Inside the ABC Shake-Up: New Chiefs Reveal Backstory, Hint at Future Plans

Ben Sherwood Channing Dungey - H 2016

The fourth-place network "can do a lot better," says Ben Sherwood as he and Channing Dungey talk strategy, THR analyzes the reasons for Paul Lee's ouster and top producers offer insight on the Big Four's first black leader: "Nobody is surprised that Channing eventually got the job.”

A version of this story also appears in the March 4 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

When chatter first surfaced the morning of Feb. 17 that ABC Entertainment Group president Paul Lee was being pushed out, the timing — before the annual May upfronts and in the middle of TV's frenzied pilot season — was more surprising than the news itself.

After all, rumors about Lee's fate at the Disney-owned network had circulated since Ben Sherwood assumed the top job of Disney/ABC TV Group president in February 2015. Sherwood, 52, a gregarious and hypercompetitive Beverly Hills native, was said to be at odds from the start with Lee, 55, a guarded and at times inscrutable Brit, with several ABC executives suggesting it wasn't a partnership that could sustain itself long-term.

But even less surprising than Lee's ouster was the decision to name his top drama executive, Channing Dungey, as his replacement, making the 46-year-old Sacramento, Calif., native the first African-American to run a broadcast network. "What may have been a surprise is that it happened on a Wednesday of [that] week," Once Upon a Time co-creator Edward Kitsis tells THR. "But nobody is surprised that Channing eventually got the job."

In an interview, Sherwood suggests change is necessary. "We needed some fresh air and some fresh thinking, and we believe that ABC can do a lot better," he says, adding of Dungey: "Channing is about creativity, collaboration and innovation, and she's a smart, intuitive businesswoman." Though he downplays any tensions with Lee, multiple ABC sources insist a fraught relationship was apparent due not only to their polar-opposite personalities, but also a failure to see eye to eye on the direction of the network.

Sherwood is said to have pushed Lee, who has stocked ABC with soapy serials, to consider other types of programming, including more closed-ended hours or multicamera comedies that would repeat better and provide more potential aftermarket value from syndication and international. Lee is said to have resisted requests to think beyond the linear schedule and be more cognizant of financial ramifications of his programming decisions; instead, he maintained a focus on "sticky" dramas and single-cam comedies that satisfied him creatively.

"Not that Paul didn't care about making money, but I can't say that was always top of mind for him," says one ABC insider. "If Paul wanted to take a big swing like Galavant [a sweeping period musical comedy], he felt like that was within his right. And for Ben, it was like, 'Well, that's never going to make money. I appreciate the creative swing, but what’s thinking on that beyond it looks like a fun show?' " 

Many who know Dungey well suggest she's savvy enough to be mindful Sherwood has opinions and to know to what degree to embrace them as opposed to shutting them out as her predecessor often did. (Lee couldn't be reached for comment but said in a statement on the day of his exit that he was "especially proud of the incredible team I built and the strategic, creative vision we established and successfully executed for both the network and studio.")

Sherwood inserting himself into the creative businesses also is said to have rankled Lee. From the outset, ABC executives say Sherwood made it clear he wanted to be hands-on and had a point of view to share. He has been known to regularly gather employees, attend programming events and send producers notes before big episodes. It's a pattern of behavior that carried over from Sherwood's previous job running ABC News, where he was famous for watching every program the division put on and sending staffers emails with praise, comments or suggestions during the wee hours. He'd often fire off inspirational Haiku-like notes to the staff, too, and signed his emails with acronyms including "KIG" (keep it going) and "PYG" (play your game).

By contrast, Lee's instincts often were to pull back, insulating himself with key members of his team with whom he made most of his decisions. "He wasn't someone who wanted to have lots of meetings and feedback," adds one of his lieutenants, who suggests the former ABC family chief maintained an outsider's mindset — be it as "the Brit" or "the cable guy" — for the entirety of his 5½-year run. Though he is both kind and erudite and, at times, had a strong narrative to share, Lee talked to the media infrequently, and talent agents and managers have said they didn't really know him or his tastes. Others have bemoaned the fact that he rarely made an effort to get to know the town's talent, with casting conversations often becoming an education process for the executive.

