Zombies, duck hunters and a biker gang. These niche, eclectic and often gritty worlds don't fit into the family-friendly fare and formulaic crime procedurals that typically attract mass audiences. Yet the basic-cable networks that create these types of shows are finding they can win big by reaching a dedicated core.
There's been a proliferation of high-quality scripted dramas on cable that aren't afraid to kill off popular characters and explore the darkest sides of human nature. Three powerhouses in particular -- AMC, FX Networks and A&E Networks -- have been responsible for redefining what can be done on basic cable. At the helm of each are TV's biggest hitmakers.
At A&E Networks, President-CEO Nancy Dubuc transformed History from the sleepy "Hitler channel," as it was known, into the No. 3 cable network with shows like "Pawn Stars," "Vikings" and the miniseries "Hatfields & McCoys." She also put A&E on the map with "Duck Dynasty" and the drama "Bates Motel."
FX Networks CEO John Landgraf was charged with developing a next set of hits to follow successes like "The Shield" and "Rescue Me" when he joined the company in 2004. Since then, he has aggressively built a slate of programming that includes successful comedies like "Archer" and "Louie," and the critically acclaimed "American Horror Story."
But while these networks may tout a handful of shows that can rival broadcast TV, their average prime-time ratings overall pale in comparison to those of the Big Four. Each executive says chasing a broader audience would be their doom, but they all face questions over what comes next, especially as others try to copy their playbooks for success.
At AMC, Mr. Collier is looking to replenish his stock of hits, as "Mad Men" bows the first half of its final season on April 13, and "Breaking Bad" said goodbye last fall. AMC hasn't really launched a mass hit since "The Walking Dead" premiered in October 2010. It moved its Western drama, "Hell on Wheels," to Saturday nights; axed "The Killing" yet again; and canceled "Low Winter Sun" after just one season.
Mr. Landgraf is trying to turn the company's new network, FXX, into a compelling hub for younger-skewing males. But a year in, differentiating FXX from FX remains a problem.
Ms. Dubuc had a blue Christmas after "Duck Dynasty" patriarch Phil Robertson stirred a controversy with anti-gay remarks that briefly got him suspended. The show's viewership declined considerably during its most-recent season, with the finale drawing just 6 million viewers, down from 8.4 million from its season-four finale.
Ad Age sat down with these risk-takers to discuss the advertising market, the role of data in their businesses and the secret to creating a killer show. Lightly edited excerpts follow.
What's the dynamic heading into this year's upfront?
MR. LANDGRAF: Last year was really a watershed year for basic cable. I have a 56-page document that has 1,200 seasons of original programming. And out of all 1,200 seasons that aired, [among us we have] five of the top 20 of all TV shows -- Charlie had two; Nancy had one; we had two. That's a really big deal that finally basic cable was able to muscle its way in. I mean, "Walking Dead" is No. 1; "Breaking Bad," "Duck Dynasty" are up there; and [FX's] "Sons of Anarchy" and "American Horror Story" are well, well up there.
MS. DUBUC: It's no longer about broadcast and cable. We have the
tonnage to be able to attract clients across all three big brands. The perfect example is the "Bonnie & Clyde" stunt we did at the end of the year. You're able to give advertisers the ability to reach the 10, 11, 12 million-viewer category, and that's a unique opportunity and it also brings them into the fold working with us as a company. You're not out there justifying why cable is better than broadcast anymore.
MR. COLLIER: What's interesting about that is we're all more important to the marketers, too, because it's not just creative ideas that are fun they can show on a reel, but is actually reaching mass audiences. … The way we come to market now, it used to be broadcast in the upfront row first, and then the bigger cable networks were the first to feed, and then by the end of the summer, cable was done. And now, we've all probably had upfront conversations already. We have the final season of "Mad Men" coming. We are not putting the final episode in the upfront, we're going to hold it out for scatter and just have it be scatter. That is something of a posture, because we know there's demand with our originals, we know these are our biggest events, and we're going to come to market with the posture that says, 'The demand is there, and we will sell it almost like a sporting event. It is going to be a pop-culture moment and we're coming to market as such.' That, I think for cable, is night-and-day different than, say, when we launched History Channel [Mr. Collier spent time in ad sales at A&E Networks].
