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Inside 'Modern Family's' Billion-Dollar Winning Formula and How Season 4 Might Change Everything

This story first appeared in the Sept. 28 issue of The Hollywood Reporter magazine.

"Always look people in the eye -- unless they're blind. In that case, look their dog in the eye." Ty Burrell's character, Phil Dunphy, is flipping through the pages of a homemade book of wisdom titled Phil's-osophy that he plans to share with daughter Haley (Sarah Hyland) before she heads off to college. "If you get stopped for speeding, tell the policeman your spouse has diarrhea," Burrell continues, flashing his signature smirk of childlike confidence as a cadre of producers hover over a bank of screens cackling. "Phil's-osophy," he adds with a nod.

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It's a funny scene, part of Modern Family's upcoming season being filmed Aug. 13 on the 20th Century Fox lot in Los Angeles. But Dunphy's wife, Claire (Julie Bowen), struggles with the next line: "I want a Phil-vorce."

It doesn't sit right with the actress. "It's too mean," Bowen announces somewhat sheepishly as co-creator Steve Levitan makes his way to the set to tweak it for her. The episode's co-author Dan O'Shannon later will acknowledge that there had been a debate over the line in the writers room, with some believing the mere suggestion of divorce among the tight-knit Dunphy-Pritchett family might be off brand for television's top-rated comedy. Levitan suggests an alternative: Claire simply will stare at her husband without uttering a word. Everyone approves, and the director calls for another take.

Bowen now is noticeably more comfortable in her delivery, and viewers will be too. About 13.3 million of them tune in to Modern Family each week to see a comedy that is, at its core, extremely uplifting. Eye rolls and bickering are featured plenty, but the series ultimately is about a blended family that -- gasp! -- really likes one another. "In the 1990s and early 2000s, there was a lot of cynicism in comedy, especially in network sitcoms, where you had a lot of people trying to out-snark each other. I think the time was right for a show like this to come in and be the antidote to that snarkiness," says executive producer Danny Zuker of the show's sweetness, which serves as its secret weapon.

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The tone -- plus a pitch-perfect, multigenerational ensemble of actors and an ability to present such themes as homosexuality, adoption and nontraditional families in the context of relationships rather than archetypes -- has earned the series the rare combination of class and mass, with such diverse fans as CBS CEO Leslie Moonves, sitcom legend Norman Lear, the Obamas and the Romneys agreeing on one thing: They really enjoy it. So much so that Modern Family has grown its audience in each of its three seasons on the air, rounding out the third as TV's number-one scripted series and the top comedy in the key adults demo. At the same time, the show has won the outstanding comedy series Emmy two years in a row. And, unless those proverbial pigs fly, it likely will win a third Sept. 23. (All six adults are nominated in the supporting actor category, too.) On top of all this, Modern raked in $164 million in spot ad revenue in 2011, making it the second-most-lucrative comedy behind only Two and a Half Men, according to Kantar Media, thanks to its appeal among younger, affluent and highly educated viewers.

The commercial success of the series -- sources suggest it's a $1 billion asset for producer 20th TV and network ABC -- is even more surprising considering the situation comedy was considered all but dead before it premiered in 2009. "This really is the show that reinvigorated the genre," notes 20th TV chairman Dana Walden. Adds fellow chairman Gary Newman: "It just seemed America was ready to embrace a comedy. Whether that was a sociological factor based on people going through a recession, it took on a life of its own."

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That success begat friction this summer as the adult cast -- Burrell, Bowen, Jesse Tyler Ferguson, Ed O'Neill, Eric Stonestreet and Sofia Vergara -- sued 20th TV in a heated all-for-one, one-for-all salary renegotiation. After a series of nasty headlines and a canceled table read, the actors reached deals in a matter of days (proof of the ensemble cast's power) that will pay them about $170,000 an episode for the fourth season, which begins Sept. 26, plus a small cut of the show's backend profits that could be worth millions. Salaries will escalate to about $350,000 an episode in the show's eighth season. (The kids got raises, too.) "It was a distraction more than anything, and I think the cast feels the same way," co-creator Christopher Lloyd, 52, said at the time. "Now other people can go on with the numbers, and we'll go on with the letters."

But after three years of nearly unanimous praise, the inevitable, existential fear of backlash looms as the show's cast and creators introduce key changes, including a baby for Vergara and storylines involving maturing kids. "It would kill me if I heard people say, 'That show has really gone downhill' or 'I'm just not interested anymore,' " confesses Levitan, 50, who says it's that concern that pushes the 13-member writing staff to work harder. "When moments come up where we feel like a story beat or a joke feels a bit familiar, we keep going because we're not going to give the cynics anything to grab onto."

