fx and disney

Under the terms of the Disney acquisition of 20th Century Fox properties, the broadcast network Fox and various cable networks are not included. FX, however, is part of the Disney sale. Speaking with the Television Critics Association today, FX CEO John Landgraf said he expects FX to have a place in Disney, particularly feeding the streaming service Disney announced prior to the Fox deal.

“Without knowing anything other than I had a lovely conversation with Mr. Iger, he was extremely kind,” Landgraf said. “He seems to have really wanted FX to be a part of the larger plans and feels like we do something that’s unique. In some ways, that FX and Disney’s brand are so different from each other is a good thing. It means that also what it is that we do and the entities we have doesn’t exist already inside that company, meaning we bring something distinctive and unique into their world.”

Landgraf referenced some of Disney CEO Bob Iger’s comments about the changing landscape of entertainment.

“I think if you look at the larger context of streaming, obviously one of the things Iger has said is that one of the reasons they’re getting bigger is they want to be able to compete against global streaming services like Netflix and Amazon,” Landgraf said. “When you think about the amount of money subscription services like HBO, Netflix and Amazon have made in adult scripted programming, you can see with clarity at least they believe that’s a really good thing to invest in. That’s an important component of what drives consumer interest into a streaming service. We end up becoming the adult scripted component of their larger plans.”

Keeping in mind the deal could take up to 18 months to be approved, Landgraf also qualifies his own early predictions.

“Only time will tell exactly how that plays out, but I think it could be a very good thing,” Landgraf said. “The streaming services are putting a huge amount of pressure on the business model because Netflix is a money losing entity. It reports a profit but it’s free cash flow is just a measure of the amount of money it takes in in a given year versus the amount of money  it spends in a given year, is negative more than 2 billion. It’s losing money but gaining market share and market value. That puts enormous pressure on the business enterprise. I understand why in that context, why Hollywood companies feel the need to bulk up. All I can say is I’m optimistic and time will tell.”

FX also represents a comparatively low maintenance entity for Disney to support. There will reportedly be layoffs when some Fox positions are eliminated, but FX ought not to represent a strain on Disney resources.

“I don’t think they’ve given any indication,” Landgraf said. “They have a vast enterprise to organize here and exactly how they’re going to organize it I don’t know. I can tell you this, the way we’re able to do what we do, we’re a very lean organization. Not a lot of people, 270 people. Compare that to the number of people employed by HBO or Showtime or Turner or USA, it’s a very small, tight organization. It’s a very efficient organization. It has a very distinctive culture. We can’t do what we do if we’re not allowed to maintain our culture. I think if the company’s going to spend eight, nine, 10 billion dollars to acquire us, they’re going to want the best of what we have to offer. How we work that out, what their point of view is, I don’t know. All I can tell you is I feel optimistic about our ability to continue to do what we do well.”

Until the deal closes, FX remains a Fox property and cannot, for legal reasons, interact too much with Disney execs.

“Disney management and shareholders do not control the Fox entity until they control it,” Landgraf said. “For all intents and purposes I still report to the board of directors, to Peter Rice and the Murdochs at Fox and will continue to. There are pretty specific rules about how we can and cannot communicate given the fact that they don’t own the company. We have to operate within a set of fairly stringent rules as long as the regulatory process is pending.”

Disney has a history of acquiring other entities and keeping them running. Landgraf compares FX to Pixar.

“I don’t really have any concerns other than the details, which I don’t know and won’t know,” Landgraf said. “I don’t think there’s any organization creatively for which I have more respect than Pixar. I just think their track record speaks for itself. I know from reading about Pixar they have a distinctive process and distinctive creative culture that emerged over time. It’s creatively driven and story first process. Ours is different. Ours has to do with specifically the way we relate to and empower creative people who work with us. I have every optimism that Disney as a potential new parent will understand and support that. They want what we have which is extraordinary television and extraordinary critical acclaim and Emmys, all those things that help round out a streaming service. I’m happy to be going to a place that doesn’t have the particular emphasis and expertise we have.”

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