Well, after the better part of a year producing in-house for Networks, I can confidently say, I was wrong.
Producing programming in-house does *not* save money for the Networks.
In fact, in my experience, it actually seems to increase the cost of the programming.
There are a number of reasons for the increase in cost, but in general they can be outlined as follows:
- Legal inability to use the lowest-cost vendors; primarily driven by the insurance requirements of the Network. While this worked when out-of-house production companies were willing to assume risks; the Network isn’t willing to assume those risks, which results in vendors directly charging more than they would have to otherwise, because they must purchase special insurance policies to satisfy the Network. Direct Price Increase – 7-10%
- Financial processes are so slow, that vendors working with the Network increase their pricing. Vendors know that the Networks are notoriously slow in paying their bills. In return for this reality, Networks get just about the worst deals on everything. You may get a good deal once or maybe twice, but after that, forgettaboutit.
These two primary facts of Network life, more than offset the cost savings of going out of house. The final nail in the coffin, at this time; is that Networks simply do not have the experienced people they need, internally, to make good production decisions. They just don’t.