Welcome to Strictly Business, Variety's weekly podcast featuring conversations with industry leaders about the business of media and entertainment. I'm Cynthia Lyttleton, co editor in chief of Variety Today. My guest is John Langraf, Chairman of FX Networks, NAT GEO and Onyx. Landgraf doesn't need too much introduction to regular listeners of Strictly Business. Simply put, he's one of the most respected executives in all of entertainment. He's a deep thinker who is in a class by himself when it comes to deep thinking about the entertainment business. And what's more, he's got the courage of his convictions and he's not afraid to say what he thinks. Landgraf was generous enough to be the guest speaker on November nineteenth at Variety's annual Business Manager's Breakfast event in West Hollywood. In a room full of accountants and lawyers. Landgraff wasn't afraid to get into the details of FX's approach to talent compensation. It's a different philosophy than many of his top competitors. He also spoke candidly about FX's journey through the past few years to settling into a comfortable place within the Walt Disney Company. The conversation whiz by for me on stage, but smart folks in the audience told me afterward that it was substantive, so I hope listeners will agree. It's all coming up after this break.

Welcome to Strictly Business, Variety's weekly podcast featuring conversations with industry leaders about the business of media and entertainment. I'm Cynthia Lyttleton, co editor in chief of Variety Today. My guest is John Langraf, Chairman of FX Networks, NAT GEO and Onyx. Landgraf doesn't need too much introduction to regular listeners of Strictly Business. Simply put, he's one of the most respected executives in all of entertainment. He's a deep thinker who is in a class by himself when it comes to deep thinking about the entertainment business. And what's more, he's got the courage of his convictions and he's not afraid to say what he thinks. Landgraf was generous enough to be the guest speaker on November nineteenth at Variety's annual Business Manager's Breakfast event in West Hollywood. In a room full of accountants and lawyers. Landgraff wasn't afraid to get into the details of FX's approach to talent compensation. It's a different philosophy than many of his top competitors. He also spoke candidly about FX's journey through the past few years to settling into a comfortable place within the Walt Disney Company. The conversation whiz by for me on stage, but smart folks in the audience told me afterward that it was substantive, so I hope listeners will agree. It's all coming up after this break.

Did you know that seven to ten consumers crave more authentic, culturally diverse stories in media. That's just one of the insights Amazon Ads uncovered in It's from Ads to Zeitgeist research. The streaming revolution has transformed how we access entertainment, connecting viewers and listeners to content from every corner of the globe. But what does this mean for brands? A new VIP report, Entertainment Everywhere, builds on the Amazon Ads research to explore this fascinating intersection of culture, entertainment, and advertising. Visit Variety dot com slash vip for more information.

Did you know that seven to ten consumers crave more authentic, culturally diverse stories in media. That's just one of the insights Amazon Ads uncovered in It's from Ads to Zeitgeist research. The streaming revolution has transformed how we access entertainment, connecting viewers and listeners to content from every corner of the globe. But what does this mean for brands? A new VIP report, Entertainment Everywhere, builds on the Amazon Ads research to explore this fascinating intersection of culture, entertainment, and advertising. Visit Variety dot com slash vip for more information.

And we're back with the conversation with FX chairman John Landgraf. It has been a heck of a year for FX.

And we're back with the conversation with FX chairman John Landgraf. It has been a heck of a year for FX.

Yeah, really good.

Yeah, really good.

Thirty six is the number. I'm sure that's probably circled somewhere. Thirty six Emmy Awards this past year. Did I get is that the number right for thirty six Emmy's leading, leading the industry for the first time, elbowing past few other brands you might have heard of to lead the industry for the first time. That was a That was an enormous accomplishment, an enormous, enormous long haul for your team, not just one year but for many years. But and symbolic in a way, but it must be. It must after after this year and the reinvention that we're going to talk about over the last five years since FX came under the under the excuse me, under the umbrella of the Walt Disney Company, a little deal you all might have heard something about we're going to talk about that, but it just the symbolic victory at the end of this year, having the Emmys and so many shows just really click. And I want to put in a plug for the current show that I'm one episode in. I'm going to spend some quality time with it over the weekend. Say Nothing is A is the latest entry in your list of really really distinctive and compelling dramas. So so just congratulations on a fantastic year.

Thirty six is the number. I'm sure that's probably circled somewhere. Thirty six Emmy Awards this past year. Did I get is that the number right for thirty six Emmy's leading, leading the industry for the first time, elbowing past few other brands you might have heard of to lead the industry for the first time. That was a That was an enormous accomplishment, an enormous, enormous long haul for your team, not just one year but for many years. But and symbolic in a way, but it must be. It must after after this year and the reinvention that we're going to talk about over the last five years since FX came under the under the excuse me, under the umbrella of the Walt Disney Company, a little deal you all might have heard something about we're going to talk about that, but it just the symbolic victory at the end of this year, having the Emmys and so many shows just really click. And I want to put in a plug for the current show that I'm one episode in. I'm going to spend some quality time with it over the weekend. Say Nothing is A is the latest entry in your list of really really distinctive and compelling dramas. So so just congratulations on a fantastic year.

Thank you so much. Yeah, it look in some way it was a proof of concept on a number of different levels. I would say first for Disney, right because they made a really bold choice to pivot, you know, a century old company into streaming as a primary direct to consumer business, and they beefed up in acquiring the Fox assets, a whole bunch of other general entertainment assets and tried to say, we want to be as excellent as everyone else in general entertainment, not just family and sports. We're going to invest in curators, you know, people like Kevin Feige and Kathy Kennedy and the folks at Pixar, and we joined that we think that we can make we can compete with smaller units that do you know, a modest amount of very heavily curated material. And then they gave us the opportunity to make content for a global streaming platform instead of a basic cable network, and so that enabled a lot of things. But the question of could you compete against trillion dollar companies or companies that make you know, literally hundreds and hundreds of television series and movies from a central centralized process was an interesting challenge and I'm really proud we were we were able to meet it, but also really happy for Disney. I really, you know, they've been fantastic stewarts of our brand. We probably exist today because they bought us, because it's a basic cable network. I don't think I would be sitting here. I don't think we would have been able to make those shows. So, you know, I was glad to be able to say, yeah, this is a good idea, like all the things that you did to reorganize your company, and you could see in the in the recent quarter of the earnings call that took a while, but it's really it's really paying off.

