Can Edgy FX Thrive at Family-Friendly Disney?

As much as FX Networks and FX Productions CEO John Landgraf welcomes the return of American Crime Story and Atlanta to FX this winter, he still wishes the network could have had them back on the air last year, where their absence on year-end top 10 lists hurt the network’s position relative to its two biggest competitors for quality TV, HBO and Netflix. But that’s what happens when you work with visionaries like Ryan Murphy and Donald Glover—Landgraf calls them “unicorns”—who make the edgy, distinctive shows that have turned FX into one of TV’s most acclaimed, and most daring, networks. With other creative demands on their time (Murphy is shepherding six other shows; Glover wanted to play Lando Calrissian in the Han Solo prequel movie), Landgraf decided in both cases that he’d rather wait until he could have “all of their attention” and produce second seasons that would be worthy successors to the first ones. Not many network chiefs would make the same decision, but for Landgraf, “it comes back to this question of, are you investing in the quarter, are you investing in the year or are you investing in the decade? And FX has done extremely well by investing in the decade,” he says. “We’ve invested in the brand, quality, breadth and consistency, whether or not that had the most profoundly positive impact on the quarter or not.” It is a mantra that has served Landgraf exceptionally well as he’s built FX into one of the edgiest brands on TV—which, aside from AMC, is the only ad-supported network with a stable of premium programming that stacks up against the likes of HBO and Netflix. [kickout id="1" label="cover"] While advertisers flock to hits like American Horror Story, they’re also eager to be a part of the network’s lower-rated critical darlings like The Americans and Baskets. “For these high-engagement shows with passionate fans, regardless of rating size, we know that our commercials resonate better in that programming to that audience than in lower-engagement shows, so advertisers seek that out,” says David Campanelli, svp, director of national broadcast for Horizon Media. “There’s incredible value to advertisers to reach those people, and the content that they’re passionate about.” FX Networks (which includes FXX and FXM) brought in an estimated $749 million in linear ad revenue last year, according to S&P Global Market Intelligence’s Kagan, with FX accounting for $592.5 million of that. But for the first time since early in Landgraf’s tenure, the future of FX’s brand seems to be more of a question mark than an exclamation point. On Dec. 14, Walt Disney Co. announced it was acquiring most of 21st Century Fox—including FX Networks and FX Productions, its TV and movie studios, its stake in Hulu and international assets like Star and Sky—for $52.4 billion, to expand its global footprint and to help fortify its content as it prepares to directly take on Netflix with a trio of direct-to-consumer offerings over the next couple of years. The announcement left many concerned whether an edgy brand like FX can thrive in a family-friendly company like Disney, and prompted an unnerved Murphy—the network’s most prolific producer (American Horror Story, American Crime Story, Feud and the upcoming Pose)—to leave his longtime home at 20th Century Fox Television studio and sign a five-year exclusive deal with Netflix two weeks ago that could be worth as much as $300 million. “I was very not prepared for what happened" when the Disney news was announced, Murphy said at the TCA winter press tour last month. He told Disney chairman and CEO Bob Iger, “The stuff I do is not specifically Disney. ... Am I going to have to put Mickey Mouse in American Horror Story?” Landgraf is sorry to lose Murphy to one of FX’s biggest competitors, but admits, “I saw that coming for awhile.” Ultimately, "I don't think it changes our business at all," aside from FX missing out on some new shows from Murphy during the length of his Netflix contract. "At the present time, though, we have four shows we're making with Ryan, so our Ryan Murphy business is pretty full at the moment, and every indication I have is that he'll continue making those four shows.” Landgraf adds that Murphy's three anthological shows for FX could go on "indefinitely," which means they will likely remain in business together for several years to come. Navigating the Disney deal (the regulatory process could take 12 to 18 months) will be the biggest challenge—and perhaps also the biggest opportunity—yet for Landgraf, who joined FX as its president of entertainment in 2004, shortly after dramas The Shield and Nip/Tuck started the network along its transformative path. Despite FX’s early successes (including Rescue Me, which was the first pilot Landgraf ordered to series), “we had to prove we weren’t just lucky,” says Landgraf, while wooing wary advertisers. “The notion that for artistic reasons we were going to have to be pushing towards premium made some advertisers uncomfortable.” [kickout id="6" label="the americans"] Back then, brands “were a lot more risk-averse” when it came to envelope-pushing content, says Dani Benowitz, evp, strategic investment, Magna Global. When Sons of Anarchy first launched in 2008, “it was mostly beer and video games in there,” she recalls. Many of them eventually came around, as Landgraf and his team built FX’s brand, a process he likens to constructing a building, story by story. The cornerstones—The