FX network could be a victim of Disney-Fox consolidation
The Washington Post
To its fans, FX has offered some of the most compelling television of recent years, with “The Americans,” “Atlanta,” “Justified” and that O.J. dramatization everyone couldn’t stop talking about.
To watchers of the Disney-Fox merger, the cable network offers something else: a giant enigma.
With FX among the 21st Century Fox assets sold to Disney, a question has percolated through Hollywood: Can the network and its beloved programs survive?
“FX has been some responsible for some really great television, but these are shows that, relatively speaking, don’t get a lot of viewers,” said Cory Barker, a pop-culture writer and expert who closely follows the cable space. “And it seems everything Disney continues to do is move toward its big-property, profit-maximization strategy,” he added. “It’s hard to see where FX fits in.”
Disney on Thursday announced it was spending $52.4 billion to buy nearly all of Rupert Murdoch-led 21st Century Fox besides the Fox broadcast network and its news and sports operations.
Many Fox divisions are expected to be consolidated under Disney in the new structure, and executives could be looking for new jobs. Fox’s film operations, including its animation and specialty film units, and even top executive Stacey Snider, may not remain in the new combined company.
Conversely, its TV studio, responsible for hits such as “Modern Family” and “This Is Us,” is thought safe because it regularly churns out the broad hits Disney covets.
And FX? No one seems to know where it will fall.
Under its longtime president John Landgraf, FX owns one of the most prestigious track records in all of cable — a point underscored by its eight Golden Globe nominations earlier this week and record-setting 18 Emmy wins last year.
But it is also a niche channel that rarely scores more than a few million viewers for its shows and regularly engages in the kind of criticand award-friendly material Disney has shown little appetite for.
The network helped usher in the era of original cable programming with early 2000s hits like “The Shield” and “Nip/Tuck.” It drove a subversive comedy renaissance with “It’s Always Sunny in Philadelphia” and (before controversy engulfed its creator) “Louie.” And it launched the modern anthology craze with such franchises as “American Horror Story.”
In recent years it has lost a little luster but has remained sharp with the first year of Donald Glover’s much-admired “Atlanta” and “American Crime Story,” the franchise whose first season about O.J. Simpson was a significant hit — and Emmy-winner — for the network in 2016. It will be followed next year with a new installment about the 1997 murder of designer Gianni Versace.
These kind of upscale shows could come in handy for Disney, experts and analysts say. The Fox deal is partly motivated by Disney’s desire to compete with Netflix and Amazon in “over-the-top” content that goes directly to consumers; it will launch a streaming service in 2019. FX could be instrumental in this effort, they say, because both Netflix and Amazon first made their bones with high-end programming.
“If I’m Disney, I want to over-invest in FX because of who they are,” said Ross Fremer, a finance specialist at the independent entertainment company Cinetic Media. “What the network can do with Disney’s money and scale would be huge.”
At the same time, he acknowledged that moving in a bigger direction might mean FX losing at least some of its identity. “I don’t know that they exist as a cable brand known as FX anymore.”
At least for now, executives are saying the right things. Disney chairman Robert Iger alluded to FX among a range of 21st Century Fox properties that “we think will be of great use” in selling directly to consumers.
Lachlan Murdoch, 21st Century Fox’s executive cochairman, touted FX’s “inventive originality” to analysts on a call announcing the deal Thursday and said he hoped it would “flourish under Disney ownership.” Neither Disney nor FX executives would comment for this story.
FX is unique in a number of ways. It is very small — just a few dozen key employees in a building on Fox’s westside Los Angeles lot — given the shows it produces and cultural impact it has. It also sits on ad-driven basic cable, where very little of the prestige-television revolution has occurred.
And it handles much of its development and production in-house rather than rely on large outside providers, making it a kind of selfcontained entity that’s rare in today’s cable world.
That makes knowing its true value difficult. Some banks have valued it high: Wells Fargo recently put the number at $8 billion, more than half of Fox’s entire film operation. But other analysts aren’t so sure.
“It’s difficult to evaluate this deal because evaluating the [Disney-Fox] deal means knowing what you’re getting,” said Brian Wieser, an analyst at New York-based Pivotal. “And what is FX really worth?”
The network has some virtues in its favor. Not least is Mr. Landgraf himself, who could be seen as a kind of John Lasseter of prestige television, finding and then peddling an aesthetic. Promoted to president in 2005, he has become known for taking chances on shows and creators that fit his refined taste and hoping a well-heeled audience will follow.
He has also been a media darling for his almost philosophical takes on the business in conversations with reporters, often accompanied by a strong shot of candor. At the gathering of journalists known as the Television Critics Association tour in 2015 he gained notoriety for asking whether there was simply too much TV, both an admission of responsibility and a jab at his newfangled competitors.
FX also has strong relationships with a number of valued creators. The top-tier writer-producer Ryan Murphy, for instance, has made some of his biggest hits at FX, including “Nip/Tuck,” “American Horror Story” and current hit series, “Feud.”
The network did invest heavily in, and profit from, Louis C.K., with programs such as the buzz-building “Louie,” which the comedian oversaw in almost every regard, and Pamela Adlon’s emerging hit “Better Things,” which C.K. executive produced. FX has taken the comic’s name off all its shows in light of sexual-misconduct allegations against him. While an absence of a hit like “Louie” is hardly welcome, FX’s fortunes aren’t tied up in C.K., and “Better Things” is expected to come out mostly unscathed when its third season debuts next year.
That could be one more show Disney takes a look at and decides to invest in, hoping to supercharge FX’s audience with more production and marketing dollars. Under Disney, experts say, FX may not have to lose out to better-capitalized competitors, as it did when it sought comedy hit “Master of None” and eventual royals smash “The Crown” only to lose them both to Netflix.
But some past efforts to go bigger have faltered. “The Strain,” a genre exercise that was the network’s answer to “The Walking Dead,” received modest praise and viewership and ended earlier this year. And FX’s ratings have slipped — double digits in the most recent quarter as it faces competition from a wide range of streamers and premium channels.
Even with a bright programming future, FX may remain doomed. It has been a unicorn — a basic cable network at a time of subscription services, and a place of boutique autonomy at a moment of scale and corporate oversight.
“In some ways we’ve been waiting for places like FX to feel the contraction for a while,” Mr. Barker said. “[The] Disney acquisition might just accelerate it.”