Thank you so much. Yeah, it look in some way it was a proof of concept on a number of different levels. I would say first for Disney, right because they made a really bold choice to pivot, you know, a century old company into streaming as a primary direct to consumer business, and they beefed up in acquiring the Fox assets, a whole bunch of other general entertainment assets and tried to say, we want to be as excellent as everyone else in general entertainment, not just family and sports. We're going to invest in curators, you know, people like Kevin Feige and Kathy Kennedy and the folks at Pixar, and we joined that we think that we can make we can compete with smaller units that do you know, a modest amount of very heavily curated material. And then they gave us the opportunity to make content for a global streaming platform instead of a basic cable network, and so that enabled a lot of things. But the question of could you compete against trillion dollar companies or companies that make you know, literally hundreds and hundreds of television series and movies from a central centralized process was an interesting challenge and I'm really proud we were we were able to meet it, but also really happy for Disney. I really, you know, they've been fantastic stewarts of our brand. We probably exist today because they bought us, because it's a basic cable network. I don't think I would be sitting here. I don't think we would have been able to make those shows. So, you know, I was glad to be able to say, yeah, this is a good idea, like all the things that you did to reorganize your company, and you could see in the in the recent quarter of the earnings call that took a while, but it's really it's really paying off.

I was just going to say that that the reports not only was it a very strong quarter, but the green shoots going forward are very clear and the phrase you use, proof of concept. This really does feel like twenty four was the year when after all of the disruptions that we all know about, starting with the acquisition in twenty nineteen, which took you know, over a year to close, and then the pandemic and the strikes. We all know the litany and wars and interests, right, we all know the litany. It's a good reminder that nothing happens quickly, but in five years time, as you get to the end of twenty twenty four proof of concept exactly in that deal. And so interesting because the acquisition of FX, you know, Disney had never really played in the waters of really premium TV, commercial free TV or you know, largely commercial free TV, and you know, as they've discussed and if you all have discussed it was it was something of a leap for them to get into you know, FX brand. Some of the content on its face doesn't seem like it would fit neatly into the Disney world. But as we know, that brand is pretty expansive and includes includes a lot of you know, includes a lot of a lot of lanes for content to be produced. And it seems like that's been born out from your experience.

I was just going to say that that the reports not only was it a very strong quarter, but the green shoots going forward are very clear and the phrase you use, proof of concept. This really does feel like twenty four was the year when after all of the disruptions that we all know about, starting with the acquisition in twenty nineteen, which took you know, over a year to close, and then the pandemic and the strikes. We all know the litany and wars and interests, right, we all know the litany. It's a good reminder that nothing happens quickly, but in five years time, as you get to the end of twenty twenty four proof of concept exactly in that deal. And so interesting because the acquisition of FX, you know, Disney had never really played in the waters of really premium TV, commercial free TV or you know, largely commercial free TV, and you know, as they've discussed and if you all have discussed it was it was something of a leap for them to get into you know, FX brand. Some of the content on its face doesn't seem like it would fit neatly into the Disney world. But as we know, that brand is pretty expansive and includes includes a lot of you know, includes a lot of a lot of lanes for content to be produced. And it seems like that's been born out from your experience.

Yeah, I think so so far. Look, I think there's a fascinating set of questions unfolding right now with the sort of scale of the Internet and network effects and sort of again the scale these trillion other companies, which is, you know, it is one brand, right, one singular brand. Can it be all things to all people? Or do you need a master brand? And then a set of sub brands that have a greater level of more specific affinity, right and Disney sort of right now going the route of both. Right, Disney has a profound affinity within family and theme parks and many other things, animated films and kids television shows, But it's also working its way into being a master brand that has all these other brands Marveled and Star Wars and Hulu and FX underneath it. And there are other companies that have dispensed with all those sub rands. What I would say is that is that I as a as an individual who leads a group of people who need to pay attention to every frame of every episode of television that we make, who who work very very hard on every episode, There's just a limited amount of attention we have, and so we can only do a certain amount of storytelling. Otherwise you don't have that level of curation and authority. Right, You can't. You could. You can be an editor of variety. You can't be an editor of all things for all people at all times. And so back to the proof of concept, I think the thing that was really satisfying for me is the notion that you know, against much much larger competitors spending much much more money and taking many many more at bats, we were able to put that attention in that focus and that curation of talent, because really, we don't make these shows. The talent makes the shows and prove that that can make an impact even in this kind of competitive marketplace.

Yeah, I think so so far. Look, I think there's a fascinating set of questions unfolding right now with the sort of scale of the Internet and network effects and sort of again the scale these trillion other companies, which is, you know, it is one brand, right, one singular brand. Can it be all things to all people? Or do you need a master brand? And then a set of sub brands that have a greater level of more specific affinity, right and Disney sort of right now going the route of both. Right, Disney has a profound affinity within family and theme parks and many other things, animated films and kids television shows, But it's also working its way into being a master brand that has all these other brands Marveled and Star Wars and Hulu and FX underneath it. And there are other companies that have dispensed with all those sub rands. What I would say is that is that I as a as an individual who leads a group of people who need to pay attention to every frame of every episode of television that we make, who who work very very hard on every episode, There's just a limited amount of attention we have, and so we can only do a certain amount of storytelling. Otherwise you don't have that level of curation and authority. Right, You can't. You could. You can be an editor of variety. You can't be an editor of all things for all people at all times. And so back to the proof of concept, I think the thing that was really satisfying for me is the notion that you know, against much much larger competitors spending much much more money and taking many many more at bats, we were able to put that attention in that focus and that curation of talent, because really, we don't make these shows. The talent makes the shows and prove that that can make an impact even in this kind of competitive marketplace.

