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FX Networks Chief John Landgraf: ‘There Is Simply Too Much Television’

FX Networks CEO John Landgraf took aim at the irrational exuberance that has gripped the television business in the past few years, predicting that the seemingly ever-growing volume of original scripted series programming will begin to decline after next year.

“There is simply too much television,” Landgraf said flatly during his presentation Friday at FX’s portion of the summer Television Critics Assn. press tour. Citing FX research, he predicted that the number of original scripted series on the air this year “will easily blow through the 400 series mark” and probably rise in 2016 before an inevitable winnowing begins. The process will undoubtedly be Darwinian and weighted toward the largest companies with the top shows and the financial wherewithal to weather the storm and inevitable failure.

The biz “is in the late stages of a bubble. We’re seeing a desperate scrum — everyone is trying to jockey for position,” Landgraf. “We’re playing a game of musical chairs, and they’re starting to take away chairs.”

In his wide-ranging discussion of macro-economic issues weighing on major media congloms, Landgraf stressed that the industry has no choice but come up with new business models to address the erosion in the traditional advertising market and the disruption in the way viewers are watching television.

“It’s going to be a messy, inelegant process,” Landgraf said, noting the shock that media congloms have had this week as stock prices were hammered by Wall Street’s rising worry that cord cutting is eating into long-term earnings potential. He called the surprising selloff of media shares, including those of FX Networks parent, 21st Century Fox, an overreaction, but one that underscores the lack of clarity on how new business models will be established in the coming years.

“There are going to be weeks like this week when Wall Street radically overreacts, and then it’ll recover a bit,” he said.

In his comments, Landgraf reflected the clear tension between traditional media and digital upstarts like Netflix. He admitted that he would have preferred to not license FX programming to Netflix or Amazon, but in reality those deals had to be done because FX did not have the same ability as the netcasters to reap off-network profits in the SVOD arena.

Nonetheless, the largest media congloms control the marquee brands that will become increasingly more important to viewers as the landscape of entertainment becomes so saturated with options.

“It’s a bumpy, rocky transition, but it’s not a transition that leads to a valueless future for Disney, Time Warner and 21st Century Fox and only Netflix (succeeds),” he said. “Brands are increasingly important as mediating filters for an overwhelmed public.”

The jam-packed landscape of shows has become a big problem for all programmers because viewers are overwhelmed by options that it’s becoming much harder to launch series. He cited FX’s Billy Crystal-Josh Gad comedy “The Comedians,” which was canceled after one season, as an example of a show that greatly improved over the course of its run but, with so much competition, execs decided it was virtually impossible to get viewers and TV critics to give it a second look.

The audience “is overwhelmed by the sheer volume of TV shows,” he said. “It’s impossible to get you to take another look at something you’ve already rejected.”

By FX’s math, there were about 280 scripted series on the air in the U.S. five years ago. In 2014, it was about 371. And this boom has come at a time when Netflix, Amazon, Hulu et al. are also providing instant access to an array of older series. “You take a fixed audience and divide it by 400 shows (and library product), and most shows are going to see ratings go down,” he said.

Moreover, there’s no question that many viewers prefer the commercial-free environment of SVOD platforms, or premium services like HBO and Showtime. Ad-supported television has to find new formulas for delivering advertising that also recognizes the dramatic shift in the time frames in which viewers watch television. That means doing more with targeted advertising, cutting down on the number of breaks during a program in favor of more relevant spots that appear in less intrusive ways, he said.

“Advertising is going to have to radically change,” he said. “If the only thing an advertiser will be is C3 (ratings), how do you have every episode of ‘The Americans’ on a service with targeted advertising opportunities? How do you assign the appropriate value to someone who just starts watching the first episode of the first season of ‘The Americans’ because they’ve heard so much about it?”

Landgraf noted that advertising accounted for 55% of FX’s revenue when he took over the network in 2004; today it’s about 32%, and Landgraf predicts it will drop at least 1% per year. In 2004 FX had no revenue from content licensing; this year it’s about 12% of the overall pie and growing as the company has beefed up the operations of the FX Prods. unit.

“Viewership is spreading out chronologically over time,” he said. “Nearly all of the viewership of a TV show used to come on the first night. Now that is spread out across the DVR, VOD and streaming” that takes places anywhere from seven to 28 days after premiere. “The ability to make revenue off a television show is challenged. When you have a large thriving portfolio of television as we do you can manage your way through that.”

Landgraf wasn’t all business during the session. He gave a shout-out to the new Denis Leary comedy “Sex&Drugs&Rock&Roll,” which has received mixed reviews. “We’re very pleased with the performance of this show and very optimistic about its future,” he said.

FX has a big launch coming up on Sept. 15 with “The Bastard Executioner,” Kurt Sutter’s follow-up to “Sons of Anarchy.” Landgraf acknowledged that the pilot, set in the Middle Ages among warrior knights, is dense and marks a departure from “Sons.” They opted to turn the first two episodes into a two-hour premiere to help the audience grasp the breadth of the show’s world.

“If people stick with it, he’s going to get his hooks into you,” Landgraf said of Sutter.

 

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