4 TV Execs in Showdown: Fox's Reilly Calls Pilot Season 'Welfare State'; Sarandos' New Threat

Showtime's David Nevins and FX's John Landgraf joined the streaming service exec and the network chief, who reveals for the first time his plans to slash pilot orders by 50 percent.

This story first appeared in the Oct. 25 issue of The Hollywood Reporter magazine.

Is Netflix "freeloading" off the networks and cable carriers that help create a big chunk of its programming? That was the word FX Networks CEO John Landgraf used in a terse Sept. 20 Wall Street Journal interview explaining FX's move to enable more video-on-demand viewing of its shows on cable systems. VOD hurts Netflix, countered its chief content officer Ted Sarandos, who said he would pay less for shows if cable carriers planned on gobbling up all the so-called "binge viewers." With such fighting words being thrown around the cutthroat (and booming) television business, THR decided to invite four of its brightest and most articulate executives to sit down and duke it out. They didn't disappoint. Landgraf, 51, and Sarandos, 49, were joined by Showtime's David Nevins, 46, and Fox's Kevin Reilly, 51, in a spirited debate about the competition for top projects, what TV agents get wrong and the shows they'd most want to steal from one another.

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All four of you now compete for the same projects. What's the most frustrating part of that rivalry?

John Landgraf: I really believe in the development process. Obviously, Ted's organization has a different point of view. There's a process of working on a script and working on a pilot -- sometimes actually retooling a pilot -- that's valuable for precision of tone. And it's difficult to do that right now because [with] any project that has merit, there is, at minimum, a pilot commitment and often a series commitment.

Ted Sarandos: I'm a fan of development, I just don't want to do it. (Laughs.)

David Nevins: Having the ability to go at the right pace is one of the things I like about my job, as opposed to when I was in the network business. I don't like artificial pressure to go faster and to make decisions before things are ready.

Kevin Reilly: I enjoy that they get to appreciate my misery.

Kevin, you've done a few straight-to-series orders lately. Why?

Reilly: We've been bound to these cycles for a long time in the broadcast side of the business. When I worked in cable [at FX], I loved getting off of it. It was a much better process creatively. It has a higher yield on the success side. You want to have the ability to course-correct if need be and not have to cast under duress. So my series orders have been predominantly to unwind us off the cycle in broadcast, but the marketplace is at such a fever pitch. I can't stand it. I get dragged into pitch meetings that I shouldn't be in because, "Oh, Nina [Tassler of CBS] was there and she blew air-kisses; Paul [Lee of ABC] sent flowers; Bob [Greenblatt of NBC] is vacuuming their rugs." It gets that silly, but then people start throwing money, and there's nothing else to do. It starts to pervert the process when there's too much money involved too early and everyone makes false promises that they can't deliver.

How much of your feelings are directed at Netflix?

Landgraf: None of us is implicating Netflix in that because the truth of the matter is, there are now 48 channels, at last count, making scripted original series. So it's the whole ecosystem that's creating it. Netflix is a part of it, but so are we.

Sarandos: People get wrapped up in the cost of a show and say we pay a lot for a show. But I don't have the development infrastructure overhead, and I'm not [making] 50 or 60 pilots to do it. If you took all that money out and put it on the screen -- which is what we did with House of Cards -- then we're probably not that different.

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What's the one show that got away for each of you?

Landgraf: Easy. Breaking Bad.

Reilly: I was given the script of Homeland by Howard [Gordon] because of our relationship with 24, and I read it and thought it was really good, but it felt like a cable show. I still wrestle with it. It would not be our highest-rated show, but I really wish I had it.

Sarandos: True Detective [upcoming] on HBO is a show that I would have loved to have. It's one of the best-written projects I've seen.

Were you in that bidding process?

Sarandos: For a second.

Nevins: I was, too. I actually thought I was going to get it, and in the end [HBO] offered a big check and an overall deal for the writer.

Ted, how long can Netflix go without releasing any ratings information?

Reilly: This is a Ted Sarandos roast, right? Where's Jeff Ross? (Laughs.)

