FX's Plan to Outlive Cable

Between fears over the rapidly-spreading coronavirus and the rapidly-evolving state of the race for the Democratic presidential nomination, this is one of those weeks where what’s going on in the TV world seems… just a bit less consequential than usual. And yet, the battle to remake television goes on, with Monday marking a major milestone: The debut of Disney’s new FX on Hulu offering. For this week’s Buffering, I talked to FX Networks chief John Landgraf about the process of moving his beloved brand to a new platform and why he thinks it was necessary. Also in the newsletter: A look at cable’s increasingly rapid decline, Schitt’s Creek’s late-stage surge, and, yes, updates on COVID-19’s impact on the entertainment industry. –Joe Adalian

Reach Joe on Twitter @tvmojoe or email buffering@vulture.com. Listen to Joe each week on KCRW’s Screengrab, on the radio Tuesdays or online here.

For cord-cutters who’ve been searching for a way to get their fix of FX fare, which encompasses everything from American Horror Story to It’s Always Sunny in Philadelphia, there’s now a simple solution: Subscribe to Hulu. This week’s launch of FX on Hulu means every one of the network’s current and future shows, as well as most of its 20-year library of originals, now lives on Hulu. It’s great news for consumers, who previously needed an expensive cable subscription in order to (legally) watch in-season episodes of FX series. But there’s a catch.

While any show that airs on FX will stream on Hulu, some projects developed by FX’s creative teams will now skip the cable channel entirely and instead be exclusive to FX on Hulu. This means FX cable customers who had been looking forward to the new Alex Garland thriller Devs, announced in 2018 as an FX original, will need to have (or start paying for) Hulu in order to see the show when it debuts tonight. The same goes for the buzzy Cate Blanchett miniseries Mrs. America,announced in October 2018 as an FX original, but now set to stream exclusively via Hulu next month. It’s a bit of a bum deal for FX’s cable viewers — but it’s also the future.

FX on Hulu exists because the old cable universe, in decline for years, is moving closer to imploding altogether. Linear ratings are in free fall. The total number of U.S. homes with cable dropped by a stunning six million last year, down 7 percent in a single year. In response, Disney, which took control of FX last year, is looking to give consumers a credible alternative by bulking up its streaming offerings. The first play was the launch of Disney+, which serves family audiences. Now, Disney wants to make Hulu a lot more appealing, and putting FX content on Hulu is a major part of the strategy.

I caught up with FX Networks chief John Landgraf earlier this week to talk about the biggest change to the network’s business plan since 2002, when the premiere of The Shield started the brand’s transformation into an original programming powerhouse. During our 40-minute phone conversation, Landgraf was his usual wonky self (this is a good thing), explaining exactly why FX needed to team up with its new sibling streamer and insisting the cable version of the FX brand would remain vital for years to come.

The key takeaways from the chat:

• Landgraf says he’s committed to keeping the linear FX’s programming pipeline stocked with just as many originals as ever, even if some shows will now stream exclusively on Hulu. “As FX original linear shows finish, the plan is to replace them with new original FX linear shows that will also appear the next day on Hulu,” he says. “The intent right now is, whenever Atlanta is done, replace it. Whenever Better Things is done, replace it. Mayans, Snowfall, American Horror Story, Sunny, Archer. We intend to continue to invest in and maintain the vibrancy of the FX linear brand for the FX linear subscriber.”

• He admits cable is shrinking, but thinks too much is made of cord-cutting — and more should be made of the fact that more people still subscribe to cable than a streaming service. “I still think that the press really overreports usage on streamers and underreports [usage] on channels,” he says. “If you look at the totality of television consumption, you see the amount of it in America that occurs on channels still dwarfs the streaming system. And what’s nutty is that Netflix got to, I think 61 million subscribers last quarter. FX is in 84 million homes. FXX is in 81. So we’re still much more distributed than the top streamer in the country — and Netflix’s growth in America has started to flatten. Its [growth is] down significantly year on year.”

• He has no desire for FX to “compete with Amazon or Netflix,” arguing that’s not why a brand like FX exists. The big streamers “are the kind of utility brands like Costco or Walmart or Target or Macy’s that are meant to be everywhere in the United States or everywhere in the world and provide everything anyone could want. That’s not FX’s job,” Landgraf says. “You need a very, very big entity to do that.” FX, of course, now has the backing of just such a conglomerate via Disney. Thanks to Uncle Mickey, “FX can focus on what it specializes in,” Landgraf told me. “It doesn’t have to worry about the larger problem. Our problem is make fantastic shows, continue to make the brand better and put that brand to use not only on behalf of our continued [cable] customers, but now put that brand to use on behalf of Hulu.”

