episodes of syndicated programs is 101 but the lowest is
13 episodes (Private Eye, on cable) and the highest, 209 (Knots Landing). Most
shows have 100-130 episodes, which are accumulated during three to five years of
network airing. The average number of years to syndication for broadcast is 5.4
years, which is slightly higher than the average years to cable syndication. The
average ratings of shows that are syndicated on local broadcast stations are
higher than that of shows that are syndicated on the cable networks.
Programs that get into off-network syndication after more than 5 years of
network exhibition typically receive lower license fees at syndication for both
broadcast and cable. These shows have smaller deficit percentages to begin with
while on the networks and stay on longer. However, the initial budgets for the
program and the average ratings while on the networks are not significantly
different between the two groups (Table 2).
Table 2
Comparison of shows that went into syndication before and after 5 years of
network exhibition
Measure
Syndicated within 5 years
Syndicated after 6 or more years
Mean diff.
(sig)
Average years on the network
5.3
7.3
-
Average syndication lic fee ($)
796,210
149,670
.0222
Average network lic fee ($)
536,454
608,197
.0211
Average network budget ($)
620,982
659,203
.1704
Average network deficit (%)
13.00
7.77
.0167
Average network ratings
19.4
20.0
.5391
Note. All dollar values are in 1992 dollars per thirty minutes of programming.
Ratings are standardized across the years.
A comparison of programs that are syndicated while still on the networks and
those that are syndicated after cancellation on the networks is reported in
Table 3. Programs that are syndicated while the original episodes are still on
the networks have higher syndication license fee average for the older episodes.
This is because shows that are more popular tend to be syndicated while the
series are still on air. These shows stay on the networks longer and have higher
network license fees and budgets.
Table 3
Comparison of programs that are syndicated while still on the networks and those
that are syndicated after cancellation
Measure
Broadcast syndication
Cable syndication
While on nets
After net exh.
While on nets
After net exh.
Average synd lic fee ($)
1,077,020
955,020
221,280
111,590
Average network lic fee ($)
597,645
536,778
525,634
507,172
Average budget ($)
661,581
622,498
667,237
580,976
Average deficit (%)
9.97
12.82
20.91
11.60
Average ratings
21.2
18.3
18.3
17.6
Years on networks
6.8
4.4
6.4
3.6
Years to syndication
4.5
7.2
3.6
4.7
Note. All dollar values are in 1992 dollars per thirty minutes of programming.
Ratings are standardized across the years.
Programs that are syndicated on the local broadcast stations are mostly sitcoms
(65.5% of broadcast syndication shows) and those sold to the basic cable
networks are mostly dramas (68.4% of cable syndication shows). There are more
major studio programs than non major studio programs in the off-network
syndication market (Table 4).
The suppliers of off-network syndicated programs are fairly limited compared to
the competitive market of original network production. Only 29 companies
participated in off-network syndication (Table 5).
Table 4
Supply of off-network syndication programs
Type of syndication
Sitcom
Drama
Major
Nonmajor
Broadcast
57(65.5)
30(34.5)
61(68.5)
28(31.5)
Cable
12(31.6)
26(68.4)
29(76.3)
9(23.7)
Note. Values in parentheses are percentages.
Table 5
The syndicators of off-network shows, 1984-1997
Syndicator
Broadcast
Cable
Total
#
%
#
%
#
%
20th TV
7
7.9
2
5.4
9
7.1
ABC Distribution Co.
0
0
1
2.7
1
0.8
Buena Vista TV
6
6.7
0
0
6
4.8
Cannell Distribution
1
1.1
0
0
1
0.8
Carsey-Werner
1
1.1
0
0
1
0.8
Coleex
1
1.1
0
0
1
0.8
Columbia Pictures TV
11
12.4
3
8.1
14
11.1
Dancer-Fitzgerald-Sample
1
1.1
0
0
1
0.8
Embassy
3
3.4
0
0
3
2.4
Genesis Entertainment
1
1.1
0
0
1
0.8
Lorimar TV
3
3.4
2
5.4
5
4.0
MCA TV
11
12.4
7
18.9
18
14.3
Metromedia Producers Co.