Lloyd is equally determined to stay on top. "We're incredibly grateful for the attention we've gotten already," he says. "We're also incredibly greedy for more."

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**

Modern Family doesn't operate like most TV shows. Levitan and Lloyd are more co-showrunners than they are collaborators. The duo, who met on Wings and signed a joint deal in 2006 but re-upped separately in 2010 amid creative differences -- a year after Modern hit big -- switch off taking charge of episodes. This season, Levitan plans to oversee the odd-numbered shows while Lloyd tackles the even ones (there are 24 in all), so when Levitan is on the set running production, Lloyd is in the writers room preparing the next week's script. Several insiders liken the peculiar and practical arrangement to a custody agreement governing a TV child.

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"Chris and I are both strong, opinionated people, and we very, very quickly realized it doesn't make sense to sit here and debate each other and waste time," explains Levitan of a decision made early in the show's tenure, noting the "efficiency" of an arrangement that rarely has them interact. "We often come at it from different points of view, so we said, 'Let's just switch off who has final say.' " (They give notes on each other's episodes and attend each other's table reads, though they don't sit together.)

Lloyd says the clash stemmed from his and Levitan's opposing views on why Modern worked so well. "We had different ideas about what the things were that were making the show click," he says. "That can lead to differences of opinion, and it was not going to be practical for us to argue every point of every episode. … [The arrangement that we've worked out] will lead to situations where you go, 'Well, that's not how I would have done that,' but it is a much more practical way than to have both of us sort of swing away on every problem."

The show's cast and writers have become the de facto glue that holds the show together and ensures that viewers can't tell the difference between a "Chris episode" and a "Steve episode" -- though insiders can point to the variations in vibe and style. "I tend to think that Chris writes with his mind and Steve writes with his heart," says O'Shannon, who adds: "With Steve, it's the heart and the real and the emotion and the true, and with Chris, it's the structure and the satisfying experience of watching a story come together and unfold and bringing people together in unexpected ways." For whatever differences there are in style and approach, writers say that at no point have Lloyd or Levitan ever tried to divide the staff. "Their situation works incredibly well for them," adds Walden. "I don't know that I would necessarily look at that model and say you can lay it into every show. It works here because they trust that they're both aiming for that same high bar."

Indeed, castmembers say that what might have been an awkward work environment has turned into a positive. "We definitely shoot two different shows, and it's actually kind of nice for the actors because you never feel like you're in some sort of rut," says Bowen. Adds Burrell, "We've grown to be a kind of family, and we have these two dads." In that scenario, O'Neill serves as the young grandfather who has coached many of them through the show's -- and its stars' -- rise. Those stars not only spend time together outside of the show (many went to Mexico for Vergara's 40th birthday in July) but also, in solidarity, submit themselves as supporting actors in the awards race and, of course, negotiate their deals together. It's telling that O'Neill, the biggest star at the show's inception, was paid as such but joined the others as part of the salary renegotiation. "Ed gives us advice like: 'Stay away from drunk people now that you're recognized' or 'Go into the stall when you're going to the bathroom. No more urinals.' That kind of stuff," says Burrell.

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Spending time with Levitan and Lloyd, it's easy to see that the former, who got his start as a broadcast journalist, is the more extroverted of the two, on and off set. He regularly does press, tweets often to his 60,000-plus followers and typically accepts awards on Modern Family's behalf (memorably receiving a perfectly timed eye roll from his wife, Krista, when he revealed from the stage at the 2011 Emmys that the inspiration for the winning episode was his children walking in on him and his wife "in the act"). He has been a vocal member of the showrunner community, too, voicing his support of gay marriage ("We'll offer [Ann Romney] the role of officiate at Mitch & Cam's wedding … as soon as it's legal," he tweeted in late August) and stating his displeasure with the economics of streaming options early on in the show's run. "Some estimate Hulu IPO could bring in $2Bil. What will the content providers get? Zero. What is Hulu without content? An empty jukebox," he told his followers in August 2010, urging his network to pull the series offline. "I just wanted full credit for that audience," he says now. "And because I was a bit outspoken, I went and had breakfast with Jason [Kilar, Hulu's CEO] and I think it was helpful. And the reporting is changing, too, and Nielsen is trying to get up to date."

Lloyd, son of late sitcom vet David Lloyd, best known for his award-winning work on Cheers, Taxi and Mary Tyler Moore, is more press shy, softer spoken and regularly avoids high-profile events -- even the Emmys. "I'm not an awards-show guy," he says, confirming that, yet again, he doesn't plan to attend this year's show.

