Netflix’s #1 Show Returns With Record Breaking Budget

Netflix has revealed that it has handed a record-breaking budget to one of its most popular shows which is returning next month for its third season.

Called The Diplomat, it is a tense political thriller starring Keri Russell in the title role. She plays a veteran American diplomat who finds herself out of her depth when she is appointed as the ambassador to the United Kingdom to deal with an emerging international crisis.

The show shines a spotlight on the twists and turns in the corridors of power and the sacrifices and consequences of forging strategic alliances. It follows the eponymous protagonist as she adjusts to her new role and tries to save her marriage to a former ambassador, played by British actor Rufus Sewell, who struggles with his lack of a post.

They are joined by British stage veterans Celia Imrie and Rory Kinnear who give the show gravitas and much more.

The Diplomat debuted in April 2023 and quickly won praise for its pacing, writing and performances with Russell nominated for two Primetime Emmy Awards, two Screen Actors Guild Awards and two Golden Globes.

The combination of portraying the subtleties of diplomacy with personal drama and political tension earned the show a nom for Outstanding Drama Series at the 77th Primetime Emmy Awards. It also made it a fan-favorite despite its dry and complex theme.

The first season has an average 84% critics’ score on review aggregator Rotten Tomatoes with the consensus saying that “Keri Russell’s scrappy performance negotiates the best possible terms for The Diplomat, a soapy take on statecraft that manages to make geopolitical crises highly bingeable entertainment.”

Audiences agreed and season one stayed in the global Netflix top ten for four weeks with 173.5 million hours of viewing time. It had a lasting impact.

Just one month after the show debuted, the streamer renewed it for a second season. Audiences literally couldn’t get enough of it.

Season two dropped in October last year and ramped up the intrigue. Critics liked it even more than the first giving it a 96% rating on Rotten Tomatoes. It debuted at number one on Netflix in the United States though there was one problem.

At six episodes, season two was two shorter than its predecessor. “It was my decision,” said, The Diplomat’s creator Debora Cahn, adding that Netflix “was not happy. They wanted the full eight. I was really tired. It was a time thing. It felt like there wasn’t enough time to turn around eight of them. It was a lot to do in what appeared to be a short period of time.” That mistake hasn’t been made again.

Just three weeks before the premiere of the second season, Netflix renewed The Diplomat again. It had a high barrier to beat and no expense was spared.

As every season of a show goes by it becomes increasingly harder to maintain momentum. Changing the winning formula to keep it fresh risks putting off fans whilst producing more of the same risks stagnation. Netflix hasn’t eased up with The Diplomat as the cost of making every season has been higher than the previous one. As the chart below shows, it reached a record $82.8 million (£65.9 million) for the third instalment which will again be eight episodes.

There is no question about the accuracy of the data because it comes directly from Netflix.

The cost of making streaming shows in the U.S. is usually a closely-guarded secret as studios typically combine them in their overall expenses and don’t itemize how much was spent on each one. It is a different story for shows made in the U.K. like The Diplomat.

Ensuring authenticity, The Diplomat was filmed inside actual government buildings in London including the American embassy, the Foreign Office in Westminster and the Foreign Secretary’s office. Shooting also took place at a number of historic buildings such as St Paul’s Cathedral, the Old Royal Naval College in Greenwich and Blenheim Palace, while the set for for The Oval Office was built at London North Studios. It shines a spotlight on the show’s spending.

Studios filming in the U.K. benefit from the government’s Audio-Visual Expenditure Credit (AVEC) which gives them a cash reimbursement of up to 25.5% of the money they spend in the country. It comes with a catch.

To qualify for the reimbursement, shows must pass a points test based on factors such as how much of the production work is done in the U.K. and how many of the lead actors are from the country which is where Netflix gets a helping hand from Sewell, Kinnear and co.

Crucially, to get the reimbursement, at least 10% of the production’s core costs need to relate to activities in the U.K. and in order to demonstrate this to the government, studios set up a separate company there for each show they make. These production companies are obliged to file legally-binding financial statements which show everything from the headcount and salaries to the total costs and the level of cash reimbursement.

The companies usually have code names so that they don’t raise attention with fans when filing for permits to film on location. Season one of The Diplomat was made by Netflix subsidiary Jammy Pictures which was founded in April 2020 and started booking costs in 2022 when the streamer announced it had commissioned the show. By the end of 2023 Jammy Pictures had spent a total of $68.2 million (£56.2 million) on the first season of The Diplomat but that’s not the end of the story.

Netflix also banked a $13.65 million (£11.2 million) reimbursement from the U.K. government as well as $0.65 million (£0.5 million) under the French tax incentive scheme and $1.2 million (£0.9 million) of New York tax incentives. Filming in New York and Paris didn’t prevent Netflix from getting the U.K. reimbursement as its terms only require 10% of the production’s core costs to be incurred in the country. All told, Netflix got a $15.5 million reimbursement bringing the net spending on season one down to $52.7 million.

Season two was filmed in the U.K and New York by Netflix subsidiary Fleet River Productions. Even though it lacked French tax incentives, the total reimbursement increased to $19.6 million (£15.5 million) as season two cost more to make than the first one. The cost of the second season hit $76.9 million (£60.8 million) whilst the third season rose even higher to $82.8 million. Jammy Pictures was behind it and filmed in New York City as well as London giving it a $22.2 million (£17.7 million) reimbursement.

Season three could end up costing even more than this. That’s because the latest financial statements for Jammy Pictures only go up to the end of 2024 yet filming for the third season continued until mid-March 2025. There is more to come.

Even though the third season doesn’t debut until October 16, Netflix renewed the series for a fourth instalment in May. Production of that is scheduled to start in November and is expected to split its time between London and New York again. It already has big boots to fill and when the third season debuts next month they could get even bigger.