Sarandos: I don't know. Honestly, at some point, someone will just spend a ton of money getting the answer. Because you can, right? Somebody could sample 2,000 people, spend a million dollars and get the data. It's a question of how valuable the answer is to you guys. It's not to me.

Nevins: If John puts in 10 bucks, I put in 10 bucks, we get the Food Channel to put in 10 bucks, we can put together a pool. … Question: Would we understand it if you gave it to us?

Sarandos: I don't think so …

Reilly: I love my job, but I'd really love my job if I didn't have to live and die by ratings every day. But we're in a business where perception becomes reality. Advertisers can wake up, and they're watching Netflix and saying, "God, you know, Orange Is the New Black. Everyone's watching that!" You get these sweeping generalizations. … So we really have to try to get some uniform metric, where you put it in perspective.

Landgraf: There's no question in my mind that [Orange] is a very successful show. … The only thing that gets confusing is that perception is often reality, and we don't know the difference between perception and reality.

Sarandos: I buy programming from all these guys, so if a show on Netflix is being watched more than a show on FX, that's bad for FX and not particularly great for Netflix. I want your shows to be successful [and more episodes to be made], so I can buy more of your shows.

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There's a debate over "binge viewers" and whether networks or Netflix should benefit from them. Ted?

Sarandos: Most of our business is off-net buying, and we're constantly struggling with the window of syndication. Nothing has been better for the golden age of television than the season-after syndication on Netflix and others. There are two different practices that go on. One of them is "catch-up TV," which is underdeveloped here in the U.S. Five episodes of "catch-up television" is great for the industry. It's great for getting people engaged with the show, and it takes the pressure off of the time slot. But when you stack the whole season of a show, that's [subscription-video-on-demand], and I pay a fortune for SVOD rights. If a network wants to give it away to a cable operator, they have to forgo the fortune I'd pay for it. So we just lower the price tag dramatically if you allow full-season stacking.

Landgraf: Ted's got the right to determine what's valuable for his business, but I just strongly disagree with that. We're making massive investments in these shows in terms of advertising and licensing, and we really need to be able to put more than five [episodes] in these [cable company VOD] bins in-season. I think SVOD is an after-season [thing] -- a commercial-free backend environment. I don't think the front-end environment has anything to do with SVOD. All we're trying to do is claw back some of the usage we're losing. I don't think it's fair at all that we make a show that has a 13-episode serialized structure and we can't offer the ability to watch that in-season with ads.

Reilly: There's no question that the vitality of the SVOD market, led by Netflix, has been very important for contemporary economics. It's created a great viewing pattern, and it has been a good creative part of the puzzle. But as it encroaches into our window, where we now quite often get one run of our shows -- it's a little different in basic cable, where they can repeat things -- we're paying a lot of money for that one run with the marketing on top of it before it's out of our universe. The [concern is that] within 18 months, it could appear on Netflix in an unbranded environment. People need to be able to stay somewhat tethered to our universe or that entire thing can unravel very quickly. None of it's bad for television. Television viewing is up. But what John and I are really trying to do is not only capture value but also create a consumer experience that makes sense.

Landgraf: We're all competing for the same sort of brand awareness and identity. But David's shows are attributed to Showtime indefinitely. So are Ted's to Netflix. We have a significant problem, which is that if our syndication window gets moved up from four years to one year, essentially, as a show is just developing and people don't even know about it, we're worried that we won't have a brand attribution if after a year it's on Netflix. So there really are only a couple of issues we have with Netflix. One is the stacking issue and the need to recapture some of our advertising revenue, and the other is branding, because if you look at one of Netflix's ads, it says, "Orange Is the New Black is a Netflix original series, House of Cards is a Netflix original series," and then it says, "New Girl, Breaking Bad and Sons of Anarchy," and there's no branding on that. And arguably, at some point in the life of the series, there probably should be.

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Given all the competition on cable, broadcast is struggling to develop dramas. What impact is that having?

Nevins: They can probably get by with developing fewer projects. You can still put four new shows on the air, developing 30 projects rather than developing 90 projects.