1
1.1
0
0
1
0.8
MGM
1
1.1
3
8.1
4
3.3
MTM
4
4.5
1
2.7
5
4.0
New World TV
1
1.1
0
0
1
0.8
Orbis Communications
1
1.1
0
0
1
0.8
Orion TV
1
1.1
1
2.7
2
1.6
Paramount TV
4
4.5
3
8.1
7
5.6
Qintex
1
1.1
0
0
1
0.8
Republic
1
1.1
1
2.7
2
1.6
Rysher
1
1.1
0
0
1
0.8
(table continues)
Syndicator
Broadcast
Cable
Total
#
%
#
%
#
%
Spelling
0
0
1
2.7
1
0.8
Televentures
1
1.1
0
0
1
0.8
Turner Program Services
1
1.1
0
0
1
0.8
Viacom
6
6.7
2
5.4
8
6.3
Victory Television Inc.
2
2.2
0
0
2
1.6
Warner TV
16
18.0
9
24.7
25
19.8
Worldvision
1
1.1
1
2.7
2
1.6
Total
89
100.0
37
100.0
127
100.0
In order to predict the license fee for a program at syndication based on the
program's characteristics and the market size, two sets of OLS regressions are
estimated. Separate regression equations are estimated for broadcast and cable
syndication since the two markets are different distribution channels for
television programs. Correlation matrix of the independent variables is reported
in Table 6.
Table 6
Partial correlation matrix holding CABLE constant
CABCOST
AVEPC
AVERAT
SYNEPIS
YRSTOSYN
ADREVSYN
.8675***
-.3221***
-.1385
-.2406***
-.2633***
CABCOST
1.0000***
-.0865
-.1066
-.1683*
-.1661*
AVEPC
1.0000***
.4073***
.4914***
.2595**
AVERAT
1.0000
.6349***
.2193**
SYNEPIS
1.0000
.1662*
YRSTOSYN
1.0000
* p<0.1, ** p<0.05, *** p<0.01.
Broadcast Syndication
For the prediction of the syndication license fees for off-network broadcast,
the performance during the network exhibition reflected in ratings (AVERAT), the
average budget of programs during the network years (AVEPC), major studio
syndicator dummy variable (MAJSTU), the size of the local broadcast and cable
market (ADREVSYN and CABCOST), the number of episodes of the program syndicated
(SYNEPIS), and whether or not the program was syndicated while on the networks
(SYNWAIR) are used as the independent variables. The results are in Table 7.
The adjusted R square ranges from 0.15 to 0.39 depending on the independent
variables in the equation. The adjusted R square is larger when the AVEPC
variable is omitted from the analysis (Regression 3). SYNWAIR and SYNEPIS are
not included in the same equations since shows that are syndicated while on the
networks tend to have fewer episodes to syndicate.
The most significant factor that contributes to the license fee in broadcast
syndication is the performance of the program while on the networks (AVERAT).
When syndicators sell off-network shows, they sell them on the basis of how well
the program performed on the networks.
The major studio variable is positively correlated with the syndication license
fee. Major studio shows tend to receive higher license fees when syndicated on
local broadcast stations, other things equal. The majors accept larger deficits
for new network primetime series than do independent producers. This suggests
that the future revenues from the off-network syndication market are considered
when the producers sell their shows to the networks. Major studios anticipate
larger syndication earnings, and therefore, are willing to accept lower license
fees for new shows.
The average production cost of the programs while on the networks does not
significantly affect the license fees in the syndication market. AVEPC variable
is not significant. ADREVSYN and CABCOST variables are not statistically
significant but both coefficients are negative. The negative coefficent for both
variables may mean that other factors affect the license fees of programs.
Competition has been increased in the syndication and cable markets in terms of
program supply (Robinson, 1996), which may have lowered the average price of
programs.
Syndication on the basic cable networks is a competitor to the broadcast
syndication market and as the cable market grows larger, it becomes an
alternative to broadcast syndication for the syndicators of television programs.
This means there is an increase in the number of outlets for syndicated
programs. Therefore, the license fees for individual programs may have actually
decreased despite the fact that the total revenues for syndicated programs have
increased.
Table 7
Prediction of broadcast syndication license fees
Dependent variable is STSYNLF
Variable
(1)
(2)
(3)
B
T
B
T
B
T
AVERAT
120.0297
2.746**
85.2109
2.133**
205.142
4.13***
MAJSTU
594.9555
1.846*
610.6868
1.922*
306.948
.744
SYNEPIS
-3.9976
-1.046
-
-
-9.0612
-2.023*
SYNWAIR
-
-
412.1577
1.349
-
-
ADREVSYN
-.2603
-.492
-.3636
-.707
-.1077
-.171
CABCOST
-.2266
-.734
-.0120
-.041
-.5495
-1.439
AVEPC
-.5574
-.405
-.9742
-.771
-
-
Constant
-441.451
-.351
-438.7218
-.358
-1448.09
-1.108
R2
.32978
.35019
.49264
Adj R2
.14699
.17297
.38694
S.E.
