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TV Industry Abuzz About Ryan Murphy’s Netflix Deal and Fallout for Disney, Fox and FX

Ryan Murphy’s move to Netflix is reverberating around the industry, spurring much discussion about the size of the deal and the impact on the studios and networks he leaves behind.

Murphy’s five-year deal is said to be worth as much as $250 million-$300 million over the term — an astronomical sum that dwarfs the offers that traditional TV networks and studios could reasonably field. To land the most prolific producer working in TV today, Netflix committed to rich guarantees and funding of overhead costs for his sizable Ryan Murphy Productions operation, as well as Murphy’s top-shelf fees for his work as a writer, director, and producer on his shows.

The high end of that valuation incorporates financial escalators built into the agreement that will kick in if Murphy-produced shows reach certain viewership targets. It also includes money that will flow in on top of the checks written by Netflix, namely Murphy’s share of anticipated future profits from series he has on the air or in the works through his previous studio pact at 20th Century Fox TV, where he has been based since 2003. Murphy has been a reliable hitmaker for FX and Fox for the past decade, starting with “Glee,” and most recently with the procedural “9-1-1.”

There’s no doubt that the loss of Murphy to a Netflix exclusive pact is blow for FX, which has four Murphy series on its slate at present.

“For more than 15 years, we have enjoyed an outstanding partnership with Ryan Murphy and we look forward to continuing that relationship on our four shows under his creative leadership,” FX Networks CEO John Landgraf said in a statement. “With more than 20 scripted original series on our schedule or upcoming, FX has a very successful track record of identifying and developing talented writers who have produced award-winning hit shows and it will continue to do so. The network has an outstanding slate of development and FX Productions has the finest roster of producers in our history. We will continue to provide creative freedom and support for artists of all backgrounds to tell diverse stories and do their best work.”

Murphy’s deal was immediately compared to the exclusive pact Netflix set last August with Shonda Rhimes, another prolific creator and wildly successful showrunner. That deal was valued at around $100 million for five years. But the total value of Rhimes’ could rise significantly beyond $100 million depending on the performance of the programs that her Shondaland banner delivers for Netflix, a source familiar with the deal said.

Murphy had already jumped into business with Netflix in September with the drama series “Ratched,” a look at the origins of “One Flew Over the Cuckoo’s Nest” character Nurse Ratched, which will be produced with 20th Century Fox TV. 20th TV is also producing Murphy’s “The Politician,” a political satire for Netflix starring Ben Platt.

A source close to the situation said part of the appeal of Netflix for Murphy was the chance to locate his company at a cutting-edge platform with an appetite for all the different forms of content for his company to pursue: TV programs in all genres and formats, from young adult-oriented fare to comedies, as well as documentaries and feature films. Murphy declined an interview request.

Even after Murphy shifts to Netflix in July, he and his team will continue to work on the shows that are active at Fox and FX, including the “American Horror Story,” “American Crime Story,” and “Feud” anthology franchises. “Pose,” a 1980s-set drama revolving around New York City’s transgender community, is slated to premiere on FX this summer.

Murphy’s move to Netflix was influenced by the fact that his longtime studio home is in a state of transition after Disney struck a deal with 21st Century Fox in December to buy major entertainment assets. Disney had hoped to keep Murphy in the fold after it absorbs the studio and FX Networks. “American Horror Story” consistently ranks as FX’s top-rated series.

The prolific producer faced the quandary of having a life-changing offer on the table from Netflix at a time when the future plans for the operations of 20th Century Fox and FX Networks are still being hammered out and there’s uncertainty about whether federal regulators will approve the $52.4 billion transaction. Moreover, the rumblings of the past few days that Comcast may field a counteroffer for the Fox assets — a process that could mean a longer period of limbo for the Fox studio. Murphy’s deal with Netflix is said to have come together during the past three weeks after a long courtship of the producer by Netflix chief content officer Ted Sarandos.

Murphy has long had a close working relationship with Fox Television Group chairman-CEO Dana Walden, whose prospective future role at the enlarged Disney-Fox is still unclear. Murphy and Walden had considered going into business together on a production venture, but Walden is not expected to follow Murphy to Netflix.

“Netflix is very lucky. They’re getting a once-in-a-lifetime creator and I know he’s going to do great there,” Walden told Variety. “The timing for us to stay together right now wasn’t right and everyone on the Fox side appreciates the circumstances he faced. We’re going to have so much business with him for the next few years that while he’ll be creating new things for Netflix, he’ll still be working with us on a number of shows. And that has made this news much easier to take.”

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