January 14, 2014 11:06am PT by Lacey Rose, Marisa Guthrie
FX's John Landgraf on Industry 'Tug of War,' Lost Revenue and Ryan Murphy's Control
FX Networks CEO John Landgraf took the stage Tuesday for his semiannual appearance before the press.
He kicked off his network's day at the Television Critics Association winter press tour with a 10-minute treatise on the state of cable television. Despite growing competition -- 180 scripted cable series today vs. only 33 in 2002 -- and the escalating costs that accompany it, Landgraf remains enthusiastic about the potential for his expanding slate of programming, particularly given how much of it he owns and, therefore, can continue to derive revenue from.
The biggest challenge facing Landgraf, he said, is the ad revenue he continues to lose to delayed viewership -- as much as 40 percent on some of FX's "most valuable" series -- which explains the big push behind his authenticated service, FXNow. "We need to find new opportunities to mitigate those losses," he stressed, adding that FXNow will enable him to begin rebuilding that business.
He also used the TCA soapbox to touch on what he billed as a "tug of war" in the industry over stacking rights (VOD, SVOD or authenticated streaming rights), which he called "vital to [his] business." Without going into too much detail, he noted how pleased he was to have in-season stacking rights to the vast majority of his original series. (It's a topic he addressed at greater length during an executive roundtable moderated by The Hollywood Reporter last fall.)
Also included were Landgraf's thoughts on the health of FX's suite of networks, which have posted gains despite that increased competition. In fact, FX was up 2 percent and 4 percent among the key 18-49 demo and total viewers, respectively, for the year. Similarly important, the flagship's viewership is up 4 percent among females, an important demo for a network better known for its reach among the all-important male subset. Upstart FXX has seen its demo ratings skyrocket 571 percent compared to the same period performance of predecessor Fox Soccer Channel.
Landgraf addressed such topics as creative input, his evolving brands and the "herky-jerky" path for TV Everywhere. Here are the highlights:
The Upside of Creative Control
Though FX executives have long been known for their deft care and feeding of the industry's creative talent, Landgraf suggests it's not a one-size-fits-all approach. "We're very involved creatively. We have very little impact on some shows on our air and a tremendous amount on others," he said without revealing which series fall into the latter category. "It depends on who it is. I don't think Louis C.K. needs my insight. I think he's fine without it."
In addition to Louis C.K., who writes, directs, stars in and edits his eponymous FX comedy, Landgraf noted that American Horror Story showrunner Ryan Murphy also "has virtual carte blanche to do whatever he wants to do." And why not? In three seasons, Murphy's anthology series has consecutively built its audience and continued to pull in major awards. (Outside of revealing that Murphy is likely to bring back many of the same actors for the next season, he suggested he knew very little about the subject matter.) "I think we foster the perception that it's a free-form scrum at our channel," said Landgraf, noting that while that wasn't entirely accurate, he forges partnerships and respects his partners' input. In fact, when there's an impasse, he'll let the creative person have the final word, even if they're wrong. "I think it is a little dangerous," he added of his creator-friendly philosophy. "And that kind of excites me."
A Series' Shelf Life
One of the benefits to the changing nature of viewer behavior, according to Landgraf, is the shelf life -- and subsequent quality -- of a series. "When I started in [the cable] business 10 years ago, it felt like it was a disposable medium," he explained of the evolving television business, noting that he was then making programming specifically for night-of viewership. He continued: "Now I feel like we're making shows for posterity." Which is to say his content has a considerably longer life now with nonlinear platforms introducing viewers to programming several days, months and even years after a show's run. And as Landgraf noted, the fact that FX owns much of its programming allows him to reap the benefits from both revenue streams.
FX vs. FXX
Landgraf was the first to admit that comedy upstart FXX is still a work in progress, and the differentiation between flagship FX and the new channel will continue to be more starkly defined. "It was going to take some time to get our brands around the three channels [including movie network FXM] correctly positioned," he said, noting that he decided to premiere new animated comedy Chozen on FX rather than FXX simply because they wanted to give it Archer as a lead-in. As for Archer, which easily could have fit with the FXX brand as well, Landgraf suggested the he and his team left it on FX because they didn't want to disrupt an impressive growth trajectory for the animated series. "I think several years from now you'll see that the channels have been positioned and they've been dialed into greater focus," he said. "But that's going to be a process."
The Promise of TV Everywhere
When asked why the network's TV Everywhere app is available in only about 50 percent of FX's subscriber households, he noted the relationship between the content providers, or MVPDs (multichannel video programming distributors), is a "complicated one." The promise of TV Everywhere, noted Landgraf, "has just been this constant pot of gold at the end of the rainbow and it never quite happens. I'm really optimistic that even though it's going to be this kind of herky-jerky process, the industry has finally achieved the key breakthroughs necessary for this to happen so that a year from now it will be a thing."
FX will continue to negotiate with additional service providers with the intention of eventually offering FXNow to all of its subscribers. Major service providers have been resistant to TV Everywhere, but SVOD services including Hulu Plus, Netflix and Amazon Prime have made multiplatform options an irrevocable fact of content consumption. And while Landgraf characterizes those SVOD services as an "important part of the system," he is adamant that the companies creating and paying for the content need to be compensated. "The MVPD system is paying a lot of money, $56 billion, for entertainment content. We need to absolutely be a part of this nonlinear process -- certainly from an advertising standpoint," said Landgraf. "And I think we will."