Studios are ready to give up on network comedies because they aren't viable in the streaming age

Deadline

Sony Pictures Television, which makes The Goldbergs for ABC, has notified networks it can no longer sell broadcast comedies under the current financial model. Lionsgate TV may also follow suit. "The broadcast model, created when broadcast TV was the only game in town, is based on the studios taking the risk and reaping the rewards in success," explains Deadline's Nellie Andreeva. "Today, with the rise of vertical integration and streaming, it has evolved into studios taking the risk with very little or no reward to be had, especially for indies, which explains why they have been calling for changes to the antiquated financial formula...In television, networks pay a negotiated per-episode license fee to studios that produce the shows. In broadcast, for the first four seasons, the license fee is significantly lower than the cost of producing a series. The studio covers the deficit, or 'deficit finances,' incurring tens or even hundreds of millions in costs before it can start to recoup some of the money spent. Decades ago, once broadcast comedy series got to four seasons and crossed the 100-episode mark, studios could start raking in profits, with revenue from broadcast and off-network syndication quickly covering the deficit, and the networks taking on full cost of the shows starting in Season 5. With rare exceptions for outsized hits like The Big Bang Theory or Modern Family, that scenario is largely a thing of the past."