As the lines blur between broadcast and cable, does that change the way you approach developing shows? Are you looking at more of a broadcast model?
MS. DUBUC: That would be the death of us if we started thinking more like a broadcaster.
MR. COLLIER: John and I have talked about this a lot. We always talk about trying to make something that is someone's favorite. Not trying to be mass, but trying to reach passionate audiences. "Hell on Wheels" has an incredibly passionate audience and we support it with all sorts of Westerns, and that is a very different audience than the passion group we're targeting with "Mad Men," and certainly different than what's at the core of "The Walking Dead." You're really trying to do what got you to the dance, which is find these unique pockets of passion.
MS. DUBUC: But it's also making sure you don't stay in those pockets. Just when your audience is comfortable is the exact time we say we have to go do something that feels really uncomfortable.
So you are not going in looking for any of these to be mainstream hits?
MR. COLLIER: The week of "The Walking Dead" premiere, my head of research and her boss called me into the conference room and said, "I just want to remind you why we built 'The Walking Dead.' You have targeted a niche of a niche." We had "Fearfest" run for 15 years. When I got to the network, there were two things that really popped in movies, and it was horror and Westerns; that's what we did well. And so we were looking for originals to complement those pockets of passion. They called me into the room and said, "If you look at the moviegoing audience, you've got a ton of people who go to the movies, and only a subset will go to horror movies. And out of this subset that go to horror movies, only a subset of that will go and watch monster horror. So remember it's going to be passion-driven. Everything you wanted." Who knew? They did all that they were supposed to do, and it was actually John who called me, you texted me at home, and said, 'You're going to have a big night.' That's what his research was showing. But we didn't build it to be broad, we built it thinking those who love "Fearfest" would love this.
How do you view TV Everywhere and viewers watching your content on other devices?
MR. COLLIER: A lot of it is about making sure the viewer has an opportunity to see the content in a way -- for me at least -- that drives them back to the linear water-cooler experience. At its core, television is at its best when everybody rushes in Monday morning and I see people on the train platform and they say, 'Oh my God, I was watching last night, I can't believe you did X.' That still works. We're going to talk a lot about the nonlinear viewing, yet we led with the fact that between the three of us, we have the top shows in cable.
MS. DUBUC: At the end of the day, 98% of our advertising revenue is coming in through linear because of the desire to engage on the linear platform. We happen to have, just by luck, been out very early with TV Everywhere, just because of the way that our affiliate agreements were coming up. We have the Watch app for all three of the core brands and we're just under 7 million downloads for that app, the viewership has been robust. Our belief is we need to keep them in the ecosystem of our brand, and if it's our brand on a tablet, or if it's our brand online, or if it's our brand in a new environment, then so be it. We don't want to bury our heads in the sand, we know what's happening out there, but the reality of how the content is being consumed is still overwhelmingly on a linear -- either live or DVR -- playback experience.
MR. COLLIER: You still worry the entire day leading up to your premiere of your new series. With all the stuff we consume ourselves within the multiplatform universe, the way the lead-in is situated, where the promos are going to run, how the break structure is going to go. All of that hasn't changed a bit because the focus is still on when "Fargo" comes, it is an event. ... It would not be as enjoyable in business if we didn't still enjoy the premiere, right? If we still didn't make that night important.
Let's talk about advertising. What do you think are the biggest challenges right now for the industry?
MS. DUBUC: We're all going to say the same thing: measurement.
MR. COLLIER: Measurement.
MR. LANDGRAF: Yeah.
MS. DUBUC: Nielsen has got to figure out the tablet. And they have to figure it out fast.
Do you think they are getting close?
MS. DUBUC: No. I think it's unfortunate.
MR. LANDGRAF: We're losing the ability to calculate the audience.
MS. DUBUC: There was a recent roundup, you know, status report of where they are, and they're not where they need to be.
How do you combat this?
