“…we are all watching an epic battle unfold for who will control human attention, which is both a finite resource and the most economically valuable commodity on Earth, because who controls your attention controls the ability to monetize that attention.” John Landgraf
FX Networks – Executive Session
By Valerie Milano
Beverly Hills, CA (The Hollywood Times) 8/10/17 – On August 8th, FOX Network CEO Dana Walden gave a quaint, pep-talk about the exciting new programming and up-trending viewership in coveted demographics. Then, the following day, subsidiary network FX and its CEO John Landgraf dropped the black curtain, shot out the lights and prophesized by candlelight the nuclear winter about to envelope broadcast television as we know it, and possibly the world.
Landgraf clearly enjoyed this session in the same manner that Richard Burton benignly enjoyed torturing John Hurt in the film 1984 to the strains of a Eurhythmics soundtrack.
However, Landgraf’s scenarios and pontifications have the ring of wisdom. Follow the money. The company that controls content and attention spans, controls and exploits the disposable income of it’s viewers. In his heart, Landgraf is F— all interested in the back and forth of overnights and demographics. He’s looking for high ground to plant his flag when the Tsunami of individualized media consumption breaks and hits land; de-regulation, monopolization, and Political manipulation are all connected and moving toward a more perfect union of controlling interests. Landgraf laments soulless manner in which the Amazons and Facebooks of the world compete to control our free-thinking time and goad us into pushing the food pellet button with our credit cards. But, if that’s how the world’s going anyway, Landgraf’s going to be ahead of the pack.
Landgraf took us on a wild ride that looped in Politics, national unemployment, copyright infringement, wage stagnation and the disappearance of the family farm (I think). Eventually, he would land the plane and talk about his network. Oh, and (spoiler alert) Louie is not coming back…
Let’s let John speak for himself.
JOHN LANDGRAF: “It feels important right now, at least to me and I’m hoping many of you, to address the elephant in the room at TCA, which is the massive transformation, one might even say “disruption,” that the business is undergoing. It seemed obvious for some time that a profound shift was coming to the television business. We had a period when there was more great and more diverse TV each year than the year before, but for critics and viewers, there wasn’t so much TV that you couldn’t keep track of it. But, for a while now, many of us could see that we were heading from an optimal number of shows to an unmanageable number of shows. In fairness, there’s probably still more great TV and more diverse TV each year than the year before, and that’s certainly a good thing, but it doesn’t seem quite as special or at times as joyful within this paradox of choice and glut of oversupply the new marketplace has created. So I want to talk about at least my perception of why there’s too much TV, and why does that now seem likely to continue for some time?”
Landgraf tries to explain why so much content is being dumped on the market,
“So if you’ve been curious about why there’s more television being produced than you or anyone can possibly watch, understand that a good deal of that programming is being produced at a loss in the belief that it will drive a massive shift in the share of consumption which, in turn, will swamp existing competitors, ultimately driving a fundamental shift in market value. Even beyond television, which is our current focus in this room, we are all watching an epic battle unfold for who will control human attention, which is both a finite resource and the most economically valuable commodity on Earth, because who controls your attention controls the ability to monetize that attention. This is the root of the battle between Walmart and Amazon, between Facebook and Google and Apple, between Instagram and Snapchat, between Netflix and Amazon and the legacy television brands. It’s creating the exhilarating race to the top as seen in the competition to create ever higher quality television programs, but it is also creating a glut of content and the depressing race to the bottom in the dissemination of anger provoking, false, or misleading information and endless volumes of relative mediocrity in so many areas.”
Landgraf finally lowers his landing gear for his runway approach.
“For a while now, even as FX has enjoyed a series of its best years ever, it has been obvious to us that we were going to have to considerably improve our strengths, diligently shore up our weaknesses, and aggressively transform our consumer model in order to thrive well into the future. And what do we see as our strengths? Well, consistent quality. More than 80% of our original series last year made year end best lists, which is four or five times a higher batting average than nearly all our competitors and even a little better than HBO’s. We have a deep individual focus on each show each season and each episode by a team of insightful and extremely experienced programming, production, marketing, and publicity executives who show consistent creativity, honesty, respect, and courage in their relations with our talent. Also, FX has a history of paying generous profits to our creative partners on the majority of our shows, something we are very proud of. Another strength is the originality of the series FX Networks programs, born out of our willingness to take risks and to fully back the vision of our creative partners.”
