Sometimes nice guys finish first.
FX Networks and FX Productions CEO John Landgraf is the son of a preacher with the persona of a professor, and he is a rarity in the TV industry: the closest thing to a regular amount of ego inside of a Hollywood TV executive. And humble at times though he is, these days he’s got reason to crow — loudly. Last year, his flagship channel, FX, swept the Emmy Awards with 18 wins — second only to HBO — won an industry-high four Golden Globe awards and notched the top three shows on television’s collective Best 2016 Series list — Atlanta, The People v. O.J Simpson: American Crime Story and The Americans.
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Landgraf, who took the reins at FX 14 years ago, has built a television empire in what’s arguably been the industry’s most challenging and content-rich period. FX has thrived on his watch, generating hit after hit, from veterans such as The Americans and The Strain — both set to soon end their runs — to recent breakouts such as Donald Glover’s Atlanta and the Marvel Comics-inspired Legion. The series surge continues this summer with the John Singleton-produced Snowfall, chronicling the early days of the 1980s crack cocaine epidemic.
The 55-year-old veteran proiducer also revitalized the once-dormant anthology/limited series genre with successful shows like the Emmy Award-winning American Horror Story, Fargo and American Crime Story. And he’s struck comedy gold with freshman Emmy winner Baskets, as well as venerable series such as It’s Always Sunny in Philadelphia, Archer and You’re the Worst. Launched on FX, those shows now find their audience on comedy-centric sister channel FXX.
Related: HBO, FX Lead 2017 TCA Awards Nominations
All of Landgraf’s programming accolades have been achieved with a budget that’s a relative pittance compared with what deep-pocketed competitors like Netflix and Amazon spend on their scripted series.
With the Landgraf-coined “Peak TV” bubble of scripted series — now at more than 450 shows across broadcast, cable and digital streaming services — predicted to burst sometime over the next couple of years, Landgraf is playing the long game. His next move is repositioning linear channel FX into a multiplatform brand that can serve consumers’ changing viewing habits via digital video-on-demand service FX Now. Landgraf is also taking changing audience demographics into account — women and people of color comprise more than half of FX’s showrunners and producers.
In a conversation with Multichannel News editorial director Mark Robichaux and programming editor R.Thomas Umstead, Landgraf explained his Moneyball approach to production, the new dynamics of the TV business and how diversity drove FX to profit.
MCN: How would you rate the general health of the programming business today? Some people say this is just the downside of the cycle. Other people say it’s the edge of a cliff. You have famously called it a content bubble. What’s going on?
John Landgraf: The way I think about it is, there is a business model in television that has been successful for a long, long time, right? Sixty years, more. It’s called the channel. And it’s been an important organizing principle; it started with broadcast networks and then premium and basic cable networks, all built on the notion of a linear stream.
And these channels are still overwhelmingly how people who watch television consume their time. I think the reason that fact is often lost … I think if we dug into the data we’d find that still more than 80% of all time consuming television is on linear channels.
I think the amount of time spent watching linear television channels each year relative to the prior year and the percentage of the total consumption of television each year relative to the prior year is going down — very slowly going down.
And on the other side of the spectrum, there is an appreciating television asset, which we’d call, broadly speaking, nonlinear consumption, right? And I’m including in that VOD and TV Everywhere and FX Now and HBO Go and DVRs, as well as Hulu and Netflix and YouTube.
So it’s a vast bundle of nonlinear consumption. Mostly on-demand. Its main characteristic is it’s not that flowing linear stream.
Buzzfeed’s watermelon video thing was ludicrous because it’s not compelling to watch people put rubber bands around a watermelon relative to watching Silicon Valley or The Americans or the Super Bowl. It’s a tiny, tiny thing in terms of actual, concurrent streams or in hours of consumption relative to broadcast television.
Content on these powerful linear streams is still watched vastly, vastly more, in terms of current viewership, than anywhere else. … They are still far and away the best place to start advertising, better than a bunch of tiny little bits of consumption in a system rife with fraud and bots and all kinds of things. Not to say there’s no value there, but just saying the level of value is vastly different.
MCN: Do you think traditional programmers are adapting fast enough?
JL: It’s an evolutionary process. I think one of the reasons that we actually began counting the number of original programs, which led to identifying this phenomenon called “peak TV” is ultimately you’ve got to accept the background radiation of the competition, right? You can’t put your head in the sand and think that major-league pitching hasn’t improved in 30 years and think that you’re going to pitch the same way you did 30 years ago with the same result. You have to basically tool yourself to the batters you’re facing in the current market.
