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Old 11-05-2012, 06:42 PM   #1
smoko
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Default Advance Payment to Production Company

I have no knowledge about selling a show idea to a cable TV network. Because the network asks for a budget, does it mean they will give the production company an advance payment (the amount listed to create each show in budget) to tape the shows?
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Old 11-08-2012, 07:39 PM   #2
Owen_Thinks
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Default Re: Advance Payment to Production Company

I assume you're talking about the nuts and bolts of budgeting/funding of actual production -- not anything related to buying the concept or spec script (to which I can't comment).

Assuming the former, in terms of the show actually getting made there are typically a series of milestones that are tied to progress. The broadcaster won't just cut a check for $10 million to the prod co and hope they deliver a show in six months. Instead, they'll pay out a quarter of the budget when the contract is signed (or whatever % is negotiated). Then once the prod co delivers an approved story outline (for example) then the broadcaster releases another percentage of the budget funds, then once they receive delivery on the completed show they make the final payment to the prod co. For a series it breaks down into delivery of the first episode, delivery of the first 3 episodes I believe.

At least that's been my (admittedly limited) experience in cable.
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Old 11-08-2012, 08:31 PM   #3
killertv
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Default Re: Advance Payment to Production Company

Most cable networks have sister production units (FX has FX Productions, for example) so a lot of them will finance their own productions. But as you say, you have no knowledge of cable TV - does a network really ask for the budget? They're going to have a ballpark just from the pitch and then they'll know better by the time they read a script. If it takes place on Mars, it's likely outside their range. And cable will generally spend less than the broadcast networks.

What you're asking sounds more like the broadcast model. The networks pay a license fee to the studios to have first-run rights to air the episodes. So the studio is actually in control of the budget, which they pay for by deficit financing - that is to say, borrowing the money for the season on the hopes that the hit show will make a lot of money in reruns/syndication.

There are some shows that aren't produced by the cable network (Mad Men is one) so sometimes the broadcast model is also how the networks operate. But it sounds strange that they'd ask for a budget for anything beyond a rough estimate.

Notably, on the reality side, it's so cheap to produce an episode, that typically a broadcast network license fee will cover production costs, so there's no studio attached and the production company produces the episode with the network's money.
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