You are about to pitch your concept or completed documentary to a channel. But what do they pay? If your "ask" is off the map, you look unprofessional. Too high and they might laugh and walk away. Too low and you're leaving money on the table.
Documentary license fee benchmarks used to be so hard to find. Perhaps the scarcity of information dates back to the clubby broadcast era, when the niche was comprised of public broadcasters in a handful of countries, and even fewer commercial networks. Now, factual television is a multi-billion-dollar, global industry. And the television sector's underlying costs and commercial terms are still relatively closely held.
So what do US channels pay for documentaries? It sounds like one of those "how long is a piece of string?" questions. But there are answers to be found from a study of the financial ecology of factual television programming. The place to start is the "Sweet Spot." Every network is steered by an annual programming budget that establishes or implies a sweet spot for the cost of an hour of original programming. The sweet spot is the cost that the director of programming is comfortable presenting to the final decision-maker.
Programming executives expect buy-in for approved ideas that are budgeted near the sweet spot, and that meet their network's editorial standards. And even if senior management passes on the idea, no one gets fired for recommending a program that is budgeted near the range.
The sweet spot benchmarks are out there. Speaking at this year's WestDoc Conference, Tim Krubsack, SyFy's vice president of alternative programming, noted, "Our budgets range from $275,000 to $500,000 per hour, and our sweet spot is $350 to 375,000 per hour." And a less specific benchmark for HBO was reported in The New York Times in a feature article about Sheila Nevins and her HBO Documentary Films unit: "On average, HBO pays in the ‘mid- to high-hundreds of thousands per hour, equal to the highest end of PBS,' said one executive who has worked in both worlds."
My newsletter, DocumentaryTelevision.com, publishes weekly profiles of networks and producers; my focus is on the commissioning and production processes. Here's our recent report on the sweet spot at MTV.
What Does MTV Pay for Original Programs?
($'000)
Scripted (hour)
$750 - $1,000+/-
Reality (half-hour)
Signature: $400+/-
High: $225 - $300+/-
Sweet Spot: $200+/-
Low: $175+/-
The sweet spot benchmark varies from channel to channel. And it is based on a broad array of commercial and programming considerations, as outlined below.
Financial Scale
Top-ranking, well established networks enjoy higher program budgets than middle- and lower-scale channels. Discovery Networks and AETN, for example, each spend around $750 million on programs across all of their channels. Discovery Channel, A&E and History are each distributed in around 100 million homes, and they earn a monthly subscriber fee for each of these homes. These subscriber revenues are supplemented by comparably scaled advertising sales. The result: Successful channels spend hundreds of millions annually on their programming pipelines.
Their average costs per hour, or sweet spots, are far higher than less-distributed channels, and their premium, or signature, programs are often budgeted at more than $1 million per hour. New, niche channels lack this scale, and their programming budgets are a fraction of the fully distributed channels.
For example, The Documentary Channel is distributed to around 25 million homes, and is emerging from financial hardship into profitability. According to CEO James Ackerman, "Many producers license their programs to us at no cost in order to obtain US distribution." The producers' motives vary. They might give their projects away to qualify for awards, satisfy funders or simply get their work out in a market that provides fewer and fewer slots for feature docs.
Investment Strategy
Budgets are higher when networks are investing in growth or when they are going through a rebranding process. And costs per hour may fall if management decides to take cash out of the business.
Schedule
Primetime on Sunday, for example, draws higher profile and bigger-budget programs than other time slots.
Genre
Lifestyle is less costly than many genres. HGTV home makeover shows may be budgeted at $75,000, or less per half-hour. A signature documentary that is rich in CGI and dramatic re-enactments, like History's America The Story of Us, was budgeted above $1.25 million per hour.
Competition
Does a channel need to invest more in programming to retain its audience? And what do other channels pay for comparable programs?
Original vs. Acquired
Acquired programs that are not crafted for a channel are heavily discounted against original productions. Original programs are developed by the network specifically for its audience, and the network owns those programs. For example, OWN (the Oprah Winfrey Network) is reported to pay between $80,000 and $150,000 for US rights for features that are acquired for the Oprah Winfrey Documentary Club.
However, OWN is investing more than $600,000 for two-hour, "cinematic" documentaries that the network is developing with celebrities like Julia Roberts and Mariel Hemingway. Unlike the acquired features, these "owned" specials will be available for OWN to distribute to its planned international channels.
Cost Categories
For our DocumentaryTelevision.com studies, we segment each network's productions into four levels: Signature, High, Sweet Spot and Low. Unusually high-cost Signature, Event or Showcase programs anchor a channel's major promotions. Signature programs define the channel's brand.
