Television deficit financing is the practice of a

network Network, networking and networked may refer to: Science and technology * Network theory, the study of graphs as a representation of relations between discrete objects * Network science, an academic field that studies complex networks Mathematics ...

or channel paying the studio that creates a show a license fee in exchange for the right to air the show, and in which the license fee is less than the cost of the show. A major broadcast network will ask a program producer to share in the

financial risk Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial ...

when considering adopting a new program to its schedule; at least for the first season of the series.

Deficit A deficit is the amount by which a sum falls short of some reference amount. Economics * Balance of payments deficit, when the balance of payments is negative * Government budget deficit * Deficit spending, the amount by which spending exceeds ...

financing is often the norm for scripted television, this came during the Post Network Era. Deficit financing however, does not cover the cost of product, which leads to a deficit for the studio. Television deficit financing also helps to minimize the substantial risks and costs of developing programs for the networks and gives studios initial benefits as well. The studio bears the difference between production costs and licensing fees, but recoups significantly more money if the show is sold in

syndication Syndication may refer to: * Broadcast syndication, where individual stations buy programs outside the network system * Print syndication, where individual newspapers or magazines license news articles, columns, or comic strips * Web syndication, ...

. The main benefit of deficit financing comes from syndication, this offers different windows for the program, i.e. first run syndication, second run,

cable Cable may refer to: Mechanical * Nautical cable, an assembly of three or more ropes woven against the weave of the ropes, rendering it virtually waterproof * Wire rope, a type of rope that consists of several strands of metal wire laid into a hel ...

, etc. There is both good and bad to deficit financing, it gives the studios the opportunity to gain major rewards, but they are also taking most of the risk. For networks, they are minimizing most of their risk, but they risk losing out on most profit. If the network orders enough episodes of a show, the studio can then sell the series to other markets. Deficit financing minimizes risks and costs of developing programs for

networks Network, networking and networked may refer to: Science and technology * Network theory, the study of graphs as a representation of relations between discrete objects * Network science, an academic field that studies complex networks Mathematics ...

. Lotz, Amanda D. (2007) “The Television Will Be Revolutionized”. New York, NY: New York City University Press. p. 83

References

{{Reflist Television terminology Television syndication