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If Ryan Murphy’s ears were burning Thursday, it was for good reason.
Speaking to shareholders at the first Investor Day for parent company 21st Century Fox, the two executives used Murphy to illustrate why the company’s business of creating TV shows to be sold to third-party networks has been so profitable lately.
An advantage of being an open supplier, said Walden, is that they have become “magnets for many of the top show creators in the industry,” like Murphy.
“Ryan joined our studio from Warner Bros., where he felt boxed in creatively,” Walden said. “Since then, he’s developed three very different projects for three very different networks: Glee for Fox, American Horror Story for FX and the new HBO pilot Open.”
She called Open, a TV show about an open marriage, a “provocative concept and an innovative business arrangement,” given that it is HBO’s first series with a third-party supplier.
Newman then recalled that when Glee was first announced, “The response across the industry was unanimous: Musicals don’t work on TV. It’s too expensive. It won’t repeat. And the high school setting will keep it too narrow and niche.”
Now, Glee is an “international powerhouse,” Newman said. “In fact, we have clients around the world clamoring to create their own versions.”
Newman added that licensing deals with Amazon.com and Netflix are worth $1.5 million per episode of Glee, and 50 million songs and 13 million albums from the show have been sold. Glee, he said, boasts more songs on the Billboard Top 100 list than any musical act in history, including The Beatles and Elvis Presley.
“We launched a live stage business with a sold-out arena concert tour in 2011, and now a live stage musical is in the works,” Newman said of Glee. “And two more seasons of the show were ordered by Fox. When you identify the right creator and support a big, creative vision, you get a show like Glee, which is exactly the kind of property that our studio excels at exploiting.”
At Fox, added Walden, Murphy “can develop for broadcast, basic cable, pay cable and more, and we can command far more lucrative deals from networks like HBO for access to talent like him, and then he can flourish creatively knowing he has the support of a studio that can turn his sometimes out-of-the box ideas into successful businesses.”
Walden and Newman also showed an old, nerdy photo of Seth MacFarlane and contrasted it with a photo of him hosting the Oscars a year ago, noting how The Hollywood Reporter called the Family Guy creator “the billion-dollar brain.” Other shows earning praise from the executives included 24, Homeland, Arrested Development and even M*A*S*H* from three decades ago, which still adds $20 million a year to the unit’s bottom line.
Newman also boasted about containing costs.
“On the comedy side, there’s no better example than Modern Family,” he said. During that show’s first four seasons, we produced episodes for an average $400,000 less than comparable single-camera comedies, including the show we follow on ABC, The Middle. Do the math. That’s roughly $40 million in savings on Modern Family alone.”
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