Ancillary Markets

Ancillary Markets

Television programs have always been designed for initial exposure through local or national transmission. Once aired, some programs never run again. However, most programs are then sold in a range of subsequent, ancillary markets. As the number and variety of these “aftermarkets” has increased, and their importance as revenue sources has grown, their influence on the television industry has become more marked.

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There are three major ancillary markets for television programming: international syndication, domestic rerun syndication, and home video.

International syndication—the sale of program distribution rights outside the originating national territory— has long been a lucrative source of revenue for television producers as well as a significant target of cultural criticism. Programs have been sold on this market since the 1950s, as countries began to develop and expand television service. With its fundamentally commercial media system, the United States quickly emerged as a primary exporter of programming, and its studios’ slick fare was promoted as a comparably inexpensive alternative to domestic productions in many countries. As a result, many societies’ primary experiences with global television have been with U.S. television, with series like I Love Lucy in the 1950s and Dallas in the 1980s being particularly influential. Some cultural critics have argued that this dominance has fostered American cultural imperialism across the planet, while others have argued that local audiences assert their own cultures and meanings over these programs.

While the United States has continued to dominate international syndication, the degree of its dominance has lessened as other countries have successfully gained reputations and market share as television exporters. Australian, Brazilian, British, and Japanese firms in particular have long sold programs to global audiences. While language and culture are certainly significant issues in international television distribution, some series have traveled quite broadly. Brazilian telenovelas, for example, have been a particularly successful global genre over the past two decades and have been dubbed into several different languages and dialects for runs in dozens of countries.

Rerun syndication may overlap with international syndication (e.g., after a program has already run for the first time in a foreign market) but is primarily thought of as a domestic market. Reruns are episodes of programs that are sold to local broadcast stations and cable networks after their initial transmission. The most established rerun syndication market is the United States, whose more localized broadcasting system has long relied upon the availability of extant programming. The U.S. rerun market developed in the 1950s, as the many stations coming on the air after the end of the 1948–52 license freeze all sought programs to fill their time and attract local advertisers. While first-run (i.e. “new”) syndicated programs initially filled these hours, reruns of these programs, offered at a discount from their distributors, also attracted sizable audiences, contrary to expectations. The success of these programs in rerun form, and the networks’ shift toward filmed programs in the latter half of the 1950s, fostered the growth of the rerun market. These “off-network” programs were sold to stations and advertisers largely on the virtue of their familiarity with audience, and by the early 1960s, they had squeezed most first-run syndicated programming out of the market entirely.

Since that time, network-originated series have generally gone into production with the hope that they eventually make it to the rerun syndication market. This has particularly been the case as production costs have increased while licensing fees—the amount paid by networks for first-run rights to series—have lagged behind. Rerun syndication generates additional revenue for series producers, often returning the first profits on the property, even after years of exposure on first-run television. Current network hits often generate enormous profits in this regard when they enter this market, as with The Cosby Show in the late 1980s and Seinfeld in the late 1990s.

Since most syndicated reruns (particularly sitcoms) are broadcast on a daily basis (i.e., five or more times a week), a series must typically have a four-season network run in order to compile enough episodes to be an attractive rerun property. Rights to series may be sold for cash, but a more common arrangement (particularly since the media recession of the late 1980s) is through barter, whereby a series is acquired for free (or at a discount) in exchange for a few minutes of advertising time in each episode. The local station still gets to attract local advertisers during its time, but the program’s distributor can then sell national advertising time.

The money and broadcast time at stake in rerun syndication raised significant fears of the monopolization of television in the 1960s, and in 1970 the FCC banned the broadcast networks from the ownership and syndication of virtually all of their prime-time programming under the Financial Interest and Syndication Rules (“Fin-Syn”). Hollywood studios and independent production companies greatly benefited from these rules during the 1970s and 1980s, collecting the syndication revenues of network hits as they entered the rerun market. After a decade of relaxed regulatory limits on media ownership, however, the rules were retired in 1995, enabling networks to once again own and syndicate their own prime-time programming. In the wake of Fin-Syn’s repeal, many studios, networks, station groups, and cable networks have merged, forming huge, synergistic corporations that turn network programs into lucrative off-network properties across an array of media outlets.

While domestic rerun syndication continues to be a major source of television revenue, the home video market has recently become a significant profit generator for television studios. In this market, television programs are rented or sold directly to consumers on VHS tapes or DVDs. Although the VHS rental market had been vital to the film industry since the late 1980s, it had been only marginal for television producers. Unlike a film, which can be released as one tape, a typical television series necessitates many tapes, complicating both retail and domestic storage.

The rapid consumer adoption of DVD technology at the turn of the century transformed the market for television on home video, because of the discs’ high audiovisual quality and copious storage space. Series are now sold on DVD as “box sets”: book-sized packages with several disks holding an entire season’s worth of episodes. FOX pioneered this form with their release of the first season of The X-Files in early 2000; other studios soon followed, emptying their archives of older series, and, increasingly, releasing current series before their marketing in rerun syndication. ABC’s Alias, CBS’s CSI, and FOX’s 24 were released as full- season DVD box sets in this manner.

Regardless of the particular form of distribution, these three markets have become anything but “ancillary” in recent years. While having an international success is still not as necessary with television as it now is with film, it has extended the market life of series for years and even decades and has helped foster a global television culture. Meanwhile, the revenue generated from rerun syndication continues to expand and usually represents the bulk of profits for most successful scripted programs. However, the sudden growth of television on home video represents perhaps the ultimate ancillary market, as programs are now sold directly to consumers as collectible cultural artifacts.

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