If Shonda Rhimes’ deal with Netflix was the initial shot heard round the industry, Ryan Murphy’s was the nuclear bomb. The one-two punch of losing two of the most prolific and successful mega-producers to their streaming rivals has given the linear networks even more reason for anxiety in an increasingly fraught landscape.
“The Shonda-Netflix deal was a game changer,” says Fox entertainment president Michael Thorn. “Just that amount of money” — a multiyear pact worth at least $100 million, although insiders contend it’s even more — “to develop at one place, it definitely raised the bar. For the studios that want to make overall deals as part of their business, it’s going to be really competitive.”
Netflix plans to spend upwards of $8 billion on programming annually in the coming years, which explains why the company didn’t flinch at shelling out hundreds of millions of dollars for Rhimes and Murphy — with additional deals likely to come.
“I would look at our overall deals as a way we’re continuing to develop IP,” says Netflix chief content officer Ted Sarandos. “Instead of buying companies and buying a factory, really you’re buying the ability to create [intellectual property] together with Shonda, with Ryan, with Jenji Kohan.”
Sarandos disputes any notion that this is anything but good news for the talent and those who rep them. “A lot of people talk about Peak TV as a pejorative,” he says. “I talk about it as a complete celebration. If this is Peak TV, I’ll take more ‘peak.’ It’s the best time in the history of television to be a producer and a creator.”
But the traditional outlets are at a distinct disadvantage, without the deep pockets to mount a counteroffensive. As the networks announce fall schedules at their upfronts, it’s also the time of year when many studio deals expire. And the nets may be hard-pressed to convince some mega-producers to stay.
The broadcast networks felt the pinch this pilot season, as more top-tier talent eschews the network cycle — and its hefty episodic commitment (as many as 24 a year) — to play in the premium sandbox. “Talent in short supply and so many bidders on the available show creators who are out there: Those are the things that keep us up at night,” says ABC Studios president Patrick Moran.
Many of the top producers on TV are said to be mulling their next move — showrunners Steve Levitan of “Modern Family” and Kenya Barris of “Black-ish” have both already been approached by Netflix. And though prolific producers like Greg Berlanti and Chuck Lorre, both currently ensconced at Warner Bros. TV, or Seth MacFarlane at 20th, are all in longer-term deals, they’re most certainly on Netflix’s radar.
Further complicating matters for the networks is the return of consolidation. With Disney expected to gobble up 21st Century Fox’s production assets, a CBS-Viacom remarriage in the works and potential structural changes or divestitures if AT&T’s Time Warner deal is approved, uncertainty about the future makes any long-term deal a tough sell.
Much like the plight of the middle class in America right now, the mid-range writer may also be getting squeezed. As TV gravitates toward limited-run series with short orders — and auteur-driven programming that relies on smaller writers rooms (if at all), many fear fewer year-round steady gigs for scribes who aren’t newbies but aren’t mega-successful either.
For the writer-producers at the top of the business, however, ITV America president and CEO David George sees bigger paydays. “It’s a bit of an arms race at this point,” he says. “The battle for brand names and proven commodities is only getting more intense, as it’s harder to get content that breaks through. The cream of the crop can take advantage of it because their names resonate.”
It’s not all gloom and doom for the traditional networks: Not everyone will want to leave the still lucrative world of linear television. Lionsgate TV Group chairman Kevin Beggs points to Courtney Kemp, creator of “Power,” who’s under an overall deal with Lionsgate/Starz. Although her hit is on pay cable, she specifically wanted to do a 22-episode network procedural, says Beggs. “The first project we identified took off with four big broadcasters bidding on it,” he says. “That’s one example of going the other way.”
In another example, 20th Century Fox TV managed to nurse its disappointment over Murphy’s exit by securing a deal renewal from another top producer, “Empire’s” Lee Daniels. “I’ve loved the creative freedom Fox has afforded me over the last several years,” Daniels says. Other showrunners who recently agreed to stick around at 20th include Tim Minear (“American Horror Story”), Kurt Sutter (“Sons of Anarchy”) and Danielle Sanchez-Witzel (“The Carmichael Show”).
|Zohar Lazar for Variety|
Also, the streamers continue to be very selective in who they pursue. Sarandos says he’ll remain strategic: “They’re in a very rare breed,” he says of Murphy and Rhimes. And while Amazon’s been getting in on the game, inking pacts with Jill Soloway, Amy Sherman-Palladino and Robert Kirkman, the other services haven’t gone overboard on overall deals. Apple, for example, has only done one so far, with “Bates Motel” executive producer Kerry Ehrin, who was brought on board to run the service’s high-profile Reese Witherspoon-Jennifer Aniston series about morning news.
