Opportunity Knocks?: The Rising Cost of Original Programming on Cable TV

April 29, 2008

The May 5 edition of BusinessWeek features an article entitled Spending Like Mad Men on Cable TV. The article notes the growing cost of original programming on cable television which is up to $1 million per episode for one-hour scripted dramas on basic cable and $3 million per episode on premium television. The run-up is threatening to begin eating into profit margins at the networks.

In theory, depending on the success of EliteXC’s debut on CBS in May, this trend could create increasing interest in MMA programming. The product is relatively cheap to produce in comparison to other original programming options (at least from the networks’ prospective) and has demonstrated an ability to draw viewers and sell subscriptions. The key factor that would seem to be holding back expanded MMA coverage on cable is the lack of mainstream acceptance and success for anyone outside of the UFC, two things that could change on May 31.

One particularly interesting potential development in the television industry that could affect MMA is prospect of a new premium television station started by Paramount, MGM, and Lionsgate. On April 21, the studios announced they will leave Showtime to start their own network in 2009. Such a network could easily be in the market for cheap, attractive programming.

However, according to BusinessWeek, some analysts believe the studios’ threat is merely a negotiating ploy. Showtime was asking the studios’ to accept a lower fee during negotiations for an extension. It is apparently a difficult time to launch a new network with major cable and satellite companies saving space for HD channels and other services (such as on demand video).

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