The curation, the approach that your team, it really is defying a lot of the kind of prevailing winds of the trends. I spoke with some of your team the other day and they were talking about we love pilots, old fashioned pilots. There's a lot of there's a lot of good there. So we'll talk a little bit more. But since we are in a room full of business managers and again we're we are so grateful for you taking your time and your candor. I wanted to talk about, you know, a lot of the the shorthand of the transition to streaming, the major changes that we've seen in the kind of fundamentals of how how Hollywood creatives and networks and studios make money. All of that has prompted and catalyzed a conversation within FX, within your production because you do have a pretty robust FX productions unit, and you've had to, you know, make some decisions and really sort of think about what you are, what you are presenting to the creative community, because you are competing with companies and I think when you say trillion dollar balance sheets, you're talking about the largest tech companies like the Amazons and the facebooks and the Apples, which we'll talk a little bit about that that influence. But can you talk at a time when the whole notion of valuation of content, which is the kind of crux of how how you determine future future rights and profit streams. Can you just talk in the big picture of as the world moved more toward a cost plus model that has had a big impact on creatives, how did you and your brain trust sit and figure out a way that you could present what you felt were very fair approaches to talent but also preserved that notion of kind of swinging for the fences, playing for the back end. I know that's a big question. Yeah, but it's a room full of business managers.

The curation, the approach that your team, it really is defying a lot of the kind of prevailing winds of the trends. I spoke with some of your team the other day and they were talking about we love pilots, old fashioned pilots. There's a lot of there's a lot of good there. So we'll talk a little bit more. But since we are in a room full of business managers and again we're we are so grateful for you taking your time and your candor. I wanted to talk about, you know, a lot of the the shorthand of the transition to streaming, the major changes that we've seen in the kind of fundamentals of how how Hollywood creatives and networks and studios make money. All of that has prompted and catalyzed a conversation within FX, within your production because you do have a pretty robust FX productions unit, and you've had to, you know, make some decisions and really sort of think about what you are, what you are presenting to the creative community, because you are competing with companies and I think when you say trillion dollar balance sheets, you're talking about the largest tech companies like the Amazons and the facebooks and the Apples, which we'll talk a little bit about that that influence. But can you talk at a time when the whole notion of valuation of content, which is the kind of crux of how how you determine future future rights and profit streams. Can you just talk in the big picture of as the world moved more toward a cost plus model that has had a big impact on creatives, how did you and your brain trust sit and figure out a way that you could present what you felt were very fair approaches to talent but also preserved that notion of kind of swinging for the fences, playing for the back end. I know that's a big question. Yeah, but it's a room full of business managers.

Twenty one minutes and thirty seconds left. I could spend the next twenty one minutes answering that single question. Look, we when I came to Fax this is twenty years ago and started the studio, you know, we had a fair amount of authority over the way we structured our deals, and we really wanted to have an incentive structure where there was a shared benefit, right, So there were some very profitable shows. Maybe It's Always Sunny in Philadelphia would be an example that came out of that where our partners, our creative partners, have really done very well on that show. But that was predicated on healthy markets. You had six seven companies that were all, you know, of roughly comparable size and scale, and who could all be frenemies and deal with each other. You know, when you have trillion dollar companies that could effectively, you know, afford to spend billions of dollars uneconomically for a long period of time for some other goal. Or you had a company like Netflix that really came in and wanted to change the ecosystem and hope to run away with it and even now has one hundred million more subscribers than its nearest competitor globally. That really distorts the market. So unfortunately, when they went to a cost plus model, we really had no choice. So the way we approached that is we basically took all and look, there's been a lot of I think valid criticisms of it in the sense that it's you know it's been it's but we took the entire pool of dollars that have been paid out over magr across a very wide bucket of programming at that time when we built it, it was inside Fox. We took all that money, we said, well, how would we allocated through a fixed fee model basically based on and you know, we looked at everything we could, look at ratings, longevity awards, all the things that we thought created valuation. We just reallocated it across multiple different points. Of course, that was all before the strike eliminated packaging, right, which was not this strike, but the strike before this strike, or the labor action before this strike. So it's just very complicated, and frankly, I don't love where we are in the sense that I think the healthiest relationship between creatives and distributors or studios is one in which you know, there's really a shared ownership. But unfortunately, you can't be in a situation where you have to sell your content to trillion dollar competitors, or competitors they are trying to take over the whole market and they don't have to sell their content to you. You can't do that, right, So, once the representative community went down the cost plus model, and we didn't introduce that model. I think that there was nowhere for it to end up where we are now. And look, I hope ultimately you know, it's going to take a long time further to be a stabilization in the business where there might be four or five six competitors who are in it for the long haul. We can all look at each other and say, Okay, we're going to be around twenty thirty, forty years and maybe we can be a little bit more aggressive about selling to each other. Right now, selling is a bit of a one way street, right in other words, you know Netflix or sometimes Amazon or who who are buying? But most of our competitors are selling, you know, other than to themselves. They're not buyers.

Twenty one minutes and thirty seconds left. I could spend the next twenty one minutes answering that single question. Look, we when I came to Fax this is twenty years ago and started the studio, you know, we had a fair amount of authority over the way we structured our deals, and we really wanted to have an incentive structure where there was a shared benefit, right, So there were some very profitable shows. Maybe It's Always Sunny in Philadelphia would be an example that came out of that where our partners, our creative partners, have really done very well on that show. But that was predicated on healthy markets. You had six seven companies that were all, you know, of roughly comparable size and scale, and who could all be frenemies and deal with each other. You know, when you have trillion dollar companies that could effectively, you know, afford to spend billions of dollars uneconomically for a long period of time for some other goal. Or you had a company like Netflix that really came in and wanted to change the ecosystem and hope to run away with it and even now has one hundred million more subscribers than its nearest competitor globally. That really distorts the market. So unfortunately, when they went to a cost plus model, we really had no choice. So the way we approached that is we basically took all and look, there's been a lot of I think valid criticisms of it in the sense that it's you know it's been it's but we took the entire pool of dollars that have been paid out over magr across a very wide bucket of programming at that time when we built it, it was inside Fox. We took all that money, we said, well, how would we allocated through a fixed fee model basically based on and you know, we looked at everything we could, look at ratings, longevity awards, all the things that we thought created valuation. We just reallocated it across multiple different points. Of course, that was all before the strike eliminated packaging, right, which was not this strike, but the strike before this strike, or the labor action before this strike. So it's just very complicated, and frankly, I don't love where we are in the sense that I think the healthiest relationship between creatives and distributors or studios is one in which you know, there's really a shared ownership. But unfortunately, you can't be in a situation where you have to sell your content to trillion dollar competitors, or competitors they are trying to take over the whole market and they don't have to sell their content to you. You can't do that, right, So, once the representative community went down the cost plus model, and we didn't introduce that model. I think that there was nowhere for it to end up where we are now. And look, I hope ultimately you know, it's going to take a long time further to be a stabilization in the business where there might be four or five six competitors who are in it for the long haul. We can all look at each other and say, Okay, we're going to be around twenty thirty, forty years and maybe we can be a little bit more aggressive about selling to each other. Right now, selling is a bit of a one way street, right in other words, you know Netflix or sometimes Amazon or who who are buying? But most of our competitors are selling, you know, other than to themselves. They're not buyers.

