TRF 235 Trade Magazine

History

The National Broadcasting Company (NBC) was founded on November 15, 1926. NBC began as a joint venture of mass communication pioneers RCA, AT&T, and Westinghouse Electric Corporation, but is now a Comcast subsidiary under the NBCUniversal umbrella. The company began as a radio broadcasting company before expanding to broadcast television in 1939 with its broadcast of the opening ceremonies of the New York World’s Fair. Continue reading →

A Brief Overview

Shonda Rhimes and her Burbank, California-based production company, Shondaland Productions, have become one of the most revolutionary content creators in broadcast television. Shondaland was first conceived when ABC Studios, picked up Rhimes’ pitch for medical drama, Grey’s Anatomy. Since then, the company has grown to around 550 employees and pioneered the diversification of broadcast television (Myers, 2015). Shondaland and its benevolent monarch, Rhimes, have built a strong relationship with ABC Studios, and even after nearly a decade together Shondaland renewed its exclusivity contract until 2018 (Goldberg, 2014a). On a more personal note, Rhimes had an intrinsic knack for storytelling, even as a young girl. Rhimes would tell all Watergate stories she overheard her mother watching, using canned food for actors in her kitchen pantry. And while those cans eventually turned into real people, her riveting stories of scandal and heartache never changed- and that’s why she is one of the most valuable minds in all of television (Gross, 2015).

Assets

Shondaland Productions is an ABC-based production company, which means everything produced by Shondaland is a shared asset with ABC Studios until their contract expires. Although Shondaland is technically independent of ABC, their partnership extends for over a decade, and with a mutually beneficial relationship the partnership probably will not disintegrate for years to come. Since Rhimes gets the final word on anything with the Shondaland label, she is the most valuable asset to both Shondaland and ABC Studios- in fact ABC’s entire Thursday night lineup is either produced, created or written by Rhimes. Some of the biggest hits are Grey’s Anatomy, Scandal and How to Get Away With Murder, all shows with phenomenal ratings for network television (Casserly, 2013). No other external production company has created a comparable amount of profitable intellectual property as Rhimes has for ABC. Even in an era when broadcast television is changing at exponential speeds, Rhimes has constantly made content that attracts millions of viewers, giving her both a flawless reputation and an emblem of genius (Sims, 2015).

Business Model

Rhimes’ business model changed throughout the various stages of her career. In the beginning, before Grey’s Anatomy came into existence, Rhimes would go to all the big studios and pitch her idea and cross her fingers that someone would pick it up. In fact, Grey’s Anatomy is the by-product of a not-so-profitable pitch about women journalists covering the brutality of war, but when her pitch was rejected Rhimes asked ABC what kind of show Disney CEO, Bob Iger, was looking for- and the producers’ response was a medical show. Just like that Rhimes came up with one of the most profitable shows in modern network television (Gross, 2015). Now that Rhimes has built a reputation her business model no longer involves fruitless pitches, in fact, she now has the freedom to pursue whatever project her heart desires under her partnership with ABC. The president of ABC Entertainment Group even said, “Shonda is free and has a huge amount of power to pursue her vision is precisely how the magic happens,” which makes Rhimes’ business model asking ABC to fund a project- and then getting it funded at her command. From the perspective of Rhimes’ business opposed to her personal acclaims, it wants to maintain ABC’s lead in the 18-42 demographic for network programming (Casserly, 2013). Everyone in the business knows broadcast television is on the decline: NBC is relying on throwback programming; FOX took ABC’s business model of creating a show featuring a diverse cast to bring in views with Empire, and CBS is losing its 18-42 demographic. That being said, Shondaland and ABC’s does need to worry about CBS: while Shondaland leads in the coveted 18-42 demographic, CBS has comparable ratings, but spread out across more demographics. On top of that, CBS is set to launch its own online streaming service, CBS All Access, which will strongly appeal to the demographic Shondaland caters to. Shondaland and ABC have made a venture into online streaming by licensing out Rhimes’ shows to Netflix, but the market is changing so rapidly it’s hard to tell how the Shondaland business model will develop (Sims, 2015).

Revenue Model

            As briefly touched upon in the previous sections, ABC and Shondaland are contractually joined until 2018, so until then ABC and Shondaland split all the revenue generated through advertisers and Netflix licensing. Grey’s Anatomy and Scandal alone bring in around $13 million in advertising revenue alone, that’s around $300 a season just on first-time air revenue. Forbes forecasts that there are tens of millions more dollars being made off syndication and licensing agreements, as well as online viewership on ABC’s website and Hulu (Casserly, 2013). An advertisement during Rhimes’ hottest show, which right now is How to Get Away with Murder, cost around $229,794 for 30 seconds. That is closely followed by Scandal and Grey’s Anatomy which come in around $207,255 and $160,415 for 30 seconds respectively (Steinberg, 2015). Rhimes personally profits through her salary, which she takes out of Shondaland’s cut of the profits. She is estimated to make around 12 million per year (Casserly, 2013).

Casserly, M. (2013, May 8). How ‘Scandal’s’ Shonda Rhimes Became Disney’s Primetime Savior. Retrieved February 6, 2016, from http://www.forbes.com/sites/meghancasserly/2013/05/08/how-scandals-shonda-rhimes-became-disneys-primetime-savior/#902c9aa4670f

Goldberg, L. (2014, May 13). Shonda Rhimes Inks New Overall Deal With ABC Studios. Retrieved February 10, 2016, from http://www.hollywoodreporter.com/live-feed/shonda-rhimes-inks-new-deal-703585

Goldberg, L. (2014, December 22). How to Get a Job in Shondaland. Retrieved February 7, 2016, from http://www.hollywoodreporter.com/live-feed/how-get-a-job-shondaland-753483

Gross, T. (2015, November 11). Shonda Rhimes On Running 3 Hit Shows And The Limits Of Network TV. Retrieved February 8, 2016, from http://www.npr.org/2015/11/11/455594842/shonda-rhimes-on-running-three-hit-shows-and-the-limits-of-network-tv

Myers, R. (2015, September 23). Shonda Rhimes on Power, Feminism, and Police Brutality. Retrieved February 8, 2016, from http://www.elle.com/culture/career-politics/q-and-a/a30186/shonda-rhimes-elle-interview/

Shonda Rhimes. (n.d.). Retrieved February 9, 2016, from http://www.imdb.com/name/nm0722274/?ref_=nv_sr_1

ShondaLand. (n.d.). Retrieved February 10, 2016, from http://www.imdb.com/company/co0170849/?ref_=fn_al_co_1

Sims, D. (2015, May 12). How Network Television Is Facing the Future. Retrieved February 10, 2016, from http://www.theatlantic.com/entertainment/archive/2015/05/network-television-netflix/393005/

Steinberg, B. (2015, September 29). TV Ad Prices: Football, ‘Empire,’ ‘Walking Dead,’ ‘Big Bang Theory’ Top The List. Retrieved February 9, 2016, from http://variety.com/2015/tv/news/tv-advertising-prices-football-empire-walking-dead-big-bang-theory-1201603800/