• FX on Hulu, at its heart, is about the fact that “[streaming services] have a much greater potential to achieve high levels of brand fanaticism than a brand on a linear channel,” Landgraf said. The exec explained that brand-tracking metrics such as the Net Promoter Score regularly show that consumers value streaming services much more than basic cable and even premium networks. FX already does much better than most of its cable peers when it comes to brand devotion, but if it’s going to keep up with its streaming rivals, it needs “to be on or associated with the mode of delivery that is beloved by consumers at this moment in time.”

One fun revelation: Hollywood execs love to send each other gifts, and the launch of FX on Hulu was no exception. Both outlets celebrated the debut of their new joint initiative by exchanging baked goods. “We sent them cupcakes, they sent us donuts,” Landgraf said.

You can read the full Q&A with Landgraf over at Vulture.

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Former Amazon exec and current venture capitalist Matthew Ball is out with a new deep-dive essay on the state of media. Provocatively titled “The End of Pay TV,” it makes the case that cord-cutting is about to dramatically accelerate as the big conglomerates start cutting back on original programming and reduce new spending on linear networks in order to push consumers to subscribe to services such as HBO Max, Peacock, and Hulu. Instead of slow, steady declines, Ball argues “the floor will suddenly fall out” on traditional pay cable — and perhaps soon.

To be clear, he’s not predicting cable TV will suddenly disappear from the planet. But Ball thinks that by the end of next year or early 2022, “Consumers will wake up and see that Pay TV isn’t just a zombie business and delivery model, it’s a zombie product — and one that is increasingly deprived of fresh meat. There’s no model for this decline, but it certainly won’t look like a simple acceleration of the past decade.”

Ball’s essay, particularly well-timed given the launch this week of FX on Hulu, offers these key arguments:

• Companies such as Disney and WarnerMedia aren’t giving up on cable, but they’re no longer going out of their way to save it. “Traditional TV players haven’t just embraced [direct-to-consumer streaming], they’ve decided they’re done trying to stem the decline of pay TV,” he writes. “They are reducing their investments in the [cable channels], pulling out many of the investments they’ve already started, and begun deliberately speeding the collapse in the hopes that, if they burn their boats relatively faster or harder than their peers, they’ll be best positioned in the future. This doesn’t mean they don’t still want to pull cash out of the old system — they do – but they’re not optimizing for it … And they’re right to do so.”

• Ball points to recent moves by big companies to put current and future cable projects on streaming first (or even exclusively) as the biggest sign these companies have given up growing cable. There’s FX on Hulu. NBCUniversal is loading Peacock with shows which would’ve gone to Syfy or USA even three years ago. ViacomCBS recently decided loyal fans of RuPaul’s Drag Race will have to subscribe to Showtime in order to see the all-star version this summer. “Soon, pay TV will be getting worse on absolute terms. Much worse,” Ball argues, using FX on Hulu as an example of what’s to come. “The best programming? Hulu. Catalogue? Hulu. Incremental cost? Zero. Ad-load? Low or zero. FX on Pay-TV has only one advantage: it airs a few shows a few hours earlier than FX on Hulu.”

• One of the major reasons the cable bundle hasn’t collapsed more quickly has been because cable has added even more sports offerings and the big sports leagues have been happy keeping their games on pay TV, despite a few experiments such as ESPN+ (which doesn’t carry the biggest games) and NFL simulcasts on Amazon Prime Video. Ball thinks that will soon change, too, as big companies realize this is the time to transition sports fans to streaming. “My bet would be that by the end of 2020, Disney will announce plans to launch [a direct-to-consumer version of] ESPN in 2021,” he predicts.

What one TV exec thinks about it: I had read Ball’s essay before my chat with FX Networks’s Landgraf, so I asked him whether he also thought the cable ecosystem would dramatically shrink over the next five years. He told me that while he didn’t “have a crystal ball,” it was obvious cable has lost subscribers in recent years. “Is there an inflection point where maybe at some point there’s more streaming customers than [cable] customers? Yeah, maybe,” he said. “But it’s a fairly long way off.” He also disputed the notion FX on Hulu was about speeding up the decline of the cable bundle. “I don’t think anybody intends to hasten its decline. I just don’t think that’s accurate.”

My take: I think Ball has it right. The last nine months have seen one big company after another announce a shifting of resources from linear cable network over to direct-to-consumer products. And the stunning (early) success of Disney+ has only added to the sense that consumers are willing to build their own bundles by adding more new streaming platforms. Younger folks not used to paying $125 cable bills may balk at paying $60 to $80 for five, six, or seven streamers, but those of us who’ve spent decades paying for dozens of channels we never watch may welcome a system where we can pick and choose the best content providers on a month-to-month basis. Cable used to be cool. Soon, it could be history.