And have you in your experience, you know a lot of people are talking about the need to kind of realign everybody's incentives. Have you found I mean, obviously, I know you know you and your team are so such a track record of incredible artistic integrity and working with people. But at the same time, as we've discussed people, do you know economic incentive is a driver for a reason? Have you found that in talking to people very candidly about how you know, how you are doing things and how how you are looking at that allocation that that is a you know, that is a selling point for effects. Do you feel like people feel like there's a transparency there that they can that they can appreciate.

And have you in your experience, you know a lot of people are talking about the need to kind of realign everybody's incentives. Have you found I mean, obviously, I know you know you and your team are so such a track record of incredible artistic integrity and working with people. But at the same time, as we've discussed people, do you know economic incentive is a driver for a reason? Have you found that in talking to people very candidly about how you know, how you are doing things and how how you are looking at that allocation that that is a you know, that is a selling point for effects. Do you feel like people feel like there's a transparency there that they can that they can appreciate.

I don't think anywhere in the industry right now there's my transparency as talent wants and their representatives want. In fairness, I just don't think anybody has achieved that. And I can tell you that we always try to be fair because fundamentally, where we recognize that we don't make television shows right, we need people to make television shows. But would I would say that I'm not even sure that the industry right now is well organized to understand how to unlock long term asset value right in the sense that when you look at the consumption of television or film, an enormous amount of it is essentially library, right. But if you look at what the current investment is designed to create, it's not long term library neither is it in the main snow White and the Seven Dwarves or you know, Pinocchio or The Lion King or something that's going to last as a movie for twenty thirty forty fifty years, nor is it one hundred two hundred, three hundred four hundred.

I don't think anywhere in the industry right now there's my transparency as talent wants and their representatives want. In fairness, I just don't think anybody has achieved that. And I can tell you that we always try to be fair because fundamentally, where we recognize that we don't make television shows right, we need people to make television shows. But would I would say that I'm not even sure that the industry right now is well organized to understand how to unlock long term asset value right in the sense that when you look at the consumption of television or film, an enormous amount of it is essentially library, right. But if you look at what the current investment is designed to create, it's not long term library neither is it in the main snow White and the Seven Dwarves or you know, Pinocchio or The Lion King or something that's going to last as a movie for twenty thirty forty fifty years, nor is it one hundred two hundred, three hundred four hundred.

Episodes of fifteen season show.

Episodes of fifteen season show.

Right, I'm not sure the industry even knows how to really fully recognize that long term value. So there's a misalignment in my view. I mean, it's something I work on every day to try to create alignment. But right now there's a little bit of a misalignment because when you go to a cost plus model, everything starts really expensively. Right. Obviously, just the cost of making television has radically transformed in the twenty years I've been doing this, So you start at a very expensive level and very very few shows end up making it to the point where they really are going to matriculate into being long term assets in library and for me, the inability to do that actually damages a lot of value creation for the creative community, right, because essentially there's only a limited amount of value you can get out of a one off project.

Right, I'm not sure the industry even knows how to really fully recognize that long term value. So there's a misalignment in my view. I mean, it's something I work on every day to try to create alignment. But right now there's a little bit of a misalignment because when you go to a cost plus model, everything starts really expensively. Right. Obviously, just the cost of making television has radically transformed in the twenty years I've been doing this, So you start at a very expensive level and very very few shows end up making it to the point where they really are going to matriculate into being long term assets in library and for me, the inability to do that actually damages a lot of value creation for the creative community, right, because essentially there's only a limited amount of value you can get out of a one off project.

You don't have the economic events of syndication of international that's right.

You don't have the economic events of syndication of international that's right.

And you know, when we, for example, we make Showgun, I mean, if you can make a show for you know, a couple hundred million dollars. The level of global performance you have to create just to make one more season is so extraordinary that very very few shows are ever going to make it through that filter. So it's fantastic from my standpoint that we were able to recreate Fields or Pan and spend the kind of money and do the kind of detail work that I would love to do and never could without a global streaming platform. But it's going to be you know, we're working on the second season now, that's going to be so rare. How do we create a system where it's actually a more normal process for something to go multiple different seasons? And I don't just mean two or three. I mean we need we need sitcoms and procedurals and the kinds of things that people are still actually watching inside these streaming systems. I look at the data and I know what people are watching, and they're watching a lot of the output of this industry back from an era when we had a profit participation model and we had people incentivized to keep working on one television show year after year after year and make hundreds and hundreds of episodes, And you know, it's a challenge figuring out how to rebuild that model inside a new entire ecosystem right now. But I think the audiences tell us that that's television. That's something they really want from television. I don't think we're very good at giving it to them right now.

And you know, when we, for example, we make Showgun, I mean, if you can make a show for you know, a couple hundred million dollars. The level of global performance you have to create just to make one more season is so extraordinary that very very few shows are ever going to make it through that filter. So it's fantastic from my standpoint that we were able to recreate Fields or Pan and spend the kind of money and do the kind of detail work that I would love to do and never could without a global streaming platform. But it's going to be you know, we're working on the second season now, that's going to be so rare. How do we create a system where it's actually a more normal process for something to go multiple different seasons? And I don't just mean two or three. I mean we need we need sitcoms and procedurals and the kinds of things that people are still actually watching inside these streaming systems. I look at the data and I know what people are watching, and they're watching a lot of the output of this industry back from an era when we had a profit participation model and we had people incentivized to keep working on one television show year after year after year and make hundreds and hundreds of episodes, And you know, it's a challenge figuring out how to rebuild that model inside a new entire ecosystem right now. But I think the audiences tell us that that's television. That's something they really want from television. I don't think we're very good at giving it to them right now.