These are programming events that may occur occasionally or seasonally. Think of TLC's Sarah Palin's Alaska, with its reported $1 million talent fee, and the 12-part History franchise series America The Story of Us, a production rich in costly CGI and reenactments. Programs may move into the Signature category due to their success.
MTV's Jersey Shore enjoyed such breakout success in Season 2 that key talent Snooki and the Sitch will earn fees in future seasons that are a multiple of the "nuts and beer" level compensation in their rookie season.
Channels will pay more ("High") for premium, promotable programs, for example to anchor the Sunday night schedule, or to improve a rating during weekday primetime. Cost items that push comparable productions into the High category include talent, CGI, reenactments, location, music and other clearances, and access to people and places.
The Low commission cost could be the bargain rate sought by program executives while maintaining their on-screen values. Or the Low cost could be achieved by favorable production conditions--for example, for a format that requires a small local crew versus a large crew that works in harsh and remote locations. We know of cases where the Low benchmark represents a loss leader for a new producer who has deficit-funded a production to establish a track record with a channel.
Bio Channel: A Case Study
Bio is the junior brand in the A&E family of channels. Bio's positioning and sweet spot are helpful to understand network programming economics. While Bio is not a Top 20 US channel, it is an important network because of the scale of its distribution and audience, the total original hours it commissions, and the $25-plus million it spends on new productions.
Bio was born in 1999 out of A&E's long-running Biography series, and is a rare case of a channel brand that successfully evolved from a single series. Bio is now distributed to nearly 60 million of the 115 million US TV homes. In 2009, the channel averaged 200,000 total viewers in prime. Big-ticket shows delivered 400,000 total viewers or better. Celebrity Ghost Stories is Bio's top-rated series.
Bio is an adult-targeted channel whose viewership is 58 percent female. Bio executives say, "We're watched by women, but we differ from Lifetime or Oxygen because we may be watched by men as well."
Bio's branding message is "True Story: Truth is more entertaining than fiction...we can't make this stuff up." The channel aims for strong, "emotionally backed" storytelling that is connected to pop culture. Bio programmers distinguish between their focus on lasting pop culture icons versus the celebrity flavor of the week.
Biography is Bio's leading series, and tells "True stories about fascinating people," including both celebrities and the infamous. Bio sees its principal competitors as TLC, TRU, E!, PBS, TVLAND and the Nat Geo Channel.
Bio Commissions
($'000/primetime hour)
High: $250
Sweet Spot: $175
Low: $125
Bio's High production cost estimate is for a successful primetime factual series. The key criteria for Bio to invest in a program at the High level are expected solid ratings, ad sales appeal and significant PR interest. For example, Scott Hamilton's return to ice skating after a brain tumor scare was featured in a two-part special that was scheduled on Bio during the Vancouver Olympics, where Hamilton was serving as an NBC host.
William Shatner is involved in two Bio series: Shatner's Raw Nerve, an edgy talk show, and Aftermath, which examines the lives of survivors of pop culture events like the Jessica Lynch rescue and the Unabomber attacks. The indefatigable Shatner is a PR magnet who commands atypical talent fees, and his series are budgeted at the higher end of Bio's scale.
Bio's top-rated series Celebrity Ghost Stories is delivered near the sweet spot. In each episode, four or five celebrities describe their brushes with the paranormal. Also near the sweet spot is I Survived, a non-celebrity show that tells the stories of people who defied long odds to live. I Survived: Beyond and Back extends the franchise to the people who experienced clinical death and returned to life. Bio's Inside Story two-hour specials are about the making of memorable movies as told by the participants. Inside Story falls under the "Celebrity" and "True Story" categories, yet episodes are budgeted somewhat above the sweet spot.
Bio also airs specials on motion pictures such as Jaws and Caddyshack, both produced by Pangolin Pictures, and Silence of the Lambs, Halloween and Animal House, produced by Stage 3.
The Low benchmark is the approximate cost for Mobsters, a series that relies on archives and fair use to contain costs. The Mobsters genre is not particularly ad sales-friendly, creating pressure to keep the budget low.
Takeaway
The sweet spots for documentaries and unscripted programs are shaped by an array of factors. By closely studying the market and the forces that drive it, producers will learn whether their projects are budgeted to meet the benchmarks of the channels that they are targeting with their concepts.
Peter Hamilton is the editor/publisher of DocumentaryTelevision.com. He is a former CBS executive who earned his MBA at the Wharton School. His firm, Peter Hamilton Consultants, has worked on marketing and business development projects with such industry leaders as Discovery, AETN, Nat Geo, Scripps, BBC, ITVS, Weather Channel and many others.