http://filmescape.com/how-does-tv-syndication-really-work
As mentioned in an early posting (
What is Syndication?), it’s the studios that own the distribution rights to television shows, and they don’t truly start seeing a profit until their show goes into syndication. And when I say ‘profit’, I mean a BIG PROFIT. Here’s how it works:
There are two types of syndication: broadcast syndication and cable syndication. Broadcast syndication, also known as ‘off-net’ or ‘second run’ syndication, is when the studio re-sells a show to individual TV stations throughout the country. There are over 350 stations in the USA. That’s A LOT of buyers. Much like how a studio sells it’s initial airing to a TV network, in broadcast syndication, they will sell the rights to a TV station on a per episode basis. In other words, the station can schedule these episodes whenever they like and pay the studio as they air them during a set period of time. This period of time is known as a ‘run’. Most runs usually last about two years before they have to renew. This type of per-episode payment is known as a licensee fee. This fee, of course, varies from deal to deal. Warner Bros TV sold FRIENDS into syndication during its first cycle after initial airing for ~$275,000 per episode. Keep in mind, that is per TV station. Just think about how many times you see an episode of FRIENDS on the air at your local station and multiply that by the other stations in the United States. During its first round of syndication, Warner Bros TV grossed approximately $950 million.
In addition to license fees, there’s also another type of payment known as barter time. This is money generated from ad revenue. With a license fee, the station will pay the studio cash upfront and make its own money by selling ad space within each airing (just like how TV networks make money). But sometimes, a station may want a show that wasn’t as big of a hit as FRIENDS and doesn’t want to shoulder the risk of airing it. So to hedge this risk, the station will not pay cash upfront but instead offer the studio its own ad space to sell. This is riskier for the syndicators, but if the show garners great viewership, they stand to make a lot more money than a straight license fee.
Local stations love non-serialized shows (especially comedies) because they can play them out of order and air them every day of the week. This is known as STRIPPING. With 250 telecasts per year, stations need at least 100 episodes (4-5 seasons) before ordering a show for syndication. However, with the rise of cable networks, that number has fallen a bit.
Cable networks don’t have individual local stations through the country, therefore they have literally 24-hours of television they have to program for the entire country and are in much more need of content. This is why dramas like CSI, THE CLOSER and LAW & ORDER are great for these networks because each episode is an hour long. Cable networks, however, won’t always wait until there are 100 episodes to start airing reruns of shows. If a successful show is on season three, it’s still worth it for to air its previous episodes once or twice a week. This is called REPURPOSING. This will last about 1-2 years. After this time has passed, the series would have likely accumulated up to 100 episodes and therefore the network can then stripping the show every day. For example, USA network made a deal with Universal Television Studios to repurpose HOUSE on its network while the show was in its third season. USA aired episodes from seasons 1 and 2 once a week for two years. After season 4 of HOUSE had aired, their repurposing deal had expired. They then went in to a syndication deal where they paid a license fee to Universal Television in order play the show every weekday.
As you can see, this is a massive business. Warner Bros, after generating almost a billion dollars in license fees and barter time from syndicating FRIENDS to broadcast stations, also bring in another $200M by selling it for $500K per episode to Nick at Nite, and then $275K per episode to TBS.
