Discovery’s Digi-Nets: What Do They Pay for Programs?

The ‘Sweet Spot’ for Discovery’s Digi-Nets

In our previous blog (February 17, 2010), we examined Discovery’s ‘Sweet Spot’ for commissions by the ‘Big Four’: The Discovery Channel, TLC, Animal Planet and Discovery Health, which will be relaunched as OWN: Oprah Winfrey Network.

This week, we look at Discovery’s ‘’Digi-Nets’ – so named because they are not yet fully distributed to the U.S. multi-channel market.

Discovery Networks U.S. Commissions:  The Digi-Nets
($’000 / primetime hour)        

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Coming Soon!
DocumentaryTelevision.com ‘Sweet Spot’ Report

What Do Channels Pay for Programs?
Our Research Findings for Purchase Soon

Our original research findings about the ‘Sweet Spots’ for 25+/- U.S. channels covers:

  • Network budget benchmarks for original commissions
  • Several levels: Signature, High, ‘Sweet Spot’ and Low
  • We cover ‘the biggies’ and diginets

If the data is available, we include:

  • Acquisition costs
  • Copro contributions
  • Benchmark costs for typical genres

The unique and valuable ‘Sweet Spot’ Report covers Discovery Networks, OWN Oprah Winfrey Network, AETN Networks including History, truTV, MTV, Nat Geo and many more.

How to Purchase the ‘Sweet Spot’ Data
Our 2010 archive, INCLUDING NEW RESEARCH FINDINGS, will soon be available for electronic purchase from DocumentaryTelevision.com.  We’re finalizing the purchase details now.

If you need ‘Sweet Spot’ data urgently, please email Peter Hamilton.

DocumentaryTelevision.com ‘Sweet Spot’ Report Coming Soon!

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Note: This information is taken from recent interviews with producers, network executives, distributors and experts, as well as from published sources. Actual budgets vary from project to project. 

What the Sources Say

  • The Digi-Nets bring many benefits to the Discovery Networks operation. For example, they add leverage to negotiations with distributors, advertisers and vendors; they prevent the competition from dominating a factual genre; they rerun Big Four inventory which bolsters the return on program investments; and they serve as a farm system for executives and creatives, including producers, talent and formats.
  • There is constant ferment amongst the Digi-brands: ID is headed for a brilliant career in an extended Big Four.  Discovery Kids disappointed its parent, was sold (for $300+ million) to toymaker Hasbro in 2009, and will be rebranded in 2010. The other Discovery Digi-nets fall somewhere in between.
  • In 2008, Discovery repositioned its Discovery Times channel as ‘ID Investigation Discovery’ to fill the Crime slot abandoned by Turner after it acquired CourtTV.  The reposition paid off: in 2010, ID regularly earns bigger audiences than many of its fully-distributed competitors.
  • Like the Big Four, ID relies on work-for-hire commissions rather than acquisitions or co-productions.
  • ID’s ‘High’ production cost estimate ($250) is for a prime time Crime show with a proven track record. As its ratings and distribution surge, ID may commission more costly ‘Signature’ series hosted by big, built-in talent. 
  • ID’s ‘Sweet Spot’ ($200) is for a rock-solid Crime series that delivers week after week.  
  • The ‘Low’ ID benchmark ($175) is for a commission assigned to a new producer who is prepared to work for a meager margin, or who operates from a small shop with low overhead.

The ‘Sweet Spot’ Framework Breaks Down for Digi-Nets Due to Their Lack of Scale

  • The Big Four are distributed to around 100 million homes. They green light 800+/- new program hours each year. Their scale allows useful cost benchmarks.  ID is approaching this category.
  • Science, Military, Planet Green and HD Theater lack such scale, and they use their scarce resources to commission a fraction of the programs green lit by a fully-distributed channel. 
  • Because of their relatively narrow program pipelines, the costs listed here for Digi-Net commissions are useful, but they are less predictive than the benchmarks for the Big Four and ID. (See Blog #1: What Are Networks Paying for Programming: Discovery’s Big Four).

Digi-Net Strategies

  • To overcome their incomplete distribution, low audience awareness and very tight budgets, Digi-Nets may decide to concentrate a year’s spending and promotions on a handful of franchise series or specials, filling the remainder of the schedule with reruns and acquisitions.  
  • The Digi-Nets may consider co-productions, because they deliver on-screen values that exceed the network’s investment for U.S. rights.
  • The digital channels are also more open to acquisitions.
  • Programs are occasionally bartered for Direct Response inventory or other benefits.
  • Discovery’s Digi-Nets can serve as the minor leagues for the Big Four … places to try out new producers, formats and talent.
  • They create cost savings from the use of Discovery’s expanding footage amd music libraries.

More Sweet Spots
Next week: AETN.
Coming soon: Scripps Networks, Nat Geo Channels, Smithsonian Channel, Canadian Channels, BBC, France, Germany, PBS, Arte, and many more.