We just have to be better, because the only thing that will allow us to rise as opposed to fall in this environment is we’ve just got to get better.
MCN: How is FX adapting to the new environment?
JL: We have actually managed to be pretty flat in the last four years. We took the FX network, we layered on the FXX network and the FX movie network, FXM. We layered three networks’ worth of consumption on top of one, all under one brand, and then we also layered on a significant amount of nonlinear consumption.
Our COO [Chuck Saftler], who has been the dominant buyer of movies in basic-cable network for a decade now, bought a year of linear term for our channel. Now, for a major blockbuster, we got a significant number of months of nonlinear term. And so we accumulated a very large nonlinear bundle of movies.
We also did something first that no other channel had done. When a series airs, it immediately goes into the TV Everywhere space, into FX Now, and essentially you can consume it, you can binge it on-demand from the first episode to the end. So we have made really significant strides and we’re at the point now where we generate about 10% as many nonlinear streams as linear streams, even given the fact that we are programming 24 hours a day on three channels.
In the long run, I don’t think there is a fundamental way to counteract the fact that there is going to be modest decline. No matter how well you program a linear channel, you can’t execute your way out of structural change.
If you want your business and your brand to be stronger tomorrow than they are today, there is only one answer, which is you have to lean into the appreciating asset, where there is growth in the marketplace, and where that growth lies is in nonlinear consumption, period.
MCN: How would you judge your performance?
JL: Our point of view is that we’re proud of what we have done to date, but it’s not comprehensive enough, it’s not radical enough. But knowing that, just as we know that if we didn’t step up our programming game we were going to recede rather than grow, is a good thing. I think knowing the truth is the first key. Knowing the trends and accepting the truth of the future is the first key to being successful in anything strategic, certainly in business.
So what you’ll see from us, and I can’t speak to our competitors, is more radical and more aggressive moves in the future to transform our business into what I would call a multiplatform brand. I wrote a memo — it might have been five or six years ago — to a number of key colleagues here, basically suggesting that if FX is going to thrive as a business and a brand over time, it must transform itself from a linear channel into a multiplatform brand. [Part of that] was the formation of FX Productions in 2005, when we started owning our own shows.
It’s not as if I haven’t seen the writing on the wall here for a long time. We’re figuring it out.
MCN: Wall Street is already punishing programming stocks. What do you think the business fallout will be of this disruption and competition? Will this content bubble pop?
JL: There are two sources of capital, which rely on different capital standards, that are funding this. One is the capital that flows in through traditional media companies that are still mostly oriented around brands that develop from linear channels or their film studios, right? The metric that the market uses to buy and judge that stock is profit. It takes a multiple of profit.
Then there are these other companies; the leading ones in it are Amazon and Netflix. Netflix has said they are going to run at negative $1.8 billion dollars in free cash flow this year. So even though they will declare an EBITDA, that will be because they are pushing down the amortization of programming costs into subsequent years. Their actual revenue will be $1.8 billion lower than their expenses this year, based on their own statement.
So their metric is not profit, it’s customer acquisition, I suppose. And essentially investors are willing to extend them capital at a loss in essence on the assumption that their growth and subscribers will keep up with that trailing amortization and ultimately overtake it, and they will be able to sustain and grow profitability over time. Similarly, Amazon is a very different retail business with $130-plus billion dollars in top-line revenue, so its programming costs are kind of a rounding error. So these are really different businesses.
I think what we’re going to find when we roll up all the scripted programming made in America this year … it will be more original scripted adult series this year than last year, but then, in the aggregate, premium television channels, basic-cable channels … and broadcast-television channels will make slightly less content this year than they did last. I’m talking in the range of 5% or less from peak.
I think we are probably past the peak, in terms of the total volume created by linear television channels and their associated brands, at least at this point.
MCN: What is driving this arms race?
JL: It’s this massive amount of capital flooding into the market through Netflix and Amazon, and to some extent Hulu or YouTube Red or Apple and a few other buyers. And it’s like nothing I’ve ever seen, in the sense that it’s nonprofit expenditure. It does not drive profit. It actually drives loss, right? It drives growth in top-line revenue, but it drives loss.
So we’ve got to punch above our weight, and we’ve got to fight heavyweight fighters who are a lot bigger and have a longer reach than we do just in terms of physical gifts. You’ve got to be crafty and smart and have endurance.
