On its 20th anniversary, the FX network could be viewed as a lovely birthday present for its corporate parent 21st Century Fox. Valued at $9.5 billion by media researcher SNL Kagan, the figure represents a considerable leap from its estimated $5 billion price tag in 2006.
But FX didn’t come gift-wrapped with a pretty bow when it launched in 1994 during the second big wave of basic cable network rollouts. It then faced established rivals like USA Network, TBS and TNT with similar program formats that, in the mid-1990s, seemed to already have a lock on audiences.
“When FX started out, everyone thought it would fail,” says Kagan researcher Derek Baine. “But it surprised a lot of people. It’s really been remarkably successful.”
Soon after its debut, FX ranked a lowly 23 out of 29 daily-rated basic cable networks for adults ages 18-49 in primetime.
But by 2013, FX climbed up to sixth among 104 basic networks rated in that demo, according to Nielsen, lifted by programming that leaned heavily on theatrical films but branded by its increasingly distinct original series.
FX, now available in 96.2 million U.S. homes, is powered by $670 million in carriage fees and $752 million in advertising, according to Kagan estimates for 2014.
Since day one, FX has been on a youth kick. According to Nielsen ratings, the median age of an FX viewer is 39, youngest among the top seven ranked basic cable networks.
Helping pull that young adult demo are such original series as “American Horror Story,” “Justified,” “The Americans” and “Sons of Anarchy.” Police drama “The Shield,” which ran from 2002 to 2008, helped define FX as the home of edgy programing with its ethically challenged anti-heroes.
“There were original series done before FX launched ‘The Shield,’ ” says FX Networks CEO John Landgraf. “But it was the first show that was qualitatively competitive to broadcast TV and what HBO was doing.”
But despite its rep as a bastion of critically acclaimed offerings like “Justified” and “Louie,” FX’s striking reliance on theatricals is the result of what Landgraf viewed as a dearth of marquee top-shelf, off-network TV series in the pipeline a few years ago. He worried that increasingly scarce top-draw rerun syndication packages “would be spread around so much it would be like a thin gruel.”
The anticipated series shortage acted as a catalyst for FX to feast on theatricals, making it the movie leader among entertainment basic cable networks. Movies accounted for 84% of its primetime schedule in 2013, per Nielsen. IHS research estimates FX allocates 56% of its entire schedule to movies on a 24/7 basis, more than Syfy, BET, Oxygen or ABC Family.
Landgraf embraced theatricals because they repeat well — movie stars stand out on crowded cable TV dials — and didn’t need extensive promotion beyond their initial marketing campaigns. FX estimates that in 2013 it bought basic cable rights to 69% of theatricals that grossed more than $100 million at the domestic box office, versus just 24% of similar fare in 2003.
Landgraf adds that since Hollywood mainstream films target a youth audience, theatricals can be a better FX program fit than off-network series from broadcast networks that skew older.
The FX family consists of three linear basic TV networks — FX, FXX and FXM (movie channel) — plus the new FXNow app that makes on-demand programming available to FX subscribers.
For FX, getting online rights to feed its FXNow app along with linear TV rights requires a big checkbook. At $563.5 million estimated for 2014 by Kagan, FX has the fourth-largest TV program budget among its peers.
Its sibling FX Prods. makes or co-produces many of its series, which smooths the way to nab on-demand rights. So FX Networks can spread its youth-adult focused content across three linear TV channels and on-demand.
Says Landgraf: “I think all the successful business of the future will be multi-platform brands.”