Sunday, May 03, 2020

It's all about the money - Why TV stations cannot simply do reruns of their old dramas during this COVID-19 situation

As a result of the ongoing COVID-19 situation, the Japanese entertainment industry is going through a difficult period just like everyone else. Filming and recordings of dramas and variety shows have been stopped thus resulting in variety programs running of new content to air, recordings done remotely with artistes and guests dialing in from different places and dramas being unable to start their runs or have to suspend their runs midway. The easy way out seems to be showing old dramas to fill in the slots vacated by the Spring 2020 dramas but why is that TV stations are not taking the easy way out and have to resort to showing special editions or highlights from old dramas? This article from Daily Shincho offers some insights into why this is happening.

As usual, I am not translating the entire article but will just re-organise the key highlights here.

- Reruns don't bring in any profits for the TV stations. If they just show old dramas without any production fees spent, they are unable to earn sponsorships from their corporate clients. By repackaging the old drama through re-editing it into a "special edition", they can still earn sponsorship deals.

- On average, a sponsorship deal for a one-hour primetime drama is about JPY 40m. After deducting expenses such as production costs, the TV station earns about 20% of this. If they do a rerun, the sponsorship fee will be much lesser so the profit margin for the TV station is close to nil if the old drama is just shown as it is.

- Using NTV and TV Asahi's financial results for the fiscal year 2018 as an example, you can see this difference clearly. TV Asahi has a higher proportion of reruns compared to NTV as it shows reruns of its old dramas such as "Aibou" in the afternoon at 2pm and 3pm. On the other hand, NTV which not only has lesser reruns, has a higher proportion of younger viewers than TV Asahi so this tends to attract more sponsors. As such, the broadcasting revenue for NTV was JPY 256.27 billion compared to JPY 187.939 billion for TV Asahi.

- A TBS producer who was interviewed for this report, mentioned that TV Asahi's way of getting ratings i.e. repackaging the old drama as a special edition, is something which isn't allowed to be done in other TV stations. By doing so, the TV station can still get a 15% profit margin as compared to 20% for a new drama.

- However, there is also the issue of guarantee payments (second usage fees) to the cast which has to be considered when doing reruns. Generally, this is the same across the board i.e. based on copyright neighbouring rights which tend to be several tens of thousands yen. Considering that the situation of having to show reruns will continue for the time being, it is expected that rights groups of artistes such as the Japan Actors Union and Japan Association of Music Enterprises will demand for an increase of such fees.

- The decision to allow a rerun lies in the rights holders i.e. scriptwriter, director, actors and actresses themselves. As such, if anyone says no to the rerun, the drama cannot be shown on TV again. For example, there have been viewers who say that they want to see old programmes of SMAP. However, the SMAP members are now in different agencies and ultimately, it is up to them to give the go-sign for reruns, not their agencies. As such, all  5 of them must agree to the rerun before it can happen.

- Another pressing problem for TV stations due to the inability to make new dramas is the drop in CM income. Note that this is different from sponsorship deals. Sponsors are mentioned within the programme in this format i.e. "this show is brought to you by Company A, B, C and D". CM income comes from the short commercials which are aired in the commercial slots. As such, the sponsorships are called time CMs and the CMs in commercial slots are called spot CMs. Currently, the latter's volume has gone down to half than usual.

- Due to the COVID-19 situation, some industries have had to close down for the time being especially those in the entertainment, tourism and aviation sectors. Usually during the Golden Week period, there would be lots of CMs. However, Tokyo Disneyland is currently closed so it doesn't make sense for it to advertise. Airlines cannot place ads too since they can't be urging people to get out of their homes and travel around.

- In place of these vacated CM slots, TV stations are showing more public service commercials from Ad Council Japan. Compared to 2011 when the East Japan Earthquake crisis happened and many companies refrained from placing advertisements then as a show of self-restraint, the loss in CM income is more widespread this time as it affects all industries.

- If the TV stations cannot get enough AC Japan ads to fill in the vacated CM slots, they may have to fill them with programme trailers.

- Another key area where TV stations make money is through events. However, mass gatherings are banned for now so this will have a great impact on their bottomline. Some of the events already cancelled include "Boston Art Museum Exhibition", "FUJI&SUN2020", and "Sore ike! Anpanman Musical".

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