Don't go anywhere. We'll be right back with more from FX Chairman John Landgraf.

Don't go anywhere. We'll be right back with more from FX Chairman John Landgraf.

Did you know that seven to ten consumers crave more authentic, culturally diverse stories and media. That's just one of the insights Amazon Ads uncovered, and it's from ads to Zeitgeist research. The streaming revolution has transformed how we access entertainment, connecting viewers and listeners to content from every corner of the globe. But what does this mean for brands? A new VIP report, Entertainment Everywhere, builds on the Amazon Ads research to explore this fascinating inner section of culture, entertainment and advertising. Visit Variety dot com slash vip for more information.

Did you know that seven to ten consumers crave more authentic, culturally diverse stories and media. That's just one of the insights Amazon Ads uncovered, and it's from ads to Zeitgeist research. The streaming revolution has transformed how we access entertainment, connecting viewers and listeners to content from every corner of the globe. But what does this mean for brands? A new VIP report, Entertainment Everywhere, builds on the Amazon Ads research to explore this fascinating inner section of culture, entertainment and advertising. Visit Variety dot com slash vip for more information.

And we're back with more from FX Chairman John Landgraft. I think you're about to get an amen from this crowd here. But and and interesting that uh that you know with it? So you talked about a sort of a system and a process that came together under under Fox prior to the Disney Transit acquisition. Was that a tough call with Disney business affairs when you explain like, this is how we work and this is how we like to you know, negotiate and deal with our creative partners. Was that Was that a radical difference from what they had from their approach? It was?

And we're back with more from FX Chairman John Landgraft. I think you're about to get an amen from this crowd here. But and and interesting that uh that you know with it? So you talked about a sort of a system and a process that came together under under Fox prior to the Disney Transit acquisition. Was that a tough call with Disney business affairs when you explain like, this is how we work and this is how we like to you know, negotiate and deal with our creative partners. Was that Was that a radical difference from what they had from their approach? It was?

It was it was very different. And look, the whole industry is going through just wrenching changes right now. But I would say that in essence when when all of us from Fox came over and most you know, like half our colleagues in side Disney Entertainment or Disney colleagues, formerly Disney colleagues, but it was Peter Rice and Dana Walden and I and Eric Streyer who came over and ultimately Peter ended up running that group and now Dana runs that group. So you know, we we took solutions from the existing system, but we brought a lot of solutions with us. But you know, I would say, I mean, is anybody fully satisfied with the way the system works right now? I don't know who that person is. That's probably nobody in this take a pole here in Nobody in this room. But unfortunately we're in this period of transition when again I don't think the market has settled into a stable number of profitable companies. And on the one hand, when you have companies that are in the business of making television shows where that's not their primary business, it's good on one level because it brings extra source of capital in and it creates work and it creates jobs. But on the other hand, what I look at is, Okay, if the if the if the value as recognized by the markets, is created by incremental subscribers, not by the profitability of the content that generates incremental subscribers, then the then the value is locked in a value change, just similarly if the contents designed to market a service or a or a device. So what I miss, what I really miss, is a direct relationship between the actual thing that was made with us, our studio, the creators, and the actual value. But now these these everything that that our creative people do is locked inside these giant, giant systems.

It was it was very different. And look, the whole industry is going through just wrenching changes right now. But I would say that in essence when when all of us from Fox came over and most you know, like half our colleagues in side Disney Entertainment or Disney colleagues, formerly Disney colleagues, but it was Peter Rice and Dana Walden and I and Eric Streyer who came over and ultimately Peter ended up running that group and now Dana runs that group. So you know, we we took solutions from the existing system, but we brought a lot of solutions with us. But you know, I would say, I mean, is anybody fully satisfied with the way the system works right now? I don't know who that person is. That's probably nobody in this take a pole here in Nobody in this room. But unfortunately we're in this period of transition when again I don't think the market has settled into a stable number of profitable companies. And on the one hand, when you have companies that are in the business of making television shows where that's not their primary business, it's good on one level because it brings extra source of capital in and it creates work and it creates jobs. But on the other hand, what I look at is, Okay, if the if the if the value as recognized by the markets, is created by incremental subscribers, not by the profitability of the content that generates incremental subscribers, then the then the value is locked in a value change, just similarly if the contents designed to market a service or a or a device. So what I miss, what I really miss, is a direct relationship between the actual thing that was made with us, our studio, the creators, and the actual value. But now these these everything that that our creative people do is locked inside these giant, giant systems.

Right.

Right.

That's true for music as well as for television. And you you will have those rare you know, tailor swifts who can sort of overcome the long tail of an entire system. But I think it's more difficult frankly, you know, and there's a there's a very very long tail, but it's people in the in the in the you know, the very very upper middle and the very and the bottom top. I think that we're struggling to sort of unlock the full value of what they're doing right now. And I want to because ultimately that's my business is finding, frankly, the next generation of really talented creators and figuring out how to let them do their work, and then figuring out how to pay them and keep them. Almost all of FX's successes, all the way back to its beginning, we're from really new creators or new showrunners. We've never been someone who chased after and bought talent from our competitors. We've always developed it internally.

That's true for music as well as for television. And you you will have those rare you know, tailor swifts who can sort of overcome the long tail of an entire system. But I think it's more difficult frankly, you know, and there's a there's a very very long tail, but it's people in the in the in the you know, the very very upper middle and the very and the bottom top. I think that we're struggling to sort of unlock the full value of what they're doing right now. And I want to because ultimately that's my business is finding, frankly, the next generation of really talented creators and figuring out how to let them do their work, and then figuring out how to pay them and keep them. Almost all of FX's successes, all the way back to its beginning, we're from really new creators or new showrunners. We've never been someone who chased after and bought talent from our competitors. We've always developed it internally.

You you know a show runner, an unproven showrunner and Sean Ryan for the shield A. You know a promising young talent in Ryan Murphy for Niptuck.

You you know a show runner, an unproven showrunner and Sean Ryan for the shield A. You know a promising young talent in Ryan Murphy for Niptuck.