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NBCUniversal’s new Peacock streaming platform begins a soft rollout on the Comcast Xfinity platform next month, but its big national launch is set for July — a date chosen specifically to coincide with the company’s exclusive coverage of the Summer Olympics. The problem for Peacock: There’s now a not-insignificant chance that the Tokyo games will be delayed or even canceled over concerns about the coronavirus outbreak. Such a development wouldn’t be a disaster — Peacock is primarily an entertainment-driven offering — but it would also blow up months of marketing plans designed to use the Olympics to build awareness and drive subscriptions to the hatchling streaming service.

During a January meeting with investors, NBCU and Comcast execs said Peacock would be the home to some exclusive Olympics coverage, including the ability for audiences to stream the opening and closing ceremonies before they aired in primetime on NBC. What’s more, there’s no doubt the company is planning to heavily promote Peacock during its live coverage, taking advantage of the big audiences that are so rare in linear TV today. If the Games get pushed to later in the year, such a promo-palooza could still happen; if they’re canceled, it means the loss of an irreplaceable marketing opportunity for Peacock.

To be sure, Olympics organizers (and NBC) continue to insist that there are no serious considerations being given to halting the games. “What I know is it’s full steam ahead,” Comcast CEO Brian Roberts said earlier this week at a media conference. Media reports suggest a final decision might not have to be made until May, giving time to see how this pandemic plays out. And while a delay or cancellation would be a very bad break for the Peacock launch, Roberts also told the conference NBC and Comcast wouldn’t lose money because of insurance policies designed for such contingencies. (On the other hand, NBC would still probably stand to lose millions in potential profits, monies likely baked into long-term budget plans.)

As the world waits to see what happens next with the outbreak, virus fears are already having a ripple effect on the TV business:

• Streamers such as Apple, Amazon, and Netflix have all canceled a number of planned premieres and panels at SXSW. The events are often a big part of marketing plans for new shows and movies.

• Disney+ canceled a press junket planned this week in London to hype the European launch of the streaming platform.

• CBS delayed filming of the next edition of The Amazing Race, while the producers of The Bachelorette changed plans to film part of the upcoming season in virus-ravaged Italy.

Meanwhile, Contagion explodes: For weeks now, Steven Soderbergh’s 2011 film about a pandemic flu outbreak has been popping up on various digital rentals and sales charts (iTunes, Amazon, Google Play), no doubt the result of audience anxiety about the coronavirus spread. Now I hear it’s also doing well via cable video on demand. A source familiar with one major cable platform’s VOD rankings tells me Contagion was the No. 1 library movie title rented by customers last week, displacing usual library leaders such as Frozen and The Greatest Showman. The film first resurfaced in the rankings at the end of January, my source said, and has been in the top 10 ever since.

Have you washed your hands lately? Go. Wash. Your. Hands.

Schitt’s Creek is ending its run next month, and at least according to Nielsen, the show has never been more popular. A Pop TV rep told Buffering the show’s sixth season is tracking to be its most-watched yet, with ratings for the current batch of episodes (which began airing in January) up an impressive 61 percent versus last year. As is commonplace with linear shows these days, the bulk of Schitt’s viewing takes place on a delayed basis, either through on-network reruns, DVR replays, or digital streams. Pop says Tuesday night premiere telecasts average about 1 million viewers (including seven days of folks catching up on their recordings of episodes), while on-demand/digital viewership brings the tally to 1.5 million. Those numbers may not sound like a lot, but Schitt’s does particularly well with younger audiences: At least three episodes this season ended up as the No. 1 basic cable comedy among adults under 35 the week they aired. Having reruns on Netflix no doubt helped build that younger viewership.

FX is now known as a leading supplier of premium scripted television shows, but when the network first got rolling in 1994, it had a very different game plan: live, often interactive TV. While there were reruns of olds shows from the ‘70s and ‘80s, the network’s big gimmick was something called “TV Made Fresh Daily.” Starting with a morning show co-anchored by current Dancing with the Stars host Tom Bergeron, FX — or fX, as it was called then — served up a collection of lifestyle and service shows (pets, music, collectibles) which were broadcast live, every weekday from a Manhattan studio dubbed “the fX apartment.” (Bergeron wasn’t the only future reality host on the network: Survivor’s Jeff Probst anchored a talk program called Backchat.) Sadly, TV economics changed in the new century, and by 2002, the network had completely abandoned the format in favor of shows much more attractive to advertisers, such as The Shield and Nip/Tuck.

Check out this collection of early FX — er, fX — promos here.