Nets Can Gain From Outsourcing

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The economy has tanked; everyone is feeling it. Television production is no different. We are not strangers to recession in this industry: It has happened before and it will happen again. With countless networks, infinite Internet outlets and only so many ad dollars to go around, networks need to become lean.

Networks will start looking for places to cut costs while continuing to succeed; they are wasting money buying office space, equipment and technology for shows that may or may not work — not to mention the expense of manpower to run it all. Production houses need to reallocate budget dollars while still managing to create compelling content. They can't be wasting resources racking up fixed costs by buying infrastructure for new shows; at the same time, networks can't afford not to keep producing shows.

The solution seems to be outsourced production management to qualified companies. Outsourcing production allows networks to reduce the cost and headache of production, while upping the caliber and maintaining ownership of their shows. They need to maximize the dollars they do spend without sacrificing quality.

In today's market, networks cannot surrender the creativity and content of their shows just to make ends meet, or viewers will turn to other media.

To make a seamless transition from in-house to outsourced production, networks will need to find partners that cover all sides of good broadcast production: the creative, the technical and the business aspects. Independent production companies will need the ability and expertise to provide higher level services, on a smaller budget, with the same results. Networks will need access to the same diverse talent pools they once had in-house.

Accomplishing this isn't as easy as it sounds, but if an independent production company can provide high quality production services with scaled back costs and complexity, the networks will follow.

The current model with production-management companies will not work. Many outsourced production-management houses are one-man shows, where they orchestrate the creative, the technical and the business components of the entire project. So, let's say something happens to that one man. What happens to the network's broadcast? It stops in its tracks.

Networks are looking for the sweet spot. They need a more expansive yet precise approach to facing the challenge of production management. Most production companies consist of less than 10 employees. These small firms can only handle 20 to 30 shows. This requires networks to outsource to numerous companies instead of just one.

On the other hand, networks are not looking for a company that's as big as they are. If the company is too big, networks are still accruing the same high overhead costs that they would if they just did the production themselves.

For larger production companies that can handle rising demand, there will be opportunities to land substantial contracts with large networks. A network will give a production company all the shows they can handle to avoid spreading their production too broadly. Networks will look for companies that can manage $400 million to $500 dollars worth of production, or about 20% of outsourced productions. There is opportunity for those companies that have strong infrastructure and can build long-term relationships with networks.

There is also opportunity for those of us who do end up losing a job. With an entrepreneurial mindset, good relationships with networks and the right experience, moving to a production-management company could be a time to reinvigorate a stagnant career. Finding the home for this new talent pool will be essential for the growth and development of any company expecting to work in the new production landscape.

It's going to take a hands-on approach that networks themselves are not able to take. By moving production into the right hands outside, networks will be able to enhance their product. Outsourcing will give networks a chance to survive, and perhaps even prosper during this recession.

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