Separating Production from Broadcasting
The Voice of China also represents a real separation of production from broadcasting in China, mentioned many years ago as a major objective of television industry reform. Until The Voice of China, there were few instances of such separation.
Tian Ming, the producer of the show, is also director of Dragon TV in Shanghai. He initially intended to broadcast The Voice on Dragon TV, but was deterred by the 80-million-yuan price tag and investment-based profit-sharing scheme required by the show’s original producers. After negotiations with many provincial television networks, he eventually reached an agreement with Xia Chen’an, director of Zhejiang TV.
Xia admits he was concerned over the fate of the program on Zhejiang TV. There was little appetite for big investment at his station, but Xia eventually prevailed and signed an agreement to run The Voice. Xia and Tian also signed a VAM (Valuation Adjustment Mechanism), whereby the producer and the network share both the risk and the potential reward from a show. The agreement included stipulations on sharing advertising revenue. If audience ratings surpassed two percent, revenue would be shared, with the producer receiving a larger share. But if ratings didn’t reach two percent and advertising revenue was lackluster, then the production costs of roughly RMB 100 million were to be borne by the producer alone.
“Our agreement reveals one of the advantages of separating production from broadcasting,” said Tian Ming. “If the program is very successful, advertisement rates may double, and both parties receive more profit.”
“In addition, our running investment was not limited,” Tian added. “If advertising revenue jumps, the production team spends more money on inviting big stars and better staff. They want higher quality, higher ratings – and more profit. Separating production from broadcasting forces us to think about how to make money by improving the show’s quality, rather than by cutting budgets to meet profit targets.”
Both parties say they are happy with the profit-sharing agreement. The Voice of China has been a massive success and a cash cow for all involved in production and broadcasting. Zhejiang TV recovered its costs within two weeks. Now that’s something to sing about.
Editor: Liu Xiongfei
Source: China Today
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