On this mid-August afternoon, seven of the show's writers, including Levitan, are gathered around a table in one of the office's two fishbowl conference rooms punching up a script. There's a lightning round of riffing for a scene featuring Cam (Stonestreet) addressing a lesbian mom at daughter Lily's school -- "I'm begging you to give me five minutes with a tweezer," blurts out one writer; "My dad has those shoes," says another -- before the focus turns to a more contentious plot point: Claire Dunphy sending Haley off to college with a supply of condoms.

Levitan acknowledges that some of his writers, many of whom don't have a college-age child like he does, initially were not in favor of the scene. (Levitan is married with three teenage kids; Lloyd is married with two.) In fact, he wasn't entirely convinced he was comfortable with it either, except that it's a situation he's heard many mothers discuss. "The name of our show is Modern Family. We shouldn't shy away from things like that; we should explore them," he says, seated now in his nearby office, which features a framed copy of Blush magazine from Just Shoot Me!, the first hit show he created; a guitar that he's slowly learning to play; and Modern memorabilia.

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Rarely is there a situation written into a Modern episode that didn't happen to someone involved in the show or to others that they know. In fact, the writers say they are encouraged to attend parents' nights and plays at their children's schools to find fodder. "We bring in our fights, our petty jealousies and our anecdotes. Our story-breaking rooms are little therapy sessions," says Zuker. "My [three] kids will do something that annoys me, and they'll see me smile, and then I'll hear, 'Dad, do not put that on the show.' "

What will end up on the show this season might surprise loyal viewers. In an effort to shake things up, the series ended its third season with Gloria (Vergara) revealing she is pregnant with a second child, a plot point that was kept more tightly guarded than any in the show's history. (A fake ending was written and shot to throw off the network and crew.) The decision to add another Pritchett family member was made early in the season as a way to test Jay (O'Neill) and Gloria's relationship with each other and with young Manny (Rico Rodriguez), much as having baby Lily (Aubrey Anderson-Emmons) grow up and sending Haley off to college will do for the other two households.

Vergara still is adjusting to the new development. "I thought it was a great idea, but of course I minded because now I have to deal with this thing that is super-uncomfortable," she says in her thick Colombian accent, motioning to the sizable pregnancy bump strapped to her petite frame. "And then you have to deal with a baby on set. My scenes with Ed and Rico are so easy, and we're out of here so quickly, but with a baby it's going to be different." Levitan confesses he was nervous to tell his actress, whose persona is in many ways defined by her pinup proportions. (Gloria's sister and mother will come from Colombia for the baby's christening.)

Meanwhile, Stonestreet's Cam will return to work as a middle school music teacher, which will make for a challenging -- if deeply funny --transition. At home, he and Mitchell (Ferguson) try to come to terms with the fact that they're not the ones having a baby. "Cam is in a very tough, dark, quiet place with it and feeling a lot of the anger," notes Ferguson, who will segue into more of an emotional-caregiver role.

At the Dunphy house, teens Luke (Nolan Gould) and Alex (Ariel Winter) are coming to terms with Haley's departure. "Seeing his big sister go off to college is really sad for him," says Gould. Alex, now the oldest child at home, will spend the early part of the season trying to figure out who she is and where she fits in. "She goes through a lot of different looks: first goth and then vintage," says Winter, who lets slip that her character will get a boyfriend this year, too.

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It's no easier for Claire (Bowen), who is struggling with her daughter's departure and dad's new child. "She thinks it's ridiculous that her father's having a kid; and at the same time, there's that question: 'Oh God, am I old? And I'm done having babies?' " says Bowen. Burrell adds that "they debate getting a vasectomy" before interrupting himself and chuckling. "It's not 'they,' it's Phil. That's like when guys say, 'We're pregnant.' Phil is debating a vasectomy."

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**

Despite its sunny disposition, Modern Family was born from a bit of anger. In 2008, Lloyd and Levitan's comedy Back to You sputtered despite heavy hype and a star-studded cast featuring Kelsey Grammer and Patricia Heaton. After one season, Fox brass decided to pull the plug, leaving Lloyd and Levitan displeased. Although the duo had an overall deal at sister studio 20th TV, they vowed that their next project not be shopped to Fox. "That's a place where poor, little, defenseless, sophisticated comedies go to die," blasts Lloyd.

After taking a month or so to clear their heads, they were back on the lot to figure out what was next. Modern Family -- or, at that time, My American Family -- began with an idea to chronicle three families, including a more traditional wife, husband and kids, a gay couple with an adopted child and a third family that would go through various iterations -- a divorcee back on the market; an African-American spouse; a son with Asperger's -- before landing on an older man, his younger Latina wife and her romantic son. ("They wanted an Antonio Banderas in a 10-year-old's body," says Rodriguez of the instruction he received.) That the families would be related, a plot-reveal that comes at the end of the pilot episode, came later.