Shield, Nip/Tuck, Rescue Me and It’s Always Sunny in Philadelphia—were followed by a second wave (Sons of Anarchy, Damages and Justified), then a third (American Horror Story, American Crime Story, The Americans, Atlanta and Better Things). “Each generation of programming has to be as good as, or better than, the one that preceded it, because you can lose momentum as much as you gain it,” says Landgraf, who is readying FX’s fourth generation of shows—including drama Trust, debuting March 25. A key component of FX’s stellar reputation among audiences and advertisers is the unusually close relationship that Landgraf and his team have with their creators. “I tend to hire people who are very passionate about making great television,” says Langdraf, who listens to a creator’s vision for a show, “and I make a very clear, binary choice: Do I want to support this person in doing this wholeheartedly, or not?” If the answer is yes, “win, lose or draw, we’re in all the way,” says Landgraf, who sees the network’s role as “not diluting somebody’s point of view, but distilling it.” (His instincts aren't infallible, though: He famously passed on Breaking Bad because he worried at the time about making yet another FX drama about a white male antihero.) [kickout id="7" label="shield"] Many of those creators rave that FX took a chance on them that no other network would. “I truly believe that no other network could have let me cultivate my vision and make the show I wanted to make,” says Better Things creator and star Pamela Adlon. “They would have wanted to change everything. Including me.” Echoes The Americans creator Joe Weisberg: “FX was the only network that wanted the show. I think it was too far out for anybody else, but John got it.” Once a show is brought into the fold, that loyalty only increases. FX and Landgraf “have found a way to take the fear out of the creative process so that we can dance on our creative tightrope and not worry about falling, and that really allows the work to come to life,” says The Americans co-showrunner Joel Fields. Such is FX’s unique bond with its creators that the company had never parted ways with one until last November, when it cut ties with Louie creator Louis C.K. (executive producer of two current FX shows, Baskets and Better Things) and his production company after the comedian confirmed the sexual harassment allegations of five women that appeared in The New York Times last fall. “It was a sad, mutual understanding, and I had to do what I had to do on behalf of my employees, our business, our shareholders and our brand,” says Landgraf of the decision. FX investigated C.K.’s behavior on its own shows and found no instances of wrongdoing, but going forward, Landgraf will have to delve beyond a person’s creative mind when deciding whether or not to commit to a new creator. “How to do that without being overly intrusive is something we’re still working on,” he says. [kickout id="8" label="atl"] While FX has been forging distinctive bonds with creators, Landgraf has also been focused on improving the network’s ad experience “and allowing the advertising business to thrive over time,” he says. “I believe it has a really bright future, but we all have to believe in it and invest in it for that to be possible.” He’s found an enthusiastic partner on that front in Joe Marchese, who was named president of advertising revenue for Fox Networks Group last May and quickly shook up the ad experience on FX’s VOD and streaming platforms, eliminating standard commercial breaks in favor of full episodes or individual ad pods sponsored by a single brand. Ad loads are down as much as 70 percent per episode, and “the brands that are integrated in there, the people actually appreciate,” says Marchese. “Because we remind them that they’re getting this viewing experience for less.” FX also rolled out an ad-free premium version for Comcast and Cox subscribers last fall, called FX+, for an additional $5.99 per month. “The best version of FX” offers viewers both versions of its service, says Landgraf, adding that like Hulu’s dual offerings, the “majority” of consumers will choose the version with ads. Disney’s world In recent years, Landgraf has been prescient about many of the changes the TV industry is now grappling with. He coined the term “Peak TV” in 2015 to describe the “overwhelming” increase in scripted TV series and called out Netflix as a threat to the TV ecosystem long before most of his peers. But not even he foresaw his parent company’s impending sale to Disney. Throughout his tenure at Fox, “I’ve taken it as an ironclad given that the Murdochs were buyers, but not sellers,” says Landgraf, who therefore dismissed early speculation about a deal last fall and was “surprised” when the reports proved accurate. But he was put at ease after a December conversation with Disney's Iger, whose “words couldn’t have been more reassuring,” says Landgraf, adding that he is heartened by how Disney has nurtured other recent brands it acquired, like Pixar, Marvel and Lucasfilm. “Those brands have thrived and their cultures have thrived.” (He sees Disney’s Miramax acquisition in 1993, which eventually soured and led to Harvey and Bob Weinstein’s exit a decade later, as more of an anomaly, given that the sibling producers’ studios “tended to be fairly significantly tied to them as individuals,” he says. “And obviously we’ve found that a lot of downsides came from that. This is not the Landgraf Company. It’s FX.”) Analysts and buyers