How does a TV show make money?

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Answered by Catherine Caldwell

Everybody knows how movies get profit, but the question how do TV shows make money? still is confusing for many people, because sometimes shooting of series could be very expensive while we are able to watch it for free. Let’s try to recreate the way of money receipt to the TV program producers.
All shows are sponsored by TV channels, which will broadcast them; if the first season is successful, they start to shoot the following. Usually, other TV stations buy the right for transmission of profitable programs, so the production company receives additional income.
TV channels sell air time to media holdings, which fill it with advertising, independently choosing which show is more suitable for one or other ad. The holdings receive money from advertisers. Sometimes we notice how characters of series use special products, such as an Apple laptop or drink 7up. That means that the company already paid directly to the broadcasting producer for brand promotion, but as a rule, this applies to the shows which gain high ratings and established themselves as sought after.
The more viewers, the more likely sales of the promoted product will increase, so competition for advertising raises, and accordingly, the cost of air time, which leads to the growth of income of the channel. This is the reason why ratings are so important for TV programs.
Sponsorship is another way. Mentioning of the sponsor before and after the broadcasting is also a type of promotion. Still, there could be announced only the name and the slogan of the brand, but not information about the production.
As well, successful shows usually are distributed to another TV channels, including foreign ones. Therefore, the most important task of the program screening is to earn the amount of money on advertising which will cover the cost of shooting or the right for transmission.
Producers spend significant sums for the commercial spots and TV promotion. In order to make up for the expenses, they raise the price of the goods. It follows from this that the purchasers pay for show shooting, even though they could not watch TV at all.
However, only free television channels earn on advertising; paid ones sell subscriptions, so they need to care about exclusive and interesting content for preserving the audience and attracting new customers. As well, after the premiere, such channels make money by broadcast syndication, which is mentioned above selling telecast license that has to be covered with revenue from advertising. In addition, a small percentage of profits comes from DVD sales.

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