Why Hollywood Is Bearish On The Future Of Television

Forbes

Producing a hit TV series like The Bear was once a path to serious riches for its cast and creators. But in another massive entertainment shift, developing groundbreaking shows is worth hundreds of millions less than it used to be.  Read the full story on Forbes: https://www.forbes.com/sites/mattcraig/2024/06/26/future-of-tv-business-television-showrunners-bear-season-three-christopher-storer/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, why Hollywood is bearish on the future of television.

00:07It wasn't long ago that creating a hit show like The Bear was a TV writer's ticket to

00:11lifelong financial security and, in a few rare cases, even a billion-dollar fortune.

00:18The half-hour drama, which returned to Hulu for its third season this past Wednesday night,

00:23is everything a modern TV series aspires to be—an awards juggernaut, a ratings powerhouse,

00:29and a cultural touchstone since its debut in June 2022.

00:34Even as recently as a decade ago, such success could have meant multiple 22-episode season

00:38orders and eventually a syndication deal that would produce a massive financial windfall

00:43for the studio and the showrunners.

00:46That big payday would have also extended even to the actors, who were traditionally given

00:50residuals for reruns and, in some instances, a slice of the profits.

00:55But in today's TV and streaming landscape, profit participation is all but extinct, and

01:01in most cases, so are the profits themselves.

01:04In 2023, labor strikes shut down television production for half the year, and in its wake

01:09the fear of another economic downturn has caused a significant contraction across the

01:13industry, with widespread budget cuts, layoffs, lowball offers, and far fewer shows being

01:19ordered.

01:21With less money to go around, talent representatives and studio executives are left to argue

01:25over how to divide up the pieces of a rapidly diminishing pie.

01:30With a hit show like The Bear, Forbes estimates that series creator Christopher Storrer earns

01:35$5 million per year in an overall deal with FX, with his fees for writing, producing,

01:40and directing counted against the total.

01:43Instead of owning a percentage of the series' profits, which TV creators had traditionally

01:47maintained for decades, Storrer and co-showrunner Joanna Callow are rewarded for their success

01:53through a bonus pool based on a set of achievements, including season renewals, award nominations,

02:00and streaming service rankings.

02:02For season 3 of The Bear, which swept the 2023 Emmy Awards, winning Best Comedy, Best

02:07Actor, Best Supporting Actress, Best Supporting Actor, as well as awards for Best Writing

02:11and Directing, Forbes projects those payouts will be a little more than $1 million for

02:17Storrer and Callow.

02:18Combined, it's enough to place them in the upper echelon of modern TV creators, but that's

02:23less than one-tenth of what the old guard showrunners like Dick Wolfe, of Law & Order,

02:29Greg Berlanti, of CW's Arrowverse, Taylor Sheridan, of Yellowstone, and Shonda Rhimes,

02:35of Grey's Anatomy, make in a given year, with no visible plan to eventually reach the

02:40economic stratosphere.

02:43Under the traditional TV syndication system, the potential existed for a hit series like

02:47Seinfeld or CSI to become its own cottage industry.

02:52Once a studio paid to produce the show, it would essentially rent it out to distributors,

02:57first a broadcast network, then cable channels, overseas markets, and eventually streaming

03:01services, an infinite number of times.

03:05While most shows struggled to break even, a hit series would eventually reach profitability

03:09the longer it ran, and make astronomical profits in syndication.

03:14In that system, each party was incentivized to produce as many episodes as possible, and

03:19As contracts came up for renewal on long-running shows, showrunners and actors had considerable

03:24leverage to negotiate for higher fees and profit participation.

03:29The classic example is a show like Friends, which earned hundreds of millions of dollars

03:33each year, enough to make Warner Bros. Studio and NBC happy, as well as the talent.

03:39Famously, in its third season, the six principal actors collectively negotiated to be paid

03:44equally for the duration of the show, earning $1 million per episode for the final two seasons,

03:49as well as 2% of the show's profits.

03:52In 2023, decades after Friends went off the air, Forbes estimates that Jennifer Aniston

03:57earned $17.5 million in residuals.

04:02That all changed with the rise of streaming.

04:05In the new landscape, a single company acts as the studio that pays to produce the show,

04:09the network where it first airs, and the syndication network where its catalog can be replayed,

04:14meaning there are fewer ways to capitalize on a breakout hit.

04:18The revenue through subscriptions remains relatively flat, while a show's costs rise

04:23over time, disincentivizing more episodes and more seasons.

04:29For full coverage, check out Matt Craig's piece on Forbes.com.

04:34This is Kieran Meadows from Forbes, thanks for tuning in.

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