MCN: On that note, you’ve largely been outgunned in terms of budget by some of these new entrants, namely Netflix and Amazon. Yet you’ve been exceptionally successful at picking hits. How?
JL: So you’re a coach. What you’re trying to do is create a winning environment. And in the case of television, every single TV show is made by a single individual person, or a couple or three individual people, who then accumulate around them hundreds of other individuals. It’s a personal thing, it’s a bespoke thing — it’s not done well, I don’t think, in a factory context. It’s not as if you create the machine that builds the machine, which is the Tesla factory, and then it builds these devices of uniform size and shape. Every single thing is a piece of art and business created by an individual artist/businessperson/ craftsperson.
And there is just no such thing as a one-size-fits-all formula. … I think a good coach, for example, is good at coaching players who have different styles and different needs and different quirks and different abilities. You’ve got to get good at doing that. Then what’s hard, I think in this business, is to stay singularly focused on that single thing because there are so many other things that are distracting.
You know the political maxim, “It’s the economy, stupid.” It’s like, “It’s the shows, stupid.”
The reason we built a studio is because we wanted to do all of it. We didn’t want to license it and do part of it — the marketing, the publicity — and leave the financial and business and production issues to someone else. We wanted to have a deep and abiding 360-degree creative/personal business relationship with the people that make television from top to bottom.
I built it as a former producer. I built an organization that said, “Well, if I were gonna make a decision about bringing a talented person, what would I want from the organization I brought that person to, to give that person the best chance at success and me the best chance at success?”
I think people do their best work here — it’s pretty simple. And then once they come here, they not only have the best experience of their career, they do the best work of their career, because they have a profound level of engagement and support from me and every person in this organization.
MCN:What’s your biggest fear for the business?
JL: I’m pretty bullish. I think this is a really exciting and dynamic moment in time and I think decisions are being made now that are gonna yield tremendous success and colossal failure because I think that it’s like doing what you did won’t get you where you wanna go, right?
But on the other hand, I think there is going to be a culling of the strongest businesses and the strongest brands. I think the strongest ones are going to emerge. It’s kind of like a forest fire, right? The strongest trees in the forest have more light and more room to grow in the aftermath of the forest fire. So you just have to be on the right side of surviving a transformation like this.
MCN: You’ve got the Emmy Awards coming up very soon. FX had a great, record-setting showing last year. What’s your expectation for this year? Can you repeat what you did last year?
JL: It’s crazy to me. I mean, I feel really proud of our entrants and I think it’s as strong a team as we have ever fielded.
I think a different metric would be that more than 80% of our shows that we programmed at FX made year-end top 10 or best lists. And I think for Netflix, that was in the 15% to 20% range. If you want to call that a batting average, it’s batting more than .800, relative to batting .150 to .200.
I think you’ve got to give a little bit of an advantage, maybe more than a little bit of an advantage, to the teams with the bigger payroll, because this is the Oakland A’s playing the Boston Red Sox and the New York Yankees in payroll terms, you know?
MCN: What is it that has helped you pick the right shows? Gut? Test audiences?
JL: One of the things I’ve realized as I’ve matured as a person is that a collective intelligence is always greater than an individual intelligence. So one of the things we do around here is that even though the final decision is mine, I really listen to this group of people that I’ve worked with for a long time and I really benefit from their individual intelligence. We can have a very agreeable disagreement and a very robust and honest debate, and I learn things through listening to those debates.
And I never forget I’m betting on a person. Television is made by people and their character, their talent, their intellect, their intent, how dedicated they are to that intent, how much stamina they have — how strong is their ego, not only in terms of willingness to be stubborn and intractable when they need to be, but strong enough to take criticism and tough criticism, strong enough to work through failure.
I get to know these people individually, I sit in a room and talk to them, I ask them questions, I get a feel for who they are as people — I know I’m betting on them. Yes, I’m betting on their idea and yes I’m betting on a pilot story, but I am, more than anything else, I am betting on a person, or people if it’s a partnership. And I never forget that.
You can’t fake love. You either have it or you don’t. And I love this. I love this and I love the people who do it with passion and do it well. And I really try to be someone who cares about, thinks about, the players.
I certainly am a wonky guy who does everything I can to develop technique in myself or others, and I will use any piece of data and I can get very buttoned up on the numbers. I mean, I am not someone who is not analytical and doesn’t believe in analysis.
