With its 2017 acquisition of Scripps Networks, Discovery became the dominant player in the unscripted cable market with 19 networks, all but OWN focused entirely on reality fare. Using its newly fo…
became the dominant player in the unscripted cable market with 19 networks, all but OWN focused entirely on reality fare.
Profit margins for cable reality producers have been consistently shrinking over the past decade as basic cable networks grapple with declining ratings. With networks also controlling ownership in majority of the cases, reality companies rely entirely on license fees — often in the neighborhood of $300,000-$400,000 per episode — to cover their production costs and keep about 10% in profit. They get those license fees paid by the network as they go into production on the episodes.
There is also the issues of production overages and reshoots which networks and production companies always wrangle over and networks usually cover . Producers fear that, if Discovery executives require reshoots in the completed order, they will have to shoulder the cost if they want to get the original license fee agreement honored by Discovery so they can pay off their bank loan.
In the U.S., the only area producers point to that employs a similar mechanism if independent films, which are financed by the producers and then being acquired by a distribution company but the producers again have ownership.
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