561.99473
553.36933
739.23526
* p<0.1, ** p<0.05, *** p<0.01.
Another set of regressions is estimated with the two shows that were first
syndicated on the basic cable networks omitted. The results are not different
from the regressions with the two programs included. The results are in Table 8.
Table 8
Prediction of broadcast syndication license fees without programs that were
previously syndicated on cable
Dependent variable is STSYNFEE
Variable
(1)
(2)
B
T
B
T
AVERAT
131.582576
2.687**
227.453568
4.137***
MAJSTU
609.001140
1.815*
334.919235
.795
SYNEPIS
-5.841701
-1.201
-12.058089
-2.242**
ADREVSYN
-.070098
-.114
.185028
.265
CABCOST
-.313992
-.911
-.674249
-1.661
AVEPC
-.304949
-.207
-
-
Constant
-787.600733
-.561
-1837.93258
-1.329
R2
.34308
.51714
Adj R2
.14600
.40740
S.E.
582.64790
752.26518
* p<0.1, ** p<0.05, *** p<0.01.
Cable Syndication
Another set of regression equations is estimated to predict the license fee for
programs in the basic cable market. The independent variables used in the
analysis are, the average budget during the network runs (AVEPC), the average
rating during network exhibition (AVERAT), the genre of the program (DRAMA), the
number of years till cable premiere (YRSTOSYN), whether or not the show was
previously syndicated in broadcast syndication market (SYNBOTH), the size of the
broadcast and cable syndication markets (ADREVSYN and CABCOST), and major studio
syndicator dummy variable (MAJSTU). An interaction term between YRSTOSYN and
DRAMA is also included (YRSYN_DR) to see if comedies are more sensitive to the
timeliness of syndication. SYNBOTH and YRSTOSYN are not included in the same
equation since programs that are syndicated on the cable networks after being
syndicated on broadcast stations tend to take longer than shows that are
directly sent to cable syndication.
The total explained variation of the regressions is between 41% to 53%, which is
much higher than the adjusted R square for the broadcast syndication license fee
regression (Tables 7 and 9).
Network programs that are sold to cable networks receive much smaller license
fees than off-network syndicated programs to begin with. However, the license
fee can be better predicted by the performance on network television reflected
in ratings average, how long it took the program to enter the cable market, and
the genre of the program. As expected the higher the ratings during the network
runs the higher the license fees the program received from the cable networks.
The longer it takes to be sold to the cable networks, the lower the license fee
the program receives. The dummy variable representing dramas is significant and
has a negative influence on the license fees, which means dramas receive lower
license fees than sitcoms. Even in the cable syndication market where
traditionally dramas are syndicated, sitcoms receive higher license fees. This
may be partly because the basic cable networks increasingly resemble broadcast
television in programming. Haley (1989) notes that sitcoms are easier to
schedule and tend to generate larger audiences in syndication than hour-long
dramas. Therefore, they command a higher license fee from the stations when they
are syndicated.
Programs that are syndicated by the major studios have a positive relationship
with the syndication license fees but the variable is not statistically
significant.
For cable shows, the timeliness of syndication does have an effect. The YRSTOSYN
variable is negative and significant. This means that shows that enter
syndication earlier get higher license fees than shows that are syndicated
later.
To see if there are any differences in the timeliness of syndication of dramas
and comedies, an interaction term, YRSYN_DR (YRSTOTYN multiplied by DRAMA) is
included in the regression equation. This improved the adjusted R square by
11.4% (Table 9, Regressions 1 and 2) and the YRSYN_DR variable is significant
with a positive sign. This means that dramas are less effected by the timeliness
of syndication compared to sitcoms. Dramas that are syndicated after the network
exhibition can get license fees based on network performance regardless of when
the programs are syndicated. For shows that are syndicated first on broadcast
stations and then later on cable, the license fees are significantly lower.
SYNBOTH is negative and significant (Table 9, Regression 3).