The list goes on his first big hit, or justin Marx. You know who did show Gun, did show Store or who made the Bear. These are all people that are maybe brand names in our industry now, but they weren't before they did this.

The list goes on his first big hit, or justin Marx. You know who did show Gun, did show Store or who made the Bear. These are all people that are maybe brand names in our industry now, but they weren't before they did this.

Let me ask you, as as we want to make sure we a couple of different topics, let me ask you about the Showgun was such a success for you? Like you said, Showgun really seemed to me from my perspective, was showed that FX could really settle into the Disney system and really benefit from the different the different levers that Disney can push to get content out there. What was it and Showgun got such a as I understand, a big ride on Disney plus in outside of the US. What was it like for you to have that kind of direct like being able to see I would imagine to get a good visibility about how people in other markets in Europe and Asia and other places were watching, you know, what their cadence of watching. What was there learnings from being able to see Showgun travel around the world?

Let me ask you, as as we want to make sure we a couple of different topics, let me ask you about the Showgun was such a success for you? Like you said, Showgun really seemed to me from my perspective, was showed that FX could really settle into the Disney system and really benefit from the different the different levers that Disney can push to get content out there. What was it and Showgun got such a as I understand, a big ride on Disney plus in outside of the US. What was it like for you to have that kind of direct like being able to see I would imagine to get a good visibility about how people in other markets in Europe and Asia and other places were watching, you know, what their cadence of watching. What was there learnings from being able to see Showgun travel around the world?

Well, I guess there were learnings from watching what traveled around the world before Showgun on the Disney system. And what you could see is that you know, Marvel and Star Wars and some animated films there there there are there is a kind of storytelling that really travels globally, right, It's sort of transcends local on some level. It's it's it's fairly universal, and it seemed obvious to me that that Dana Walden's unit, you know, Fax needed to figure out how to tap into that, and so how do you do that? Obviously everyone at that time was chasing after the successive Game of Thrones, which had done so well for HBO. For me, anyway, I felt like we had you have to have to do something different to try to achieve the same outcomes. So I thought that that the sort of intense realism of medieval Japan would would be a more interesting way of going at it then another version of a constructed fantasy world. Not that there's anything wrong with that. I just felt like the audience had been given a lot of that. Also, Disney had never really committed its full sort of top level synergy marketing to a an adult title, to a to a general entertainment or a TVM A title, but they really needed it, and it was amazing when you see that machine get in gear. Both domestically, I mean, even Showgun still doesn't get the full level of support that a G rated or maybe PG rated thing. For a lot of spaces in the parks that are not going to promote, you know, beheadings in medieval.

Well, I guess there were learnings from watching what traveled around the world before Showgun on the Disney system. And what you could see is that you know, Marvel and Star Wars and some animated films there there there are there is a kind of storytelling that really travels globally, right, It's sort of transcends local on some level. It's it's it's fairly universal, and it seemed obvious to me that that Dana Walden's unit, you know, Fax needed to figure out how to tap into that, and so how do you do that? Obviously everyone at that time was chasing after the successive Game of Thrones, which had done so well for HBO. For me, anyway, I felt like we had you have to have to do something different to try to achieve the same outcomes. So I thought that that the sort of intense realism of medieval Japan would would be a more interesting way of going at it then another version of a constructed fantasy world. Not that there's anything wrong with that. I just felt like the audience had been given a lot of that. Also, Disney had never really committed its full sort of top level synergy marketing to a an adult title, to a to a general entertainment or a TVM A title, but they really needed it, and it was amazing when you see that machine get in gear. Both domestically, I mean, even Showgun still doesn't get the full level of support that a G rated or maybe PG rated thing. For a lot of spaces in the parks that are not going to promote, you know, beheadings in medieval.

Japan, plushy samurai toy exactly.

Japan, plushy samurai toy exactly.

But everything other than the fully family space has got on board, and it's an incredible marketing machine. It's it's really extraordinary. So we just basically had to make it. We had to get it done really early, serve it up and say, you know, what do you think? And then to answer your question, I mean watching something cross you know, twenty percent reach everywhere on Earth that Disney operates, which is most countries. Now it's not China. It didn't do twenty percent share in India, but in almost every territory it did to twenty percent, and that was just an extraordinary thing, which again I come from an American basic cable network, so there have been no to even attempt that before Disney bought us. So it was an exciting thing to try. And it was equal parts relief and exhilaration that it that it worked, because we'd bet the farm on it.

But everything other than the fully family space has got on board, and it's an incredible marketing machine. It's it's really extraordinary. So we just basically had to make it. We had to get it done really early, serve it up and say, you know, what do you think? And then to answer your question, I mean watching something cross you know, twenty percent reach everywhere on Earth that Disney operates, which is most countries. Now it's not China. It didn't do twenty percent share in India, but in almost every territory it did to twenty percent, and that was just an extraordinary thing, which again I come from an American basic cable network, so there have been no to even attempt that before Disney bought us. So it was an exciting thing to try. And it was equal parts relief and exhilaration that it that it worked, because we'd bet the farm on it.

Yeah, yes, absolutely, and I think it was I think in a sense of a rising tide does help lift all boats. I really, I really think that to be able to show especially I mean, Shogun isn't fully new IP but you took you know, you were it was not Richard Chamberlain back in that you know, the NBC miniseries. I have just completely dated myself because very few people. But but it really was. It was, as you say, it was a sort of a triumph for adult drama content. That wasn't that that was rooted. It was you know, four hundred, five hundred years ago, but still rooted in real life. And you know, planet Earth not not with any supernatural powers. Excuse me? And can you talk about because again we're talking about people that are in the nitty gritty of deals with You went into Showgun thinking it would be a standalone piece, but you left a small door open for the potential for Can you talk about the challenges and something like that. It sounds like you built in a slight exit ramp if you did want to, if you did want to bring it back. But is that is that a is that construct to be whether it's limited or recurring? Is that a challenge as well in those kind of the licensing regimen right now?