The streamers are instead still looking to cherry-pick a wide variety of programming, including series from big names who are already set up at traditional studios — like Lorre, whose next show is for Netflix, or Universal-based Mindy Kaling, whose “Four Weddings and a Funeral” adaptation is at Hulu. They’re also picking up one-off packages that they can own and produce in-house, without the need of a deal.
“Netflix is trying to be all things to all people,” says Blumhouse TV co-president Marci Wiseman. “They want to be an MVPD [multichannel video programming distributor]. There’s going to be a Ryan Murphy channel. And there will be one that’s all the Shonda shows.”
That’s music to Murphy’s ears — and specifically why he made the leap to Netflix, given the uncertainty at 20th Century Fox TV. He was drawn to the promise of production carte blanche — “documentaries, movies, variety specials, not just showrunning,” he says.
Plus, although he will now be creating exclusively for Netflix, both he and Rhimes still have preexisting franchises that will allow them to keep one foot in the linear world. Murphy just launched a new broadcast hit, Fox’s “9-1-1,” and has the upcoming “Pose” at FX, and coincidentally, his final two shows at 20th are both for Netflix: “Ratched” and “The Politician.”
For Rhimes, the move comes as the “Grey’s Anatomy” spinoff “Station 19” opened respectably for ABC. But that was after a string of recent disappointments, including “Still Star-Crossed” and “The Catch.”
“How much more can she say in a broadcast environment with standards and practices and certain storytelling tropes?” says one source close to Rhimes. “She loves broadcast television, but she’s producing 70-plus hours a year and it was time for her to flex some other muscles. She wants to work in a different way, in a different environment where she could do something like ‘The Crown’ or ‘Stranger Things.’”
The ability to stay in business with Rhimes and Murphy on preexisting content made things a little more palatable for 20th and ABC, which can eliminate those expensive deals from their bottom lines but still work with the two. (Murphy will even maintain his offices on the Fox lot for the time being.) But make no mistake: The defections still sting. “I would have worked with Shonda forever,” says ABC Entertainment president Channing Dungey.
The traditional networks and studios are also at a disadvantage when it comes to data: Murphy is said to have been won over by Netflix’s ability to pinpoint how, when and why viewers across the world watch his series. Similarly, David Alpert says he and Robert Kirkman moved Skybound to Amazon because of the way it interacts with consumers.
“If you go to a linear channel, they don’t really have a direct relationship with the viewer,” says Alpert. “You’re selling to a channel, which is then selling to a cable company, and that cable company is marketing to individual consumers. There’s a real disconnect between the actual people who make the show and the people who view the show. One of the exciting things about Amazon, Netflix, Apple, Hulu is the ability to really understand and be closer to the people who matter — the people who consume the content we make.”
ITV’s George notes that the talent that’s flocking to places like Netflix don’t face “brandcuffs” — they’re not selling programming to advertisers. And if the streaming service is buying it, it has metrics that strongly suggest its audiences will watch. “You can’t say the same for a linear network,” he says.
One agent calls that connection Netflix’s “secret sauce.”“Netflix is so far ahead of the other entertainment companies in terms of really understanding their customer,” he says. “That’s the real power of Netflix.”
But not everyone in the industry is as enamored of the streaming giant.
As talent continues to be tempted by Netflix, execs are trying out new arguments to hold on to the creatives they do have and attract A-list development. HBO programming president Casey Bloys has called Netflix a “factory.” Notes FX Networks CEO John Landgraf: “Netflix is a business that loses money. They spend more than $2 billion more than they take in.”
He complains that Netflix’s business practices are unfairly disrupting the marketplace. “They’re actually dumping content on the market at below cost in order to take market share, and so that does bother me,” he says. “It may be rational from a business standpoint in an environment where there’s no regulation against that kind of behavior, but there’s a utilitarianism to it to me, which is: Just leverage your balance sheet, leverage your lower cost of capital into predatory volume increase.”