Reilly: That's a very good point. I don't like the welfare state of the development process. A lot of this town was sustained by the pilot system, where we were making an enormous and inefficient amount of product. It never made a lot of sense, but frankly, it wasn't bad for people because they may not have a series, but in the meantime they're paying their bills with the pilot. It's a silly system, so maybe one of the healthier things that could evolve as there are more series opportunities is to get off of that inefficiency of just throwing spaghetti at the wall. But it's very difficult to unwire the town. Even agents are still in this mode of "pilot season." What the hell is pilot season? It's an artificial boundary that makes no sense, and it makes you do things under duress.

So in five years, will Fox make half as many pilots?

Reilly: I'm going to make half as many pilots this year. Now, we're going to make prototypes, we all believe in those. Ted's not doing that, but he'll get there.

Sarandos: Pilots and development deals also have become a defensive play in a super-competitive market. "I'm not going to ever make that, but I don't want anyone else to." Some of this has gotten out of hand.

Reilly: You can't just go in with series commitments on everything because even the most talented people sometimes get off track. It's a business of failure. And I'm not being glib or shitty about it, but you're going to find yourself saying at some point, "Hey, I bet on some amazing people, and what the hell just f---ing happened?" So the pilot becomes a hedge.

Landgraf: With Sons of Anarchy, which is the biggest show we've ever had, we reshot most of that pilot. It had a different lead in the character of Clay Morrow, and I can say with conviction the show wouldn't have worked.

Reilly: That's what I hate about the [broadcast] cycle. If I'm sitting on Sons of Anarchy, and it comes in the last week of April and I have one week to screen it and a week to cut a trailer and go sell it, that show is dead in the water. And that means a great show would have never come to pass. But I have a hard time convincing the community that somehow it's in their best interest to get off that. But we're getting there.

Three of you have worked at NBC. How would you fix it?

Reilly: Well, I was actually given that opportunity.

Landgraf: Would you put air quotes around the word "opportunity"? (Laughs.)

Nevins: You were given the gift.

Reilly: I was given the gift. It was really a breezy four years.

Landgraf: I have a lot of respect for Bob Greenblatt, I'm not going to tell you how he should do his job. I think he's pretty good at it.

Reilly: When you're in a down cycle, it's an extraordinary thing. Any mistake you make is amplified. And it takes its toll on your people and your culture. People start to get beaten down and they get paranoid. And it's not a lot of fun coming to work every day.

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What's the worst move an agent can make with you?

Landgraf: A lot of them are actually really good at their jobs. But the truth is that sometimes agents take the short term, whatever is right there in front of them, as opposed to making sure that the content is in the right place to last the long run. Nothing other than a long-running profitable series is a satisfying outcome.

Nevins: On True Detective, they took the money at HBO. But it's hard to argue that it's a bad situation. They have a series order. I just would have loved it more. (Laughter.)

What's the biggest misconception about your networks?

Landgraf: People see FX as a male network, and American Horror Story: Coven [is] a dominant show with young women, as was Nip/Tuck. And if you look at the actual viewing balance of the network, it's about 50-50. We've had difficulty shifting that perception.

Nevins: The big effort for me has been to change the perception that we're the plucky No. 2, which I loathe. That perception is changing, but we grew up in the shadow of HBO.

Reilly: Fox was the challenger to cable before there was cable. There was always that, "Oh, you have to take that edgy project to Fox." And right now I'm fighting getting lumped in with broadcast. "Oh, that's not a broadcast show." We still want to maintain that attitude, that Fox positioning. So, I've had to claw a lot of things back from the universe because "that's a cable project."

If you could poach one program from somebody else at this table, what would it be?

Nevins: I'd take some comedy from John. I'd take Louie, and I might even take The League. I'm trying to shift what we're doing in comedy a little bit, and Louie would be a fantastic start.

Landgraf: I'd take Homeland and House of Cards. I want them both.

Sarandos: No question, Louie, Family Guy and Weeds, and all those are on Netflix anyway!

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