Yeah, yes, absolutely, and I think it was I think in a sense of a rising tide does help lift all boats. I really, I really think that to be able to show especially I mean, Shogun isn't fully new IP but you took you know, you were it was not Richard Chamberlain back in that you know, the NBC miniseries. I have just completely dated myself because very few people. But but it really was. It was, as you say, it was a sort of a triumph for adult drama content. That wasn't that that was rooted. It was you know, four hundred, five hundred years ago, but still rooted in real life. And you know, planet Earth not not with any supernatural powers. Excuse me? And can you talk about because again we're talking about people that are in the nitty gritty of deals with You went into Showgun thinking it would be a standalone piece, but you left a small door open for the potential for Can you talk about the challenges and something like that. It sounds like you built in a slight exit ramp if you did want to, if you did want to bring it back. But is that is that a is that construct to be whether it's limited or recurring? Is that a challenge as well in those kind of the licensing regimen right now?

Yeah, it's it's it's very difficult. And you know we had there, we had justin Marks and Rachel Kondo and the writer's work on a potential idea for subsequent season's story. It came in about six months before the show premiere. Knows, knowing how well the show would have to do for it to even be a possibility, I thought, oh, this will never happen. So I put in a drawer and then I kind of sheepishly took it out after the show premiere and I was like, oh, this is this is pretty good. But I would say one thing, I bet a lot of the more experienced people in this room recognizes every time you're having an amazing year and you're really happy about it, and then there's part part of the back of your mind that's thinking, yeah, but I'm going to be retracing this year next year, and my clients are expect the same performance next year that they got this year, comps exactly. And so it's thrilling when you have something. But now we've got to do a second season, and we don't have James Colvell's book, and so we spend you know, every day working on the intense challenge of trying to lay out ten episodes of television that don't have all the brilliance of clavel. So all I will say is you know, what have you done for me lately? Doesn't just appertain to business managers, it also works for programmers, and you know you roll up your sleeves, get back to work and try to figure out how to do it again.

Yeah, it's it's it's very difficult. And you know we had there, we had justin Marks and Rachel Kondo and the writer's work on a potential idea for subsequent season's story. It came in about six months before the show premiere. Knows, knowing how well the show would have to do for it to even be a possibility, I thought, oh, this will never happen. So I put in a drawer and then I kind of sheepishly took it out after the show premiere and I was like, oh, this is this is pretty good. But I would say one thing, I bet a lot of the more experienced people in this room recognizes every time you're having an amazing year and you're really happy about it, and then there's part part of the back of your mind that's thinking, yeah, but I'm going to be retracing this year next year, and my clients are expect the same performance next year that they got this year, comps exactly. And so it's thrilling when you have something. But now we've got to do a second season, and we don't have James Colvell's book, and so we spend you know, every day working on the intense challenge of trying to lay out ten episodes of television that don't have all the brilliance of clavel. So all I will say is you know, what have you done for me lately? Doesn't just appertain to business managers, it also works for programmers, and you know you roll up your sleeves, get back to work and try to figure out how to do it again.

Yeah, a high class problem.

Yeah, a high class problem.

Yeah.

Yeah.

What what we've talked about, We've talked about some of the adjita in the system. What right now? Would you say, especially as you you know it, FX had, like every other network on the planet, had a couple of rocky years, But twenty twenty four really seems like has been a banner year for you. As you go into twenty twenty five. What, whether it's programming, whether it's you know, developments within Disney, what gives you hope for twenty twenty five?

What what we've talked about, We've talked about some of the adjita in the system. What right now? Would you say, especially as you you know it, FX had, like every other network on the planet, had a couple of rocky years, But twenty twenty four really seems like has been a banner year for you. As you go into twenty twenty five. What, whether it's programming, whether it's you know, developments within Disney, what gives you hope for twenty twenty five?

Well, I'm I'm glad the film business is going to be back to a normal cadence. You know, I wish every participant in the market. We're committed to theatrical release as Disney as I can tell you. As a licenser of films, for many years, FX was the top basic cable licenser. We didn't license films that weren't released theatrically. Never because theatrical release in the marketing that goes with it creates a long tail of value and we wanted to buy that release and the value that release in that marketing. And I'm glad that there are many companies that are that are working on it. But I still think are theatrical distribution businesses really challenged, right? And I don't want to see it a road because I think there is something extraordinary created in the relationship between audiences and stars and audiences and storytellers with that big screen. Even though I've never worked in that business, I still think it's a really important part of the value change. And you know what I can say is I think I think you see the industry going through really big reckoning. I think it I think it overinvested in almost everything, right, because you had you know, seven market participants chasing after one pool of subscribers. Now it's going to have to figure out which of the you know, how to have enough scale each of the companies can have enough scale to have profitability. And then inside those scaled companies, they're going to get more efficient at at figuring out what they need and what they don't need. Right, So, unfortunately it's going to be lumpy. I think for a little while, because I don't think the industry is really found And it's fascinating to me having come in with three broadcast networks and then there were four once Fox that you know, I think we're probably heading towards a four or five participant in marketplace that seems to be, you know, where things naturally gravitate. But you know, just remember that each of those broadcast networks got very efficient at knowing exactly what it needed to compete in that marketplace. Now, I think we could be a decade away from a situation where you not only have rationalized the number of participants, they're all profitable, they've rationalized their slates inside that. But unfortunately, I think we're going to be in that mode for quite some time. And for me, I guess the challenge has always been, Okay, well, you know, businesses go through cycles and they change at the end of the day. Though a healthy ecosystem needs it needs innovation, right Like if you just like, there's always going to be a certain amount of our industry that's just chasing after prior success and trying to clone it and replicate it.