agree that Disney is unlikely to dilute FX. “It would be a mistake to try and change what FX is,” says Campanelli. “I don’t think they would be paying this much money for everything if they planned on changing it dramatically.” Adds Brian Wieser, senior advertising analyst at Pivotal Research Group, “I don’t think they’ll touch it. It’s not like everything has to be princesses and Star Wars Jedis.” [kickout id="4" label="LINE 1"] The looming Disney deal won’t change FX’s upfront strategy [kickout id="3" label="mickey"] Because the Disney-Fox deal will take 12-18 months to close, it be will business as usual for Landgraf and Marchese during FX’s upfront, which is set for March 15 in New York. “This year’s upfront is going to operate exactly as is,” says Marchese. “We have to operate that way for practical reasons as a business, but also because with these other companies, who knows what the future holds?” He allows that the Disney sale could affect “the tail end” of any upfront buys, but says those deals “will be honored, no matter how things work out.” Buyers, too, say they’ll approach the FX upfront (and by extension, that of the entire Fox Networks Group portfolio, which is sold together) the same way. “Until people tell us differently, it’s business as usual,” says Benowitz. In the new upfront, Marchese will be looking to bring some of last year’s VOD and digital innovations to the linear side, which could include shorter ad pods, single-sponsor shows or pods and reduced ad premieres. While FX may no longer be under his oversight by the next upfront, he notes that the industry has adopted many of Fox’s other offerings—including linear six-second ads and audience-targeting platform OpenAP (which he created with Turner and Viacom)—and hopes that continues with whomever next handles FX’s inventory. “If it’s better for viewers and it works for advertisers,” he says, “we want more people to use it.” [kickout id="5" label="LINE 2"] Buyers are also excited about the addition of FX Networks to Disney-ABC’s portfolio, which will finally add male demos (FX's prime audience is 54 percent male) to an entertainment offering that had always skewed heavily female with ABC (63 percent female) and Freeform (60 percent female). “It brings them scale and diversity,” says Benowitz. “They will be able to compete for dollars with some of the larger guys out there—your Turners, your NBCUs.” While Disney hasn’t yet shared details of exactly how it will combine the companies, or integrate their management teams, Landgraf sounds cautiously optimistic. His hope “is that I can earn Mr. Iger’s confidence, and that my track record is of some comfort to him in terms of holding and maintaining that confidence,” he says. “But ultimately, I’m going to have to make some really good, really successful stuff and make a contribution to their larger ambitions as an ad business and a potential streaming platform.” Yet until the deal closes, “they’re still a competitor.” That’s why Disney won’t be a part of the message Landgraf and Marchese present to advertisers during FX’s upfront event on March 15 (see above). However, “the best way to take care of your future is to take care of your present,” Landgraf says. “So if you want to know how I’ll express whatever anxiety I have for myself or for the FX brand into a potential future with Disney, we’re going to do everything in our power to have the very best year in our history on every measure this year.” And he thinks that will be possible even after Netflix poached Murphy, FX's highest-profile creator. Unlike the streaming behemoth, however, "we've never been in the business of going out and buying talent that was developed by our competitors. We're in the business of developing our relationships with talent early in the curve," he says, pointing to creators like Donald Glover, Sons of Anarchy's Kurt Sutter and The Americans' Weisberg and Fields, all of whom have development deals with FX Productions. "Our point of view from the get-go is we've got to be able to grow our own talent, and I feel very confident that we can do that." If and when the Disney deal goes through, Landgraf is setting his aspirations sky-high. “If we’re given the resources, I want to be the best brand in television,” he says, envisioning a scenario in which FX encompasses the ad-supported linear network in 90 million homes, a Disney-controlled streaming platform and the FX+ subscription add-on. [kickout id="2" label="langraf kickout 890"] As for what his future may hold under new management, Landgraf shows no indications of heading for the door. “If I feel like the pathway lies before us for FX to be better next year than it was this year, and better the year after that, then my inclination is to keep being here and keep trying to make it better,” he says. “Maybe someone will decide they don’t want me in this job, or maybe something else will come along that catches my eye. But I would be perfectly happy to do this for the rest of my career.” And whenever the time does come for Landgraf to finally leave FX Networks, he says the company will be in stellar hands: “There’s an incredible team of people here with me, and my belief is that however long I’m here, the day I leave, the best days of FX will be in its future, not its past.”

Magazine

Can Edgy FX Thrive at Family-Friendly Disney?

How John Landgraf's daring network is expected to fare at its future owner

Jason Lynch

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Jason Lynch