The duo took the pitch -- a PowerPoint presentation introducing the families -- to NBC and CBS first. Both networks expressed interest, but the former had mockumentary-style series in The Office and Parks and Recreation and the latter had little experience with single-camera comedy. ABC, which had stumbled of late but had a long history of family comedy, seemed a better fit.

Getting on then-ABC Entertainment chief Steve McPherson's calendar proved problematic, so the duo arranged to pitch the series over breakfast at the Westside home of Levitan's agent, UTA's Jay Sures. "It was exactly what we were looking for: the next generation of family comedy," says McPherson, who recalls Levitan firing up a homemade video of him attempting to shoot his son with a BB gun, just as Phil does in the pilot. He bought the pitch.

Vergara and Ferguson were the first actors cast. Vergara, a star in Latin America best known stateside for once dating Tom Cruise, had a talent deal at ABC, which had put her into a slew of short-lived projects including The Knights of Prosperity; Ferguson snagged the role after reading for Cam first. ("I begged to be seen for Mitchell because I played the more flamboyant character before," he says.) Stonestreet, who is not gay, took more convincing: "Eric was probably not whom we envisioned. I always saw Cam and Mitchell more as Frasier and Niles," acknowledges Lloyd, a former Frasier executive producer, whose mind was changed after multiple auditions. ("I did the same audition, but this time I dressed a little more Cam: a lavender gingham shirt and a gray cardigan," says Stonestreet.)

O'Neill got the part only after talks fell through with Craig T. Nelson, who landed on NBC's Parenthood instead. "I told my manager to make the deal," recalls O'Neill. "He said, 'They're not going to pay you your quote,' and I said, 'Just make the deal.' He was like, 'What? You're not even the star of the thing. It's an ensemble.' And I said: 'Make the deal. I have a feeling about this show.' "

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Lloyd and Levitan were eager to get back into business with Back to You's Burrell, but the network balked. "We had had Ty miscast in another pilot [titled Fourplay] that didn't turn out well," says McPherson. "So when they first came to us and said, 'How about Ty Burrell?,' we were like, 'You mean the guy in that pilot that was terrible and that he was terrible in?' " McPherson changed his mind after watching a screen test of Burrell and the BB gun. "I got the tape and told my executives: 'Holy shit. Ty's fantastic.' " Once he was decided upon, 3rd Rock From the Sun's Kristen Johnston was out and Boston Legal's Bowen -- who auditioned at 7½ months pregnant with twins and was more compatible with Burrell -- was in.

The pilot was ordered to series in May 2009. Rather than tease it with a minute of footage as ABC did the others at the upfront presentation, the network boldly opted to air it in full -- the first time a network had done so since NBC's ill-fated Joey. "It goes down as one of the greatest professional moments of my life," says Levitan of the Lincoln Center screening, during which he watched a packed auditorium erupt in laughter at several points during the 22-minute pilot.

After garnering an outsized portion of ABC's fall marketing budget -- "more than 50 percent," says McPherson -- Modern Family premiered Sept. 23 to 12.6 million viewers and positive reviews. THR's Tim Goodman, writing for the San Francisco Chronicle at the time, said it was "one of the funniest, most fully realized pilots to hit a network since Arrested Development." By January, the comedy was renewed for a second season; months later, USA locked up early syndication rights for a fall 2013 debut at nearly $1.5 million an episode.

To hear ABC Entertainment Group president Paul Lee tell it, the series has not only helped the network kick-start other shows, including Happy Endings and Don't Trust the B-- in Apartment 23, but also attracted other talent to the network. "It's a show that's able to be both incredibly broad and incredibly smart," he says, adding: "There's no question in my mind that Modern Family changed television."

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A week or so later, hotel guests are beginning to gather as Vergara paces around Century City's Intercontinental lobby preparing for her scene. It is the fourth episode of the season -- "a Chris episode"-- and Gloria's pregnancy has become the subject of much comedy for the writers. They have her strap on a pair of stilettos and move toward the elevators, where she'll await the arrival of her onscreen husband, with whom she is displeased. Gloria was told Jay would be in San Francisco on business; instead, he has checked into a nearby hotel to get a night's sleep free of her pregnancy-induced snoring. (He later will tell her it is "like sleeping with Rush Limbaugh.") The elevator doors open, and she slaps him, leaving Jay stunned. The director yells cut, and they try it again. And again.

Whether Modern Family's loyal viewers will respond to the new storylines is an open question and one that can keep both showrunners up at night. And yet, they say they were left with no other choice as their actors age and the landscape grows more crowded. "The trick is always evolving these characters' lives and putting them in new circumstances with new challenges," says Lloyd, "but not changing things up so much that the show stops being what it has been and what people enjoy."