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Q&A: John Landgraf Talks FX’s Future Under Disney Umbrella

Following his remarks at the Television Critics Association’s winter press tour earlier Monday, FX CEO John Landgraf spoke with Variety about FX’s future as a Disney subsidiary, and how that will impact its programming and strategic choices. A condensed and edited transcript follows:

So you talked about FX’s future in relation to Disney’s streaming efforts. Have you started to formulate a picture of what that might look like, specifically, in terms of what FX’s role is?

No, we can’t. The bottom line is – and it’s frustrating, I’m sure that HBO felt the same thing in a much longer period, actually (when the AT&T-Time Warner deal was closing). But the truth is, we can speculate and plan all we want, but we can’t be directed, so essentially there’s a lot of work to be done once the deal’s closed to try to hone in on a specific strategy.

Are you getting a sense of how much investment you might see or where you might want to focus that investment?

Bob (Iger) has not declared the level of investment yet. I feel like what he’s indicated is that at (Disney’s) investor day, which is in April, he’ll start to articulate broadly the level investment corporately. But if you think about it, there’s a lot of sub-units in that corporation, and so hypothetically, even if you knew what the whole amount was, you wouldn’t then automatically know what portion of it might fall to FX, so we’ve kinda done what we always do, which is worked in the other direction, which is said, “OK, well we don’t want to be infinitely big; we don’t want to have an infinite number of at-bats.”

We’re excited about the prospect of having more, but we don’t want to change our fundamental focus or our brand, and so a lot of that has to do with process, it’s not just about what you pick. It’s about how you focus on things, it’s about how you work with people. It’s a very bespoke, sort of extremely intensely intimate interpersonal relationship we have during production and development and marketing and the holistic process with folks.

And it’s not an infinitely scalable process, right? So we’ve asked ourselves a different question, which is, “OK, if we had more resources, how would we want to use them? What would we like to do? What would we propose to do in the future that we’re not doing today? How much more of this, how much more of that? And how would we get there?” So we’ve done a lot of thinking about that.

But ultimately, we have to present that to Disney, they have to decide whether they agree with it, and then they have to decide whether it fits into their larger strategy. So all that has to happen after the transaction closes.

Iger has said that he’s going to be investing more in FX and sees it as a vital source of original content for Disney’s direct-to-consumer platforms. How do you see that impacting your relationship with Hulu?

That’s a really good question. To be honest with you, what I can tell you, is that what we’re all singularly focused on at FX is our process and curatorially the FX brand. On the one hand, we’re excited about the possibility of expanding it, so the notion of going into some unscripted programming, for example – which we’ve done some of, “30 Days,” “Black and White,” some things in the past, but very little – having that be a sustained and enduring part of our brand is exciting, because we have a profound level of respect for the level of filmmaking talent, the level of storytelling talent, in those genres.

So that’s really exciting, but we just don’t know, to be honest. All I can tell you is that what we’re interested in doing is continuing to build the FX brand, and what Bob seems to be interested in doing is taking a number of brands that he has invested in and that he respects, and using them as organizing principles inside the larger streaming ambitions of Disney and organizing principles for investing in and making stories.

He’s been really gracious about that, and you know, FX does something that doesn’t exist within the umbrella of the corporate Walt Disney parent. And that’s exciting to us, because we feel like we have a lane that no one else really occupies right now. But exactly how that works with Hulu, I couldn’t tell you.

But it wouldn’t be under the umbrella of Disney Plus and its family-friendly programming? They’ve been fairly clear about brands that would feed into that service.

No. It seems quite clear to me that FX wouldn’t be and shouldn’t be a part of Disney Plus, shouldn’t really be directly associated with the Disney brand. They’re just too different. We’re not a family brand at all, and therefore seems crystal clear it’s going to have to be a component of the Hulu strategy. But exactly how that’s going to work, I can’t tell you.

You talked at some length about FX’s quality-versus-quantity theme in your remarks at TCA. On a lot of your shows, if a creator wants to make more, they can make more, and you’ll work with them on timing. Does that model of working with creators hold up in a world where Disney has an increasingly voracious appetite for content?

Well, I can tell you that we’re going to be working for Disney, so I really can’t speak for them in terms of how their larger strategy and their need will dovetail, but we’ve tried to initiate a lot more.

So I hope we can always take a pause when we need to, when we feel like something’s important qualitatively – I guess all I can tell you is if you look at the way Disney has built its feature business. No feature-film studio in the history of Hollywood has had a batting average even remotely as close to as high as that studio has, and they fundamentally decided to make a lot less movies but put more investment and more time and more energy and more marketing into the ones they make. So every philosophical conversation I’ve had with Iger has been is sympatico, which is that he doesn’t want to just throw things out there and just be really, really focused on quality. It feels actually, really comfortable, from a cultural standpoint.

How much pressure has been put on your ability to recruit talent and maintain creative relationships, given the big deals that we’ve seen for creators such as Ryan Murphy, Shonda Rhimes and Kenya Barris?

What puts pressure on it is the money, to be quite blunt. If you are a profitable corporation or you’re part of a profitable corporation, and you have a standard that every dollar you invest should yield a dollar or more in revenue, and you’re competing against corporations that are fundamentally losing money on a free cash flow basis just keep doubling down on those losses and will lose money for decades if they need to (in order) to get to a different outcome.

Then, there’s just really a different standard when it comes to money. That said, we’ve stepped up when we needed to, even when we had competitive bids coming from one of those others. Again, we’re not trying to corner the market on talent; we’re trying to have enough talent to be able to have this extraordinary brand, and I will say that beyond the money, everything else we offer is way better, because we do less. So we all read everything, we all sit in the room and watch every rough cut, we look at every season of every show.

There’s an attention to detail on each episode on each relationship on each season of each show that can’t be matched by any organization that’s doing a level of volume that’s 35 times greater in terms of volume. You just can’t do it. So there we have an advantage. And so the question is can we get to or close enough to competitive from a financial standpoint that the other advantages kick in.

But I will say this, we don’t miss very often. So on the one hand, it’s difficult for us to match the capital structure of a business that’s losing money, but on the other hand, they spend a lot of capital on things that don’t prove to be creatively or commercially successful, and we spend a small amount of capital on things that don’t prove to be commercially or creatively successful. What we do spend, we spend really, really efficiently.

If your batting average is the focal point of the brand, do you worry, then, about what happens when your volume increases and you inevitably have more misses?

Sure. As I said earlier, it’s not just about some genius in our culture about picking shows. We really, really work on that, and spent so much time debating it and talking about the current state of television – what’s not good and where should things go, and what about this idea and that idea – but it’s really more about the process of what happens after we say yes. It’s about the level of attention to detail and support that people get in that.

And that is not an infinitely scalable process so we can definitely do more, but part of what we’re saying is: We don’t want to compete with any of these platforms on volume. We want to be a brand, and then you have a different question, which is, “What is the optimal scale for a really good broad competitive brand? Do we want to try to be as big as HBO?”

We’ve looked at that really, really carefully. So far, I don’t think we’re even going to ask to match that footprint in terms of scale. I think we’d like to match it in the profusion of genres they program in, although that’s easy to say and hard to do, because you could say you wanted to have a weekly or variety show like John Oliver or Bill Maher, but the truth is, those things come along very, very rarely. Can we sustain a batting average where 13 of our 14 shows make year-end best-of lists, ever year? No. I don’t think anyone could sustain that. And we’ve been at about 80% for five years. I think that’s tough to sustain. But if you look at where our batting average is relative to anyone else, it could fall and still be best in class.

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