Lost ... how much?

Just went in search of a report about Sky buying up the rights to show the next two seasons of Lost in the UK, and found one here . This article states that Sky will pay between £600,000 and £800,000 per episode for the exclusive rights.

This seems like a huge amount of money to me.

I realise that my knowledge of the mechanics of budgeting and making a TV show is pretty limited, but IIRC this amount of money would be quite a bit higher than the cost of making each episode of B5.

Have costs in the TV industry increased that much over the last 10 years?

Is this kind of brass fairly normal for the rights to show a successful show?

Anyone have any clues?

LOST is a pretty expensive show to make. You have a primary cast of 14 actors (This is the survivors in S1 and S2), the credits seem to go on for days, considering the changes in format that have come about in S3. I think that's really their biggest expense. The Pilot was horrendously expensive, because of the fuselage, and having to transport it and so forth. There are a few big CGI things on occasion, but not too much. Not sure if it went through, but, I know there was talk about taxes being raised in Hawaii, so that was believed (in S1 discussions) to be adding quite a bit per episode cost in future seasons.

TV union contracts in the U.S. have three or four basic teirs in roughly ascending order:

Basic cable
* Premium Cable
* First Run Syndication / Broadcast Netlets (Formerly UPN and The WB, now just The CW)
Major Broadcast Networks

* I'm not sure about exactly where premium cable falls. It may be above or below First Run Syndication, they may be basically comparable.

The further you go up the food chain the higher the mandatory minimums that set the negotiating floor get, the better the residuals packages get and the better the automatic year-by-year salary increases get. At the same time each tier represents a broader viewership, higher ad rates and higher license fees, which means the studios can afford to spend more because more of the cost will be off-set by the fee the network pays.

In addition, most American series are deficit financed - each episode costs more to produce than it earns back in domestic license fees. The difference has to be earned by by foreign sales, syndicated reruns and (in recent years) DVD sales.

Part of the Warner Bros./PTEN deal was that the shows couldn't cost more per episode than the network could expect to earn in ad revenues. The idea was to have the network fee closely match or slightly exceed the production costs, thus making sure that each show broke even or turned a small profit during its first run, whether or not it ever sold elsewhere or into reruns. (Home video was not even a consideration in the U.S. when PTEN debuted.) But this was a highly unusual arrangement.

For most of its run, B5 cost a bit under a million U.S. dollars per episode to produce. During the show's run the contemporary Trek shows TNG, DS9 and Voyager came in at around $1.7 to $3 million per episode. (The Voyager pilot alone cost more than a full season of B5.)

By the time it reached its final season Friends cost over $12 million an episode, with all the regular cast getting over a million each.

With a hit show like Lost, everybody lines up for a pay increase above the mandatory ones, because the actors (especially) feel they have the network over a barrell. While some characters could be expendable, you can't really do the show without Jack, Sawyer and Kate at a minimum, which puts them in a very strong negotiating position. This is one reason so few shows go more than 7 seasons these days, even when the ratings remain strong - they become too expensive to produce. Exceptions tend to be shows like E.R. and the Law and Order shows - series without strong continuing storylines that are more about the workplace than the private lives of the characters - and where characters can therefore be replaced without affecting the underlying premise. The original L&O has undergone something like a 300% cast turn-over since the pilot. Only Sam Waterson remains from the show's earliest days, and his Jack McCoy was himself a replacement for ADA Ben Stone.

So yeah, Lost is expensive, especially in its third hit season. The Hawaii location doesn't help, since the cost of living in general and the need to have so many necessities shipped or flown in, plus the cost of bringing in guest stars (first class ticket, first class hotel during shooting) can't help.

Regards,

Joe