Table 9
Prediction of cable license fees
Dependent variable is STSYNFEE
Variable
(1)
(2)
B
T
B
T
AVEPC
-.173379
-.451
.114208
.310
AVERAT
16.037626
2.097*
12.641038
1.798*
DRAMA
-161.33815
-2.463**
-532.12689
-2.994**
MAJSTU
31.067599
.472
52.073368
.870
YRSTOSYN
-45.106464
-2.342**
-85.37813
-3.401***
YRSYN_DR
-
-
77.708417
2.211**
(Constant)
247.768213
1.013
322.249678
1.452
R2
.55384
.66347
Adj R2
.41442
.52886
S.E.
124.58676
111.75132
(table continues)
Variable
(3)
(4)
B
T
B
T
AVERAT
7.112854
.851
14.268246
1.859*
CABCOST
-.057419
-.745
.014717
.213
DRAMA
-223.591810
-2.599**
-502.054005
-3.137***
YRSTOSYN
-
-
-83.229123
-3.316***
YRSYN_DR
-
-
73.312220
2.198**
SYNBOTH
-147.339590
-2.054*
-
-
(Constant)
294.301553
.966
360.454264
1.332
R2
.52034
.64725
Adj R2
.40747
.53702
S.E.
125.32374
110.78030
* p<0.1, ** p<0.05, *** p<0.01.
SYNBOTH variable is significant. This suggests that shows that are syndicated
first on the broadcast stations and then syndicated on the cable networks later,
may have a different life cycle. Therefore, a separate equation is estimated
without the five programs that were syndicated first on the broadcast stations.
However, the results are not significantly different from the regressions with
those programs included (Table 10).
Table 10
Prediction of cable license fees without shows that were previously syndicated
on local broadcast stations
Dependent variable is STSYNFEE
Variable
B
T
AVERAT
14.742736
1.826*
CABCOST
.065688
.777
DRAMA
-205.420480
-2.563**
YRSTOSYN
-20.130326
-.871
ADREVSYN
-.167226
-1.316
(Constant)
274.239742
.857
R2
.65869
Adj R2
.53679
S.E.
115.89486
* p<0.1, ** p<0.05, *** p<0.01.
Discussion
The common important factor in determining off-network broadcast and cable
license fees is the average rating during network runs. The history of success
is most important. Whether a program enters syndication is also determined by
its performance on the networks to begin with (Robinson, 1996) and once it is
syndicated, the compensation for the suppliers relies mainly on its
accomplishment.
Another important factor is the type of the program. Although there is no
evidence that the license fees for sitcoms are higher than dramas, due to the
lack of data, the number of sitcoms that are syndicated exceeds that of dramas
(Table 11). Furthermore, the syndication ratio of sitcoms is higher than that of
dramas (Table 12). Even in the cable market, sitcoms received higher license
fees per half hour.
Table 11
Number of dramas and comedies syndicated on local broadcast stations
Year
Drama
Comedy
1984
5
5
1985
4
4
1986
3
3
1987
5
2
1988
0
4
1989
3
4
1990
1
7
1991
2
3
1992
2
4
1993
0
4
1994
1
3
1995
1
7
1996
1
3
1997
2
4
Total
30
57
Table 12
Percentage of dramas and comedies that are syndicated
Year
Dramas
Comedies
1986
57.1
82.1
1987
55.0
80.6
1988
48.6
79.4
1989
51.6
76.3
1990
48.4
65.0
1991
50.0
68.3
1992
34.8
58.3
Note. Based on off-network and cable syndicated shows as of 1997. Figures
include all dramas and comedies that are on the air during the year of concern.
Broadcast and cable syndication markets affect the network license fees in a
different way. For programs syndicated on the cable networks, the timeliness of
the program is important. Timeliness for broadcast syndicated programs is harder
to analyze since 75.3% of the syndicated shows are syndicated after 4 or 5 years
after they premiere on a broadcast network, and has little statistical
variation. Shows that have already been syndicated on the local broadcast
stations naturally take longer to be syndicated on cable than shows that are
directly syndicated on the cable networks.
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[1] Includes all programs that started broadcast syndication during the years,
but not all programs that were syndicated on the cable networks.
[2] Karla S. Robinson has provided much of the data on the average ratings
during network runs.
[3] Not totally inclusive list for syndicated shows on the cable networks.
[4] All license fee and budget data in this paper are per half hour of an
episode standardized into 1992 dollars.
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