The Reality of Budgets

On Thursday, March 13th, members of the Editors Collective gathered to hear some straight talk about reality TV show budgets. Doing the talking were: Showrunners Jill Michelle Williams (“The Biggest Loser,” “Toddlers in Tiaras”) and Francis Lyons ("MTV’s MADE"), Post Supervisor Liz Schmidt (“Teen Mom,” “Running Russell Simmons”), Head of Production Steve Gruskin (“10 Grand in Your Hand,” “Dear Genevieve”), and Entertainment Lawyer Jimmy Finn (“Amish Mafia,” “Impractical Jokers.”)

Seated from left to right: Liz Schmidt, Francis Lyons, Jimmy Finn, Jill Michelle Williams, Steve Gruskin.

We asked hard-hitting questions... and some of the answers were surprising. Here are the highlights:

Production company profit margins for reality shows are extremely slim (10% of the total budget to be precise.) And the only way for production companies to make serious money is by volume: Having a stable of shows going at all times, each of them yielding slim profits that all add up. Small companies with only one or two shows are barely covering the costs of their overhead, paying their executives, and shelling out to make costly pitch reels so they can try to sell new shows.

• What’s the average budget for an hour-long show? No clear consensus on this. Lyons guesstimated $300K to be the median, with the low end between $50K - $75K.

It’s highly unlikely that production companies are “skimming” by inflating line items for things like editors. That’s because the networks demand full transparency when it comes to spending their money. For the first 4 to 5 seasons, a show is auditable and production companies must submit cost reports of what they actually spend on each line item — sometimes they even have to submit their bank statements. And anyway, as Gruskin pointed out, a production company wouldn’t really save much by paying their editors $50 less – they’d do better to pay for the best editors they can afford and deliver a quality show.

After the first 4 to 5 seasons, the auditable clause in the show’s contract expires, and at that point the production company may try to save money – usually by slimming down the crew and/or trimming the schedule, since by then the show has become more streamlined.

The notion that a show’s budget is tied to its ratings is, apparently, a myth. A show’s schedule and budget are pretty much locked in before the prod co has even shot the pilot. It’s all worked out as part of the negotiation of selling the show. Built into the contract are 3% budget increases per season, to account for inflation. And if overages occur, depending on the circumstances and who’s responsible for them, either the network will pony up – or the prod co will have to eat the expense (there goes another chunk of the slim profit margin.) Finn pointed out, “That’s why when you make the deal, you have to account for overages in the contract.” Sound familiar? The editor equivalent would be accounting for OT in our deal memos.

Why do some production companies pay better than others? Certainly, the type of show has a great deal to do with the budget – as Finn said, “Scripps budgets are lower because their Proctor and Gamble ads for soap don’t sell as well as Lexis ads on Bravo.” But on top of that, production companies negotiate their show budgets in the same way that we editors negotiate our rates. And as we all know, some negotiators are better than others. Whether it’s because they have a strong relationship with the client, or they have the right shows on their resume – some production companies just have the clout to command higher budgets than others. And when a production company is first starting out – like a newbie editor – they’re likely to take whatever they can get. Even if it means agreeing to an unreasonable delivery schedule, or a budget that forces them to cut corners on things like paying for OT and having the facilities cleaned on a regular basis.

• Why do some production companies pay OT and others don’t? Unlike unionized scripted TV, reality TV is a wild west where each company seems to be making up its own rules. The difference from shop to shop, it appears, is cultural. As a general rule, the places that pay OT are often the bigger companies like Viacom that have in-house HR departments, or they’re union shops like ITV. When it comes to smaller production companies, it’s pretty much a case of what the head of production deems fair and reasonable, and that varies from person to person. According to Gruskin, OT is generally not a line item on the budget. Overages in post, he notes, can really kill a budget since, next to the show runner or EP, editors are the highest paid position.

• Are show budgets shrinking over time? There was no clear answer here. Schmidt feels like schedules and budgets have been shrinking over the past few years – but the other panelists disagreed, saying that it all depends on the type of show.

• What do you think of unions? Most of the panelists had no experience with union shows to draw on. Gruskin stated that he would be more than happy to designate a percentage of his budget for health and retirement benefits – but worried that union regulations might restrict his ability to hire the editors he wanted. (Editors note: Gruskin's past union experiences were not with editors but with producers and actors.)

• What makes an editor worth more to you? While everyone on the panel cited things like finesse and skill with music and storytelling, far and away the biggest factor was: An editor who is easy to work with and doesn’t flip out under pressure. As Lyons warned: Beware of editor burnout! (Translation: Editors are human, so take a break every now and then.)

• What are the going rates for editors? According to Williams: $2,500 for a junior editor; $3,000 for a mid-level editor; $3,500 and up for a senior editor depending on their credits. Said Williams, “I’ve been lucky to work with some who make $4,000 to $6,000 per week.” Wow!

Gruskin added that it depends on the network – and the location: Editors really do make more in LA. Why? According to Lyons, it’s strictly precedential – editors in LA have a precedent of making certain rates, and so the networks know that they expect and demand it. Really? Verrry interesting. I wonder what would happen if NY editors expected and demanded to always be paid for OT and get health and retirement benefits?

 

In summary:

Production companies are not that different from editors, in that they’re relatively small fish in the reality TV financial food chain. The real Big Kahunas raking in the dough are the handful of conglomerates that own the networks. The reality TV industry (like most in today’s economy) is disproportionately top heavy, and that’s bad news for us. Why? Since the production companies are just as squeezed as we are, it’s not easy for them to go to bat for us on things like higher rates, paid OT, etc.

In a sense, production companies are even more vulnerable than editors – when a show gets canceled, the editors can just hop on a new gig while the production company has to dig itself out of a hole — and in some cases go out of business. And prod co’s are only becoming more vulnerable as it becomes easier and easier for young upstarts to get into the game. Networks know that if one prod co says a budget is too low, they can just shop around for another prod co that will do it for less. Connect the dots and it’s not hard to figure out why some prod co’s are cutting corners on things like paying OT, or say… coffee. It’s the good ole “race to the bottom” economics: Networks are scrimping not because they’re hurting for cash – but because they can.

On a positive note, we aren’t entirely powerless to stem the downward tide. Every time you stand up for being fairly compensated, you’re pushing back. And apparently, editors’ voices still resonate in the world of reality TV – just think of our counterparts in LA! When we make noise, it travels upward. So make some noise!

 

Written by Anna Holtzman

The Reality of Budgets panel was the third in an ongoing series of EC | Education & Advocacy Panels. Recaps of the previous panels can be found below.

Our next panel will be Unions: What's the Real Deal?

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