Well, I'm I'm glad the film business is going to be back to a normal cadence. You know, I wish every participant in the market. We're committed to theatrical release as Disney as I can tell you. As a licenser of films, for many years, FX was the top basic cable licenser. We didn't license films that weren't released theatrically. Never because theatrical release in the marketing that goes with it creates a long tail of value and we wanted to buy that release and the value that release in that marketing. And I'm glad that there are many companies that are that are working on it. But I still think are theatrical distribution businesses really challenged, right? And I don't want to see it a road because I think there is something extraordinary created in the relationship between audiences and stars and audiences and storytellers with that big screen. Even though I've never worked in that business, I still think it's a really important part of the value change. And you know what I can say is I think I think you see the industry going through really big reckoning. I think it I think it overinvested in almost everything, right, because you had you know, seven market participants chasing after one pool of subscribers. Now it's going to have to figure out which of the you know, how to have enough scale each of the companies can have enough scale to have profitability. And then inside those scaled companies, they're going to get more efficient at at figuring out what they need and what they don't need. Right, So, unfortunately it's going to be lumpy. I think for a little while, because I don't think the industry is really found And it's fascinating to me having come in with three broadcast networks and then there were four once Fox that you know, I think we're probably heading towards a four or five participant in marketplace that seems to be, you know, where things naturally gravitate. But you know, just remember that each of those broadcast networks got very efficient at knowing exactly what it needed to compete in that marketplace. Now, I think we could be a decade away from a situation where you not only have rationalized the number of participants, they're all profitable, they've rationalized their slates inside that. But unfortunately, I think we're going to be in that mode for quite some time. And for me, I guess the challenge has always been, Okay, well, you know, businesses go through cycles and they change at the end of the day. Though a healthy ecosystem needs it needs innovation, right Like if you just like, there's always going to be a certain amount of our industry that's just chasing after prior success and trying to clone it and replicate it.

Right, that's television being the sincerest form of flattery.

Right, that's television being the sincerest form of flattery.

Right exactly, imitation being the sinceres form of flattery, but needs innovation, right, somebody needs to come along and decide to make Titanic or Avatar or go back to Walt Disney and what he did, or you know, the mc new or.

Right exactly, imitation being the sinceres form of flattery, but needs innovation, right, somebody needs to come along and decide to make Titanic or Avatar or go back to Walt Disney and what he did, or you know, the mc new or.

It's always sunny in Philadelphia on a shoestring budget that is probably less than the valet parking fees that will be assessed here.

It's always sunny in Philadelphia on a shoestring budget that is probably less than the valet parking fees that will be assessed here.

So what excites me is not being a part of the you know, at the top of the apex of the chain. And what excites me is having a vibrant, modest sized business whose job it is to innovate, right, Because what I get excited about is I get excited about the next creative generation or the or the untapped creative genius or resource and how do we unlock that person's brilliance, how do we make something great? And So what FX is now, after you know, a lot of tumult, a lot of change, is it's a relatively modest sized brand inside a very very large global streaming service. You know, we're meant to make you know, somewhere around fifteen shows a year, which means at any given time will probably have more like twenty because they don't all recur annually. That's not that's not a lot of shows compared to a market that's pulling out four hundred and five hundred shows. But the question is can we be nimble enough and innovative enough creatively, And that's where we need the talent. Like, we're not in it for the for to take the algorithm and you know, and and basically replicate a whole bunch of successes. We're in it for the out of the box extraordinary you know, innovation. That is the bear. And I don't know where that I never know where that's going to come from. It's going to come out of nowhere, and it's and it's going to either be one of your existing clients or it's going to be somebody that one of you is going to want to work with for the rest of their lives.

So what excites me is not being a part of the you know, at the top of the apex of the chain. And what excites me is having a vibrant, modest sized business whose job it is to innovate, right, Because what I get excited about is I get excited about the next creative generation or the or the untapped creative genius or resource and how do we unlock that person's brilliance, how do we make something great? And So what FX is now, after you know, a lot of tumult, a lot of change, is it's a relatively modest sized brand inside a very very large global streaming service. You know, we're meant to make you know, somewhere around fifteen shows a year, which means at any given time will probably have more like twenty because they don't all recur annually. That's not that's not a lot of shows compared to a market that's pulling out four hundred and five hundred shows. But the question is can we be nimble enough and innovative enough creatively, And that's where we need the talent. Like, we're not in it for the for to take the algorithm and you know, and and basically replicate a whole bunch of successes. We're in it for the out of the box extraordinary you know, innovation. That is the bear. And I don't know where that I never know where that's going to come from. It's going to come out of nowhere, and it's and it's going to either be one of your existing clients or it's going to be somebody that one of you is going to want to work with for the rest of their lives.

Right.

Right.

And that's that's the magic of this industry that never changes from my standpoint.

And that's that's the magic of this industry that never changes from my standpoint.

That's the meritocracy of ideas. That's absolutely true. It's absolutely true. Well, John, we are so grateful to you for taking the time out to speak with us and kind of walk us through a lot of these things. I have a whole long list of other questions for you. But I think if we just leave with one thing at curation, Curation, curation, the FX's investment in that brand all those years, certainly you know, even predating you, it's so clear that is that all of that is paying off right now. It's in droves that has truly put you in a class by yourself.

That's the meritocracy of ideas. That's absolutely true. It's absolutely true. Well, John, we are so grateful to you for taking the time out to speak with us and kind of walk us through a lot of these things. I have a whole long list of other questions for you. But I think if we just leave with one thing at curation, Curation, curation, the FX's investment in that brand all those years, certainly you know, even predating you, it's so clear that is that all of that is paying off right now. It's in droves that has truly put you in a class by yourself.

I think it's tempting to chase the now, to chase the quarterly results. We all have to, we do have accountability. But I think the best of us, if we're fortunate enough to have some longevity, also think about the year, the decade, or even beyond that and try to build long term value. And you know, you've got to be a little bit lucky sometimes too, and that doesn't suck. Yeah.

I think it's tempting to chase the now, to chase the quarterly results. We all have to, we do have accountability. But I think the best of us, if we're fortunate enough to have some longevity, also think about the year, the decade, or even beyond that and try to build long term value. And you know, you've got to be a little bit lucky sometimes too, and that doesn't suck. Yeah.

I couldn't end it on a better not than that. John, Thank you, thank you so much, Thank you, thanks for listening. Be sure to leave us a review at Apple Podcasts or Amazon Music. We love to hear from listeners. Please go to Variety dot com and sign up for the free weekly Strictly Business newsletter, and don't forget to tune in next week for another episode of Strictly Business.

I couldn't end it on a better not than that. John, Thank you, thank you so much, Thank you, thanks for listening. Be sure to leave us a review at Apple Podcasts or Amazon Music. We love to hear from listeners. Please go to Variety dot com and sign up for the free weekly Strictly Business newsletter, and don't forget to tune in next week for another episode of Strictly Business.