Netflix reportedly paid more than 100 percent of the cost of Star Trek: Discovery in order to obtain the rights to distribute the series internationally. If this report is accurate, the show made a profit for CBS before it even aired on CBS All Access in the United States.
Star Trek: Discovery was initially seen as something of a gamble for CBS. Although CBS launched All Access in 2014, it had typically been used to release reruns of popular shows. Discovery marked the beginning of a whole new strategy, the first original content released on the streaming service. It proved to be a tremendous success; although high rates of piracy were reported, CBS confirmed it had generated record subscriptions.
According to Variety, the average episode of Star Trek: Discovery costs upwards of $8 million to produce. However, the latest report from REDEF suggests that CBS played a smart move in order to finance it. Given the CBS All Access app is only available in the United States, they struck a deal with Netflix in order to distribute Discovery internationally. As REDEF explains, "For example, Netflix is believed to cover more than 100% of the cost of CBS All Access’s Star Trek: Discovery for the exclusive rights to the series in most non-US markets."
Competition seems to have been fierce for Star Trek: Discovery, and REDEF notes that as a result, Netflix is believed to have virtually no control over the show's creative or budgetary decisions. What's more, they may have been forced to buy it for as many as five seasons, irrespective of whether or not the series performs well on their service or not.
It's important to understand that this kind of co-licensing deal actually means that Netflix is stronger overseas than in the United States. While the US market is intensely competitive in terms of streaming services, there are many markets where Netflix is one of only two or three competitors. In most markets, for example, Netflix’s also offers Star Trek, American Crime Story, Better Call Saul, Fargo and The Walking Dead - in addition to Netflix-developed series like Stranger Things and The Crown. These co-licensed shows are even marketed overseas as Netflix Originals. All this explains why Netflix signed up to such an expensive deal.
For CBS, of course, the Netflix deal means that Star Trek: Discovery was never a risk in the first place. The series had paid for itself before a single episode aired. This probably explains why CBS was willing to proceed with what was generally seen as an experimental approach for the network.
Star Trek: Discovery season 2 premieres January 17, 2019 on CBS All Access.