But at the end of the day, I don’t think you can get to the highest level if you’re coming from an analytical point of view. I think you have to come in with your heart. I think you have to bring your whole heart to the enterprise because I think people feel that — they feel a level of dedication, passion and caring, if it’s there, that’s different than analysis.
MCN: Continuing on that thought, you have been very public in stating that you have provided more opportunities for people of color and women behind the scenes and on camera. How important is that to the overall success of FX?
JL: What I have been trying to do here is have a brand that isn’t manufactured from the top down … it grows from the grass roots up. And I don’t think that that brand then is about a particular demographic. I don’t think it’s about a particular gender or a particular ethnicity. I think it’s about fearless points of view and fearless innovation and fearless pursuit of quality.
So it’s been really important to me that [FX’s programming] wasn’t only a white, male thing, you know? Famously, and this is a testament to the fact that you’ve got to break some eggs to make an omelet, we developed Breaking Bad and I passed on it. So call that a really colossal mistake on my part, the beneficiary of which was AMC because we let it go. We had it, we owned it and then they wanted to make it, and we didn’t want to make it, so we let it go elsewhere.
But I made that decision because I didn’t want to put a fourth male anti-hero show on the air when we had three already — Nip/Tuck, The Shield and Rescue Me. We put Damages on the air instead — pretty good show, also nominated for an Emmy with Mad Men. It broke that glass ceiling, although Mad Men won and Damages didn’t. But that was a statement about the pathway we wanted to move forward, which was we wanted the best talent, not the best talent that wanted to write about white male anti-heroes — the best talent period, full stop.
The other thing I’ve said — and I mean it — is that as I’ve reflected with great gratitude on this tremendous opportunity that this career has given me, and the opportunity to run this wonderful brand and lead this team, I’ve thought about the mentors that had made that possible. A common theme in that list is white males. White, heterosexual males. And I’m a white, heterosexual male.
So how do I not recognize it as an unearned advantage that essentially I had some things that were tremendously in common with them in terms of my own gender, ethnicity and sexual orientation?
So I just said, “You know what, OK, so pay it forward.” And paying it forward for me doesn’t mean don’t hire a white man, because I do, but it means … work hard to overcome the tendency for that to be a self-fulfilling prophecy and really, really put your back into it, have your organization put its back into creating an outsized number of opportunities for women and people of color and people with different gender identities and sexual orientations. Act locally.
So we have been very, very aggressive at doing that. The last time we counted, 57% of our episodic directors [were] non-white males. And by the way, when we got called out by Variety, that was 12%. So we have gone from 88% white males to 43%. We halved that. And concurrently, we have increased the ratio of people who are non-white males directing by almost five times.
MCN: Why are you pushing back Katrina ? What’s happened with that show?
JL: After thinking about it long and hard, the [American Crime Story] creative people involved decided they wanted to focus the story in a slightly different way, and that required some rethinking of how we were going to tell it. And we already had Versace in production, and it’s going great. So in essence, we were like, “OK, well, we’ve got a little bit more time here to get Katrina exactly right.” And I’m even more excited about where we’re coming out on Katrina.
MCN: So will both appear in 2018? Katrina later in 2018 and Versace earlier?
JK: I would say that is likely, yes.
MCN: Is there anything you want to get off your chest?
JK: I think that analysts and investors and some of the people that write about our industry are counting us out, because they are looking at it as if we are and always will be linear television brands and channels, and therefore our potential as businesses only lies in how successful linear channels and brands will be in the future. And I think that’s a mistake. I think we are actually incredibly well-positioned to be profoundly successful nonlinear, multiplatform brands.
What’s on Tap This Summer
Networks set seasonal slate of studio-produced fare
The summer television season is upon us, and cable networks along with video streaming services are gearing up to launch new scripted series in programming genres ranging from comedy to horror and drama. Here’s a partial list of new original scripted series premieres from cable and digital subscription video-on-demand services from June 19 through Aug. 31.
Drama (Acorn TV)
Animated (Disney Channel)
Little Witch Academia
Animated series (Netflix)
Danger & Eggs
Animated series (Amazon)
Animated series (Netflix)
The Bold Type
The Hollywood Puppet Sh!t Show
Friends from College
Comedy (Disney Channel)
Drama (USA Network)
What Would Diplo Do?
Drama (Audience Network)
Marvel’s The Defenders
There’s … Johnny!
Weekly digest of streaming and OTT industry news
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