Of course, pushing Lee aside would have proved more challenging when Sherwood first started in the role. In early 2015, the ABC chief was enjoying a stellar season in which his big bet on diversity with series including How to Get Away With Murder, Black-ish and Fresh Off the Boat as well as a Shonda Rhimes Thursday block were yielding critical and commercial successes. The same cannot be said for his 2015-16 season, which, with the exception of FBI drama Quantico, has been lined with disappointment. The Muppets cratered quickly, while pricey biblical epic Of Kings and Prophets got pushed and Wicked City and Blood & Oil proved immediate flops. By mid-February, ABC had fallen to last place among the Big Four, down 14 percent in the 18-to-49 demo year-over-year.

In her first staff meeting as the network president, Dungey said she will "put everything on the table and take a look at what's going to drive the business forward, help [the network] tell even better stories and ultimately help [ABC] win." The married mother of a 3-year-old daughter is hesitant to outline her genre priorities so soon into the job, but she points to a theme that will be important: "Having brought diversity to the air in the way that we have with Kerry Washington and Viola Davis toplining their shows [Scandal and How to Get Away With Murder, respectively] and then shows like Fresh Off the Boat and Black-ish have been very important; I look forward to continuing in that vein."

It's hard to find anyone with a disparaging word to say about Dungey, who has risen through the ranks of ABC's studio arm since 2004. That she already is familiar with ABC's talent stable as well as its current crop of pilots has put many at or affiliated with the network at ease. Notably, she won't have control of ABC Studios the way her predecessor, whom she considers a mentor, did. Splitting the studio and network was of critical importance to Sherwood, who saw the value in giving ABC Studios and its chief, Patrick Moran, greater flexibility to sell projects to outside buyers and grow an already lucrative business. In the new structure, Dungey and Moran, 44, both report to Sherwood, an arrangement that studio staffers hope will make for a simpler, cleaner process.

Producers praise Dungey's creative instincts and deep Rolodex as well as her willingness to be honest and direct in delivering feedback. "It's always upsetting when you get a phone call saying your pilot hasn't been picked up, but when you get it from Channing, somehow you know she's telling you the truth and you know the reasons why," says Shondaland partner Betsy Beers, adding with a laugh: "I'd probably rather hear a bad piece of news from Channing than almost anybody else."

Once co-creator Adam Horowitz says he still remembers the conversation he and Kitsis had with Dungey after their first table read. "Channing looked at us and said, 'This is yours to lose.' Like, I've done everything on my end, this is ready to go, it's up to you guys to bring it home," he says, with Kitsis adding, "It was terrifying, encouraging and honest all at once."

But it is Dungey's working relationship with Rhimes, ABC's most prolific and valued producer, and Beers that arguably is the most significant factor in her elevation. It dates back more than a decade, when Grey's Anatomy was set to launch amid grave concerns at the network. Rhimes credits Dungey, then at ABC's studio, for being the only executive who believed in her and her project. "Channing was our baby executive and she fought for it … pushing every minute," Rhimes told THR in 2014. The trio have since worked on five other series and developed several more.

None of this is to say Dungey has an easy road ahead. The job of running a broadcast network is an increasingly challenged one, with both ratings and talent interest in free fall; and at ABC, it's that much harder because, unlike its Big Four rivals, it doesn't air any highly rated sports programming. Worse, she has no experience in comedy or unscripted — though she cites Modern Family, Black-ish and Family Guy as favorite half-hours and Dancing With the Stars and Project Runway as must-see reality — and her first foray into managing a business will be done under a microscope.

The uphill battle is not lost on Dungey or her boss. "I always told the folks at [ABC] News to play the game as if we were half-a-million viewers behind and never take anything for granted," says Sherwood. "It's the same philosophy here: We're in a nonstop battle. You gain ground, you lose ground, you keep fighting."