How Branded Entertainment Can Help The New Reality Of TV Production Finances

by Wayne Friedman, Sep 24, 2010, 12:00 PM

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 If Ben Silverman is right, all future TV series will need bigger helping hands from advertisers-sponsors -- help that goes beyond just buying TV commercials.

The former chief of NBC Entertainment said if it wasn't for some early involvement from advertisers like Staples in the form of branded entertainment during the initial slow days of NBC's "The Office," the show might have had a shorter life span.

We don't know the actual deal points of Reveille's deal (Silverman's then-TV production company, a deal struck before he become ran NBC Entertainment) with NBC, but we can imagine there was some heavy deficit financing being accumulated. This is the case with most new shows -- especially those with a weak opening.

But we wonder -- on a day-to-day, episode-to-episode basis -- what branded entertainment can actually means to a production. Hour-long network TV productions can cost $1.5 million to $2.3 million an episode or more to produce. Few advertiser sponsors pay much to be associated with a show through branded entertainment content. Many straightforward product placement deals are perhaps only $300,000 for an individual episode.

Unless one does major product placement deals like Mark Burnett's done for "The Apprentice," it's hard to calculate where such deals, over the course of an entire season, can lower a TV production's cost by more, say, than 10%. That would be a lot of branded entertainment.

"The Apprentice" has the unusual cachet of being a show all about business. That's good -- especially for bigger businesses that know the worth of television. So some of those deals -- which can get great infomercial-like visibility for a brand for the better part of 42 or 44 minutes -- can bring the TV producer a million dollars or more.

If an hour's worth of a typical network TV budget is $40 million to $50 million a year for some 22 episodes, it would seem that a 10% savings somewhere might make the difference between a show's hanging on or not. (Surely, a TV network also has a definite say, losing big advertising revenues from low-rated TV shows).

All this would mean, according to Silverman, that TV producers in the future might need greater budget savings -- say 15% or more -- to counter the dwindling program license fees and lower-projected ratings of network shows that will be coming in future years.

In the past, some TV producers believed advertisers might hold an equity stake in their shows -- thus softening their growing production finance issues. But it turns out advertisers don't really want to be wedded to anything unproven; they'd rather get a quick hit and go.

That kind of future may provide more opportunity -- but more content entropy as well. It may help to keep TV shows afloat, but it'll be harder work getting more branded entertainment pieces to fit.

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