Syndication—leasing TV stations or cable networks the exclusive right to air TV shows—is a critical component of the distribution process. Each year, executives from thousands of local TV stations and cable firms gather at the National Association of Television Program Executives (NATPE) convention to buy or barter for programs that are up for syndication. In so doing, they acquire the exclusive local market rights, usually for two- or three-year periods, to game shows, talk shows, and evergreens—popular old network reruns such as I Love Lucy.

Syndication plays a large role in programming for both broadcast and cable networks. For local network-affiliated stations, syndicated programs are often used during fringe time—programming immediately before the evening’s prime-time schedule (early fringe) and following the local evening news or a network late-night talk show (late fringe). Cable channels also syndicate network shows but are more flexible with time slots; for example, TNT may run older network syndicated episodes of Law & Order or Bones during its prime-time schedule, along with original cable programs like White Collar or Major Crimes.

Types of Syndication

In off-network syndication (commonly called reruns), older programs that no longer run during network prime time are made available for reruns to local stations, cable operators, online services, and foreign markets. This type of syndication occurs when a program builds up a supply of episodes (usually four seasons’ worth) that are then leased to hundreds of TV stations and cable or DBS providers in the United States and overseas. A show can be put into rerun syndication even if new episodes are airing on network television. Rerun, or off-network, syndication is the key to erasing the losses generated by deficit financing. With a successful program, the profits can be enormous. For instance, the early rerun cycle of Friends earned nearly $4 million an episode from syndication in 250-plus markets, plus cable, totaling over $1 billion. Because the show’s success meant the original production costs were already covered, the syndication market became almost pure profit for the producers and their backers. This is why deficit financing endures: Although investors rarely hit the jackpot, when they do, the revenues more than cover a lot of losses and failed programs.

First-run syndication is any program specifically produced for sale into syndication markets. Quiz programs such as Wheel of Fortune and daytime talk or advice shows like the Ellen DeGeneres Show or Dr. Phil are made for first-run syndication. The producers of these programs usually sell them directly to local markets around the country and the world.

Barter vs. Cash Deals

Most financing of television syndication is either a cash deal or a barter deal. In a cash deal, the distributor offers a series for syndication to the highest bidder. Because of exclusive contractual arrangements, programs air on only one broadcast outlet per city in a major TV market or, in the case of cable, on one cable channel’s service across the country. Whoever bids the most gets to syndicate the program (which can range from a few thousand dollars for a week’s worth of episodes in a small market to $250,000 a week in a large market). In a variation of a cash deal called cash-plus, distributors retain some time to sell national commercial spots in successful syndicated shows (when the show is distributed, it already contains the national ads). While this means the local station has less ad time to sell, it also usually pays less for the syndicated show.

Although syndicators prefer cash deals, barter deals are usually arranged for new, untested, or older but less popular programs. In a straight barter deal, no money changes hands. Instead, a syndicator offers a program to a local TV station in exchange for a split of the advertising revenue. For example, in a 7/5 barter deal, during each airing the show’s producers and syndicator retain seven minutes of ad time for national spots and leave stations with five minutes of ad time for local spots. As programs become more profitable, syndicators repackage and lease the shows as cash-plus deals.