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Watching the Cash Flow

The average price of a TV series now tops well over $1 million an hour. And that has network executives fearfully wondering where the spending will end.

November 22, 1998|BRIAN LOWRY | Brian Lowry is a Times staff writer

TV, according to ABC's erstwhile ad campaign, is good. Prime-time TV, according to anyone whose name doesn't end in Trump or Rockefeller, also happens to be very expensive to make.

Even in today's media-savvy culture, people probably don't give much thought to how much it costs to produce their favorite television shows or to where that money goes. Nevertheless, the issue is significant to the TV industry, especially as ratings continue to dwindle, gradually resulting in a flattening of advertising revenues.

Granted, top-notch series like "ER," "NYPD Blue" and "The X-Files" showcase the best television has to offer, in the process exhibiting a level of quality that often puts big-budget feature films to shame for a fraction of the price. But should it really cost more than $1 million to produce an episode of CBS' "Promised Land," the recent Bo Derek series "Wind on Water," or UPN's short-lived "Mercy Point," which was known throughout the development process as " 'ER' in Space"?

According to TV executives, the budget for most new one-hour series runs from $1.3 million to $1.8 million per episode, with $750,000 to $950,000 spent on average for a half-hour sitcom.

Everybody feeling they have a sure-fire dramatic hit brewing in them, as a result, first has to find someone to foot the bill. Based on budgets reviewed by The Times, studio spreadsheets regularly include weekly items like $15,000 for makeup and hair, $30,000 for wardrobe, $35,000 for lighting and $25,000 just to dress the sets.

Viewers might take for granted songs they hear in the background or over the opening credits, but music rights for one series ran $40,000 alone. After reviewing several budgets, in fact, The Times put together its own sample breakdown for a fictitious hourlong drama--one kept relatively affordable (a mere $1.5 million) because it doesn't involve major special effects or come with a huge star attached.

Actors and top producers not surprisingly represent a big part of the average series budget, but an enormous number of variables affects the price, which can fluctuate widely from show to show. Viewers have doubtless heard about the extravagant sums paid for top programs and talent--how NBC now shells out $13 million to Warner Bros. Television for each installment of "ER," or how Tim Allen is garnering $1.25 million per episode of "Home Improvement" this season, which buys a lot of power tools.

Salaries often increase exponentially the longer a popular series stays on the air, with stars like "Mad About You's" Paul Reiser and Helen Hunt gaining the leverage to command huge raises in their fifth year and beyond, just as the "ER" cast negotiated new contracts to share in that bounty.

Still, these inflated figures represent the exception rather than the rule. A program must run for several years and achieve considerable popularity to break the pattern followed on most new shows.

Casting a well-established performer like Ted Danson or Michael J. Fox as the lead will skew the amount that goes toward what's known as "above-the-line" costs--that is, the portion of the budget allocated to actors, directors and writers.

On the flip side, big special-effects shows like "Star Trek: Voyager" and "Xena: Warrior Princess" (the latter saves money by shooting in New Zealand) place a higher percentage of their budgets toward "below-the-line" costs, which include technical areas such as special effects, costumes and production design.

Industry executives generally agree on two points: First, below-the-line costs have stayed relatively fixed over the years, especially on half-hour series; and second, the price of producing TV programs continues to escalate--a serious problem for the industry as audiences splinter.

Peter Chernin, chairman of the Fox Group, made that point in a speech to Fox's affiliates earlier this year, pointing out how deeply studios are digging into their pockets to produce high-quality programming.

"In the late '80s, the average one-hour drama cost a little over $1 million to produce," Chernin said. "Last year, 'The X-Files' cost more than $2.5 million per episode." Sources say that figure has climbed even higher with the program's move from Vancouver, British Columbia, to Los Angeles this season.


Despite agreement about the need to do a better job reining in costs, the pressure to find hits has actually tipped the scales in the other direction. With six broadcast networks vying for talent, established writers and actors are in ever-increasing demand, giving their representatives more clout in striking deals.

"The reality is the big jumps are above the line," says Andy Kaplan, executive vice president of Columbia TriStar Television Group. "It's a never-ending story, and it's all about competition. . . . It's essentially a free-market paradigm: supply and demand."

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