The competition for creative talent in the “peak TV” era has escalated to such a degree that even a company backed by the deep pockets of 21st Century Fox is getting outbid by Netflix and other rivals who aren’t held to the same standards of profitability.
So said FX Networks CEO John Landgraf during his Q&A session Saturday at the Television Critics Association winter press tour. Landgraf talked about the heightened chase for talent and series deals sparked by free-spending upstarts including Netflix, Amazon and Hulu. That dynamic has forced his team to be more resourceful and proactive in recruiting creatives.
“It’s ‘Moneyball,’ ” Landgraf said, using the baseball analogy referring to the process of assembling the most efficient roster of players based on analyzing their track records. “We’re competing against payrolls — a la the Oakland As and the Yankees — that are three to four times ours.”
Landgraf expressed clear frustration at what he described as the lack of constraints among new digital players in terms of throwing money at projects. FX has to be mindful of its contributions to 21st Century Fox’s bottom line. It doesn’t have as much coin to spread around even though it has earnings “many, many times higher” than that of Netflix.
“Nobody pays attention to the profitability of our competitors. That’s really difficult,” he said. “We have lost shows simply because we had competitors willing to pay more.”
In terms of the profitability issue, Landgraf characterized it as part of a larger contrast between traditional TV companies and tech-centric newcomers. Profitability isn’t as much of an issue for investors when it comes to Netflix et al as it is for Fox because “there’s a perception that is very carefully cultivated by Silicon Valley that they’re going to take over everything. You’re buying the future. (Whereas) we have to return a profit for our shareholders,” he said.
With characteristic candor, Landgraf cited Aziz Ansari’s comedy “Master of None” and historical drama “The Crown” as shows that it went after aggressively but lost out to Netflix.
“In both cases they overwhelmed us with shock-and-awe levels of money and commitment,” he said. But the battle isn’t only with the digital newcomers. FX made a strong run at “True Detective” when the first installment with Matthew McConaughey and Woody Harrelson went up on the auction block in 2013, but HBO snared the property.
“Part of being in this business is losing,” Landgraf said. “You just can’t win them all.”
Landgraf also expounded with eloquence on the topic of the shifting format of series content on FX and other networks. The move toward what he called “the anthological miniseries” that reinvents itself every season is a better fit for writers who have a strong story to tell over a small number of episodes but not 65 to 100 as in the traditional series format. The time frame between seasons of some shows has become less regimented — witness the long breaks for the comedy “Louie” — in a way that is better for the creative process.
“I’m starting to feel like the process of making television can be much more fluid,” he said. Production timetables and episode counts can “follow the voice, the timing, the schedule and the needs of the creative people rather than mold themselves into a predetermined business structure where they have to be creative on demand. To me that’s a recipe for mediocrity.”
Landgraf opened his presentation with a rundown of the year-end “best TV” lists that he used to illustrate the vast expanse of original scripted series — and FX’s stature among them. FX researchers counted 146 year-end best lists for 2015 — up from 115 in 2015. The number of shows referenced spiked to 1,844, from 1,030 in 2014. FX and HBO tied with 15% of the mentions on those lists, followed by Netflix with 13%, AMC with 9% and Amazon with 6%.
FX also had a correction to the eye-popping statistic it distributed late last year on the total number of current scripted series in 2015. The tally has grown to 412 because researchers discovered three shows previously overlooked. “Counting television series is like counting lemmings,” he said.
Landgraf gave a shout-out to “the extraordinary amount of quality in this platinum age of television,” and he acknowledged two surprises on competitors that impressed last year: USA Network’s “Mr. Robot” and Lifetime’s “Unreal.”
But he also reiterated his concern about the sheer number of shows as being an economic bubble that will inevitably have to scale down. Landgraf coined the “peak TV” term last summer at the TCA when he declared: “There is simply too much television.”
This time around, Landgraf predicted there will be more than 412 shows in the tally at the end of this year but it will probably drop in 2017. “There are more shows being made that can be sustained economically,” he said. And once again he indulged in some carping about Netflix’s refusal to disclose ratings for its shows. “I think it’s ridiculous that we don’t have usage numbers on Netflix,” he said.
Landgraf noted that FX had a down year ratings-wise — 13% in primetime year-over-year — but like every other executive at TCA he cited the upheaval of disruption and changing viewing patterns as the X factor that the industry is still struggling to understand. The FXNow authenticated streaming service has seen triple-digit growth in the past year, but not all of that viewing is factored into traditional Nielsen numbers that remain the most prevalent metric for TV performance.
Landgraf said he’s frustrated with the slow pace of change for “legacy media” on the measurement conundrum and other issues. But he also assured the TCA crowd: “Each time I speak to you, the hazy outline of television’s future becomes slightly more clear, at least to me.”
Part of that future is a world of declining MVPD subscribers for its core linear TV business. Landgraf conceded that subscriber losses are inevitable in a world where consumers have more options for cord-cutting and cord-shaving.
But while FX Networks channels are seeing losses, overall affiliate revenue is rising because of the success of the channels.
“We’re managing our way through this traditional pretty well,” he said. “I’d rather be paid by 100 million subscribers than 93 million but we’re still managing to grow revenue on the affiliate side.” Rising fees from content ownership via FX Productions properties is helping to offset declining linear advertising revenue, he added.
Among other topics Landgraf discussed during the Q&A and post-session scrum:
- FX’s “The People V. O.J. Simpson: American Crime Story” is tracking better than any project in FX’s history. The story of the infamous murder trial “is even more relevant today than it was 20 years ago,” he said, given the “national dialogue on race, domestic violence, gender discrimination, the 24/7 news cycle, celebrity, class and our sometimes broken criminal justice system.” And he acknowledged that the title construction with “American Crime Story” at the end was a move to avoid confusion with ABC’s “American Crime.”
- The third installment of “Fargo” will be set in 2010 — the closest to present day that the franchise has come.
- “Legion,” the Marvel property that “Fargo” boss Noah Hawley is shepherding, is looking promising as the pilot comes together. It’s set in the present day.