Landgraf describes the weaknesses and challenges facing FX in terms of scale.
What do we see as our weaknesses and our challenges? Well, our medium -scale size for one thing. Although not having to be all things to all people does provide certain advantage, the volume of output, particularly by our new Internet competitors, is truly daunting: the requirement that we earn a profit, which means that we can’t spend more than we make each year; the increasing dispersion of audiences across more programs, more platforms, and longer spans of time; the ever greater challenge in marketing and publicizing shows in the age of too much TV — the writers in this room can’t possibly get to every season of every television show, and even if you could, your readers couldn’t absorb all of your work; the degree to which the pool of talented artists is increasingly sporadic across more and more shows and brands; the frequency of advertising interruption within our programs, although that is finally at long last being addressed in numerous and excitingly transformative ways; and critically, up until now, our inability to make every episode of all FX branded series available at all time through a seamless user interface. Importantly, we got a significant jump on tackling many of these challenges because we recognized that they were emerging.”
Eventually, Landgraf invoked Nielsen to assure us that FX is maintaining market share.
John Landgraf: “This is the Nielsen universe estimate for the current month we are in now, August of 2017 versus one year ago, August 2016, and notice that FX has basically the exact same number of Nielsen subscribers. FXX is up about 4 million and change, and FXM has the exact same number. So at least we are stable in an environment where the perception is that everything is sinking like a stone.”
Landgraf then played a little Moneyball to show us how FX has actually trended upward. It was all very interesting until I went dizzy and blacked out somewhere between “nonlinear consumption and VOD ecosystem”.
Oh, yes… I’m sorry; will Fargo be back for a fourth season?
JOHN LANDGRAF: ”I hope so. I haven’t heard. We haven’t heard the idea from Noah (Noah Hawley writer/creator) for what the fourth season would be. And I think what we’ve encouraged Noah to do is to think about it and make sure he has something that he really, really is excited about and believes in. So there’s at least some possibility he won’t have that idea for some period of time, and I think there’s also a decent possibility, because Noah has been insanely fertile and productive, that we’ll hear that idea fairly soon. He has a really busy schedule, though, because he’s working actively right now on the second season of LEGION. We’re getting scripts in and we’re in active prep for Season 2. But as you guys saw, he has a burgeoning and very active feature film career also, so we’re going to have to share him with our film studio and figure out how to make that work.”
Landgraf connects some dots between Silicon Valley and Hollywood as it relates to algorithms, branding and target marketing.
JOHN LANDGRAF.” I think it’s there’s ample evidence to demonstrate that Silicon Valley’s model is a winner take all or winner take most or a monopoly, duopoly structure. And obviously, there are more than one or two companies that have very, very hefty balance sheets and distributions, so it’s going to be a titanic struggle. But I think ultimately, if you look at Silicon Valley’s model, it’s to use platforms and algorithms and scale to essentially serve people what they need and to obviate the need for brands as much as possible and then to grind the margins out of brands. So I think if you just talk philosophically about Silicon Valley’s future of the world, it would be that you would get Amazon would recommend to you and sell to you every major product you would need and brand would become less and less relevant over time and there would be less and less margin in anybody that produces a good or service that Amazon sells and less margin in the brand. And in that world, it’s about scale. It’s about data. It’s about technology, AI algorithms, finance. It’s about being able to bring billions upon billions of dollars even at loss to bear on conquering markets. And I think that’s a very, very that’s a very stiff headwind, I would say, for anybody who’s not in Silicon Valley and not on that side of that business model.”
Landgraf went on to talk about subscriber based FX+
“We wanted to use the sort of Platonic ideal of the brand expression, which we think is HBO’s expression. And we wanted to raise our hand and say that’s right and that’s the direction that we need to go in to be competitive.”
And so on…