Netflix CFO Talks Producer Mega-Deals: "Not Everyone Gets One"

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Ryan Murphy

David Wells, speaking at an investor conference, explained that the streamer is paying Ryan Murphy around $300 million for five years because the 'American Horror Story' creator "has been a very successful and prolific producer of television that has been very commercially successful."

Netflix may have shelled out around $300 million to lure Ryan Murphy away from 20th Century Fox Television, but the streaming giant won't always be so generous. 

"These deals are going to be rarer than you think in terms of not everyone gets one," Netflix CFO David Wells cautioned during an interview with investors on Tuesday morning. 

After years of licensing programming to build up its originals roster, Netflix has been making an effort to bring ownership in-house. To that end, the streamer has been looking to strike overall deals with top TV producers. First came a multiyear deal with Shonda Rhimes said to be worth $100 million; pacts with Orange Is the New Black creator Jenji Kohan and Stranger Things producer Shawn Levy followed. 

But for the mega-deals, Netflix has several criteria. Wells listed those requirements during his talk at the Morgan Stanley Technology, Media and Telecom Conference. The company, he said, is looking for a prolific producer with global popularity who "generates a lot of customer joy." 

"Ryan has been a very successful and prolific producer of television that has been very commercially successful," the exec explained of the five-year deal with the American Horror Story and Feud creator. 

Wells also put into perspective for investors just how much content Netflix's $8 billion programming budget amounts to. He says that the company will have 700 projects — including TV shows, movies, stand-up specials and more — this year. Of those projects, 80 will be what Netflix calls global originals, or projects like the Brazilian drama 3% that are designed to appeal to specific localized markets. 

As Netflix spends more on content, it has also begun to increase its marketing budget. This year, the company is expected to hit $2 billion. In the past, "every additional incremental dollar was best spent on content," Well explained. "Now it's mostly spent on content but also spent on marketing." 

Shares of Netflix, which has nearly 118 million subscribers, hit an all-time high on Monday, closing the day at $294.16. 

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