FX Chief John Landgraf on Content Bubble: “This Is Simply Too Much Television”

FX Networks CEO John Landgraf took the stage Friday to plead his case for TV’s content bubble.

He kicked off his two networks’ day at the Television Critics Association summer tour with a 15-minute missive on the proliferation of original series, with 2015 on track to produce a staggering 400-plus original scripted series — up from a then-record 371 a year earlier. “I long ago lost the ability to keep track of every scripted TV series … But this year, I finally lost the ability to keep track of every programmer who is in the scripted programming business,” he said from the Beverly Hilton podium, stating boldly: “This is simply too much television. My sense is that 2015 or 2016 will represent peak TV in America, and that we’ll begin to see declines coming the year after that and beyond.”

Known for both his intellect and his candor, Landgraf used the TCA platform to outline the challenges that that bubble presents not only to viewers but also to programmers, both of whom are increasingly overwhelmed. Among them: finding compelling, original stories and the level of talent needed to sustain such them, never mind being able to cut through the clutter and create both buzz and viewership for a series. Though he’s watched as rivals like Netflix ramp up their output to what could soon be as many as 40 series, he said he feels comfortable at about half that, suggesting that much more could compromise the specific identity and the quality of the FX brand: “I really don’t care how much money a business has to spend, as someone who struggles everyday to program good and great television, who still reads nearly every script and watches every rough cut of every episode we program, I believe it’s impossible to maintain quality control with too many shows.”

Still, the FX/FXX chief was careful to note that he doesn’t foresee the aforementioned bubble outright bursting, so much as slowly deflating in the years to come. What will become increasingly key, in his mind, are strong network brands, which he likens to a mission statement or promise to viewers. “Programmers without a defining brand identity and the scale to support that brand with great and plentiful programming and marketing are going to have a huge struggle as time goes on,” he said, suggesting that HBO, Showtime, Netflix, AMC and FX are potent enough brands that they will survive that transition. He used the universal experience of going to a grocery story to make his case: “If you went to a grocery store and there were no trusted brand names on the products, you’d waste hours of your time trying to figure out what to buy. So brands make consumers lives easier. They’re signposts that point to their favorite choices.”

Here are the other highlights from Landgraf’s 45 minutes before the TV press:

The Reality of Failing — And the Importance of Accountability

Langraf has long bemoaned his streaming rivals’ lack of transparency — and, worse, the TV press who have continued to shower them with praise despite the lack of facts and figures. “You’re job is to be tough referees and to call the wins and losses,” he urged the roomful of reporters, noting that his networks would continue to provide data on which to judge. For Landgraf, transparency has always been key to the way he conducts business, and he has often spoken as openly about his networks’ successes as he has its failures. (See the press call he famously gave after making the tough decision to cancel Shawn Ryan’s Terriers.) “Despite what many programmers would like to claim, every one of us chooses shows that don’t work …  the fact that a second season of a show gets ordered before the first season has premiered says nothing about how many people are watching it or how good they think it is,” he said pointedly, adding: “Nobody bats 400 in professional baseball and nobody bats a thousand in TV.”

The Cancelation Formula

The FX/FXX chief spoke with candor about the recent demise of the Billy Crystal/Josh Gad comedy The Comedians, which he called one of the best professional experiences of his career. From the stage, he revealed how he makes decisions about a series’ fate: “I and my team get one vote, you and the other experts get one vote and the audience gets one vote. Two votes gets a show picked up, but we overrule a 2:1 vote against us for a time if we believe either the audience or the experts will come around based on the quality of the show,” he explained, adding: “I’d like to believe that about The Comedians, particularly because some of the later episodes were, in my opinion, brilliant. Unfortunately, you and the audience are just so overwhelmed right now by the sheer volume of TV shows that it’s very difficult to get you to take a second look at anything you’ve rejected.”

The (Slow) Death of Censors

There still is a vast chasm between sexuality and violence on television in America, with the former still a taboo in the way the latter isn’t. Landgraf suggested the European market views the American double standard as a little kooky: “They think we’re crazy, that we’ll show horrific violence but won’t show a breast. That seems insane to them,” he said, adding: “I’d like to get to the point where there’s virtually no censorship and we’re pretty close.” (Case in point: the F-word, which the network has begun to use, albeit sparingly, in recent years.) Right now, Landgraf acknowledged the things that do get censored on his networks are offensive epithets: “That’s the one area of language we’re still pretty tough on.” If a character is using a racial and sexual pejorative, it’s never gratuitous but in the service of a larger point. “That’s a social good that we’re trying to promote,” said Landgraf, before concluding: “Sexuality, that’s the last frontier. How that unfolds I don’t know. It has to do with how long it takes society to change around these issues.”

Advertising Woes

Unbundling, cord cutting and SVOD offerings have all put pressure on the television advertising model, which he suggests is “pretty broken.” Landgraf revealed that 10 years ago, more than 50 percent of his network’s revenue came from linear TV spots; now, it’s 32 percent and he expects that to decline about one percent a year going forward. Acknowledging that no one likes to sit through 20 minutes of commercials during an hour-long program, Landgraf noted that Madison Avenue already is addressing the contraction with more creative and targeted advertising that makes for a better consumer experience that eventually will command higher CPM (cost per thousand viewers) rates. “There’s so much advertising, it’s effectiveness is disappearing into the ether. Once we get that model fixed, it will allow us to recapture some of the financial value.”

Wall Street’s Overreaction

Fears of unbundling and cord cutting made for a series of gloomy earnings calls at media companies this week and a sell off on Wall Street that send media stocks tumbling — with Viacom taking the brunt, declining 14 percent on Thursday. Landgraf characterized the meltdown as “way over the top.” Acknowledging that media companies must change structurally as consumption continues to shift from linear to SVOD and streaming, he said, “It’s going to be a messy, inelegant process and there are going to be weeks like this week where Wall St. radically overreacts to a piece of information.” Still, he asserted that there is plenty of value in legacy media brands: “It’s not a valueless transition (for traditional media) and only value for Netflix.”

Netflix: More Foe Than Friend

SVOD services have provided an additional revenue stream for networks like FX, which own the bulk of their own content, even as they are pitted against them for eyeballs. And Landgraf, long a vocal detractor of Netflix’s practices, acknowledged that he “would have preferred not to have sold any [FX] content to Netflix.” So, why did he? He felt he had a “fiduciary responsibility” to his creative partners to maximize revenue. “When you’re in a situation where you have one business that can very successfully monetize content and you have another business that can’t, you have an imbalance. And it’s very difficult to refuse that money,” he explained. More recently, however, Netflix has faced more competition and his networks have cut deals with both Amazon and Hulu. Networks also are becoming increasingly aggressive in launching their own over-the-top services as recent rollouts at HBO and Showtime attest. And Landgraf suggested that the strategy at FX has been to “get bigger,” citing FXX, FXM and FX Now, its authenticated app (as opposed to a pure OTT option) that includes the entire library of The Simpsons. “Scale insulates you from failure,” he said. “You’re going to have to be big to get through (this transition) and make some sacrifices along the way to fund that.”