Networks like FX and HBO are more in the curating business, he says, which should appeal to showrunners who prefer a more handcrafted approach to storytelling. What made the Murphy deal surprising was the producer’s long-running relationship with both Landgraf and Fox TV Group chairman Dana Walden. In fact, had the Disney-Fox deal not been in flux, Murphy might have stayed with 20th. Several network and studio execs say it’s the relationships that will keep some talent put.
“Dana likes to joke that everyone’s money is the same color,” Fox’s Thorn says. “But so much of it has to do with relationships. Of course they want the big payday, but they’re artists who need to work in a safe environment where they feel like they can take risks with people they trust and know.”
Network and studio execs also point to how the volume game at places like Netflix and Amazon is starting to limit marketing — and that even major shows disappear and lose their buzz quickly when episodes are dropped into the ether all at once.
“It’s a bit of an arms race at this point. the battle for brand names and proven commodities is only getting more intense.”
ITV America CEO David George
Showtime CEO David Nevins says he has perceived a “backlash” in the marketplace. “I think people understand that among the 50 shows or so that Netflix will put out in a year, there’s a small percentage of that 50 that will get any love or attention,” he maintains. “A couple of times a year they’re able to drop something that has long resonance, [but] they’ve had some pretty big shows come and go and you barely noticed.”
Netflix’s “Godless” may be an example of that. One agent singles it out as a “genius” show, “but it was one week, and then they moved on to the next thing,” he says. “I think … some of the content has the potential to feel more disposable.”
Some say the lack of ratings information and a specific measurement system for the streaming services limits how much producers know about who’s watching their shows.
“I wish there was more transparency in that regard,” says Skybound’s Alpert. “One of the reasons to work at a platform is to have data and get access to that data. I don’t know how you can have that feedback loop if you don’t have that data.”
There’s also the ongoing question of how producers can benefit from a successful show’s back end if the show is licensed in perpetuity and there’s no yardstick for how that show performed.
As the streaming services increasingly cancel underperforming shows after one or two seasons, there’s rarely any back end at all. Producers will be paid more if a show survives longer — but it’s unlikely they’ll see the kind of riches a network smash like “The Big Bang Theory” might earn in off-network syndication.
Others say the issue of back-end success is blown out of proportion: “I think that’s a fake issue,” says a top agent. “Probably one out of a hundred shows has a significant back end anyway, so when you have that one show, you’ll figure it out. Maybe you don’t have the full “Two and a Half Men,” “Big Bang Theory” craps table, like you win the lottery once in a lifetime, but trust me, if you had a level of hit like that, you’d be able to monetize that with [the streaming services].”
Alpert, who is among the “Walking Dead” producers suing AMC for profits from the hit zombie series, says he believes the streaming services could actually help reinvigorate the back-end system in Hollywood. “To me that is the thing that’s most exciting,” he adds. “I hate the nonsense. No one goes into becoming a producer to sue.”
Of course, the very notion of overall and first-look deals may have to be revisited as the definition of “exclusivity” changes in this multiplatform universe. As more talent moves away from the traditional 22-episode TV season, creatives have time to do multiple projects, digital shorts and other work for a variety of services.
“There are so many outlets that exclusive deals are getting kind of hard [to do] because people want to work in multiple places,” Bloys says. “It used to be at a network, 22 episodes would keep someone busy for an entire year. Now when you’re doing eight episodes, 10 episodes, it’s not crazy for someone to do something somewhere else. So that plays into it as well: Are you paying for an exclusive deal or a first-look deal? I don’t want to keep people from doing work.”
Ultimately, new talent shows up in Hollywood every day. So even if premium platforms steal away the mega-producers, it makes room for the newbies.
“If some people are migrating out of broadcast, which is still an unbelievably healthy, robust and unbelievably lucrative platform, then that’s opening up opportunities for people who traditionally couldn’t get in,” says Lionsgate’s Beggs. “We can’t pay bazillions of dollars to hold on to every piece of talent in the showrunning universe that moves into a whole other league. So one of our main goals is to find emerging talent and support them by financing their shows or development, or giving them a mentor to partner with — and by extension we hopefully benefit financially in success.”
Adds Thorn: “As a network buyer, I want to be in business with the Ryans, the J.J.s and the Steve Levitans. But the up-and-coming development execs will be able to make their bones by finding the next superstars.”