TCA: FX's Landgraf — Our Biggest Challenge Is Lost Ad Sales Revenue

CEO Says Network Losing 40% to Delayed Viewing, Touts New FXNow App as Way to Mitigate Reduction

Pasadena, Calif. -- Jon Landgraf,  CEO, FX Networks and FX Productions, bemoaned the ad revenue lost to delayed viewership at FX's portion of the TCA winter press tour here Tuesday. While touting what he called “all time highs” in ratings  for a number of series, Landgraf claimed that his suite of networks loses roughly 40 percent of ad sales revenue to delayed viewership.

Landgraf pointed to Sons of Anarchy as an example of lost opportunity to generate revenue, claiming that the show garners more than 5 million viewers in live + 7 Nielsen ratings, but that only 2 million of those viewers are watching the show live and only 3 million are watching the commercials.

“That’s a lot of lost revenue for a show that’s very expensive to make,” Landgraf said. “We need to find new opportunities to mitigate those losses, and we’re doing that.”

Landgraf pointed to the new“TV Everywhere” app FXNow, which the network rolled out Tuesday morning, as a way to help alleviate the losses. The app will allow MPVD subscribers to watch all three FX channels they receive through their service providers. The service will only offer current FX programming. According to Landgraf, offering content from FX’s full programming library is a long-term goal. 

"It will also allow us to begin rebuilding our advertising business," he said. 

“Right now our business model requires us to include in the ecosystem of our business important partners like Netflix and Hulu Plus and Amazon Prime,” Landgraf said. “Ultimately we’re going to have to work out a windowing strategy so that those shows come back to us.”

Landgraf also said he feels "very bullish about the business even though the advertising business is stressed now," saying that having ownership of content is the key to longterm revenue. 

He also noted that "we're now making TV for posterity," unlike when he started 10 years ago and TV was "largely a disposable medium." 

"Now, television seems like a medium that has a long life," Landgraf said. "People can still be discovering it..and you can still be earning money based on it five, 10, 15 years after you make it." 

Commenting on the fledgling FXX service, Landgraf said: "Its performance is right where we expected."

Other highlights from Landgraf’s executive session included:

*FX recently acquired to the rights to Fox’s library of The Simpsons episodes. Landgraf teased the upcoming launch of “the ultimate Simpsons non-linear site and app,” telling fans to think of it as “a comprehensive, beautifully curated digital library of all things Simpsons.”

*He touted content ownership as an important piece of FX’s future: “It’s worth making things that not only galvanize an audience the night they air, but might be useful to someone 15 or 20 years later. Of course, we own most of our programming, so we’re benefitting from both those revenue streams.

*Asked why Archer and fellow animated comedy Chozen will air this year on FX rather than FXX, Landgraf said, “I don’t think there is any reason that they’re FX shows and not FXX shows. One of the things I’ve been honest about is that I think it’s going to take us some time to get our brands around three channels correctly positioned. … I guess what I would say is just be patient with us.”

*Assessing the arena for top-flight programming, Landgraf called it "incredibly competitive, and therefore I think it’s a fantastic time for high-end talent and their representatives, because there are so many hungry buyers.” When asked how heated the competition for quality programming is between FX and other networks such as AMC and HBO, he remarked: “We’re continuously breaking new ground in terms of the amount of money we’re spending.” He also said that FX competed with Showtime and other networks for True Detective, which landed at HBO.

*Langraf said that he doesn’t have much info to reveal on the fourth season of American Horror Story, but expects it to once again be “a period piece.” He also said that True Detective creator Nick Pizzolatto had been inspired by American Horror Story’s anthology format.