Is Netflix Poised To Replace Much Of The TV Syndication Business?

Netflix continues to be a game-changer. But its new business model may be a reincarnation of an older formula, at least for one area of the TV business.

Long known for offering older TV and movie content, the 22 million-plus-subscriber service may now look to take away one of the big pieces of the traditional syndication business: reruns.

CBS programming exec Kelly Kahl recently noted that the syndication market is booming - helping to fuel the network's continuing production of original content, especially one-hour dramas. As first, I took that to mean syndication to U.S. TV stations. But, I wasn't really considering the whole picture, which also includes foreign sales, and increasingly sales via Netflix.

"Hawaii Five-0" pulls in $5 million an episode on a worldwide basis. If the show costs $2 million to $2.5 million an episode, you can understand why Les Moonves, CBS president/CEO of CBS, called it extremely profitable.

Even if "Hawaii Five-0" doesn't get mega-ratings (it pulls around a 3 rating among 18-49 viewers), you can see that you don't need an "American Idol" (grabbing 6 to 8 ratings) for this to still be a good business.

CBS says it has averaged over a 3 rating among 18-49 viewers for five nights of the week during the past season. Right now that's good data -- and especially good enough to generate the after-market revenue where networks and studios really make hay.

Recently, "TV Watch" examined a rare occurrence in syndication: HBO pulling "Entourage" and "Curb Your Enthusiasm" from the market after one season because ratings were so low the national advertising generated from those series could not pay for the uplink services that digitally send the episodes to TV stations.

You have to wonder -- would a bigger Netflix syndication rerun deal have been a better business decision?

Tags: television, tv
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4 comments about "Is Netflix Poised To Replace Much Of The TV Syndication Business? ".
  1. Doug Garnett from Atomic Direct , May 23, 2011 at 4:27 p.m.

    Interesting concept. But, unless Netflix raises its subscription costs (something I expect in the next 24 months), it's hard to see how those US syndication deals end up worth very much.

    But we'll have to see. Mostly, it will be hard on the manufacturers and retailers who rely on advertising in those syndicated programs if that shifts to Netflix - where advertising disappears without any currently viable online alternative.

  2. Brian Hayashi from ConnectMe 360 , May 23, 2011 at 4:29 p.m.

    Netflix will have a home run on their hands if they can establish an ability to lift DVD sales. But Netflix is just now getting to the "Celestial Jukebox" level, which suggests we are just at the experimentation stage.

    There are plenty of creative approaches, including speculation that Netflix could pick up NBC's underperforming "The Event" as part of that series. Could Netflix give a middling series some legs? Could it replace the traditional pilot process? The sheer number of Netflix subscribers gives one hope.

  3. Paula Lynn from Who Else Unlimited , May 23, 2011 at 4:44 p.m.

    Yes.

  4. Cece Forrester from tbd , May 23, 2011 at 6:16 p.m.

    Not in my household, unless they swear off the pop-ups.