MR. LANDGRAF: We started FX Productions almost 10 years ago to own the content. A big part of our revenue stream is still the advertising business. A big part of our revenue is still affiliate-sales business and subscription revenue, but ultimately, if you think about a piece of content like "Hatfields & McCoys," anything that Charlie makes or "Fargo," something that can generate revenue over 10 or 20 years, if you don't own it, that revenue is going to somebody else.
MS. DUBUC: Even in the distribution, if you don't own it, you're not going be a part of the over-the-top [selling content to streaming services]. Ownership is critical.
MR. LANDGRAF: Our studio partnership is not always helpful, because obviously they have a goal of maximizing revenue, and that often means taking away from us and selling it to somebody else. So you have to take ownership.
How important is data? What role does it play at your networks?
MS. DUBUC: There's a big opportunity in the cable affiliate's data, data that they're sitting on, data from satellite operators. We're pushing very hard on getting them to share that, not necessarily from an advertiser perspective, but from a point of view of helping us make ourselves better.
MR. COLLIER: I'll tell you what I do think is huge: We all know our audiences better than we did 10 years ago and a lot of that is due to the technology. We look at the way people travel through the ecosystem, how they come to amc.com, where they are on Facebook, and how they're interacting with us. … And as such, you can start to speak to them in a way that is much more personal. We talk about shifting from a b-to-b posture to one that is b-to-c. And that's liberating. We look at our second-screen app certainly for "Breaking Bad" and "The Walking Dead"… people register so you know who they are, and when they like the experience, they give you feedback. That is a great opportunity and then we started to build a data infrastructure, where we are far more b-to-c on a day-to-day basis.
MR. LANDGRAF: As much as measurement is really important, there's a lot of hype around data right now. Way too much money has been spent on internet video -- internet video from an advertising basis. It's an endless repetition of the reach they are buying from our channels. It's a small sliver of the audience that watches a lot of video and I don't think people watch video. When I'm on a computer, I don't watch commercials. They may be running, there may be banner advertising, there may be commercials running on the video site, but I've got the sound down, doing something else. I'm just not receptive to advertising when I'm on my computer relative to how receptive I am to advertising when I'm watching television. … That's an example where I think we're still providing way more value there. I think there's money shifting, growth tends to be shifting a little bit over to the video business because it's the hot new thing and data's the hot new thing, and frankly I think it's a lot of baloney.
MR. COLLIER: The one place I like data is to better know our businesses and what else viewers like besides what we're doing, because it gives us an opportunity as marketers to actually serve them in a way that is more personal, so we found that to be effective. Eventually if that's scalable, that could actually both help us as servers of creative, but also as purchasers of creative execution as well. But I agree with you as to the respect of advertising effectiveness. When I'm watching an FX show and I'm on FX, I get it and there's an immersion that is very different than waiting for that thing to skip.
MR. LANDGRAF: There's just no comparison in reach between what ad-supported cable or broadcast can provide, vs. any other medium. So much of the press, so much of the attention is going into nonlinear usage, but as Nancy said, the vast majority of consumption is happening linear.
MS. DUBUC: And even the second biggest is video on demand. Not streaming video on demand.
What are the biggest challenges facing the industry?
MS. DUBUC: I'll come at it from a creative point of view. … Cable was largely built on the ability to repeat programming, whether that was a movie, whether that was a series, you could sample it linearly. Things don't repeat the way they used to, so that by itself dictates just such a dramatic increase in original programming. You also have smaller networks doing original programming, very small networks doing scripted, I'm not sure how they make that work. I'm still scratching my head, going, 'How are they doing it?' But just the sheer tonnage of what's out there, is the biggest challenge.
MR. LANDGRAF: The year "The Shield" launched there were 30 scripted programs on premium and basic cable. Last year, there were 180, and this year I think they'll be more than 200, and that doesn't count any scripted programming on broadcast or any of the scripted programming now on Netflix, Hulu, Amazon Prime, Yahoo. Even Crackle is making some scripted programming.
MS. DUBUC: Microsoft.
MR. LANDGRAF: Microsoft picked up something that I worked five years on developing, but they turned around and they picked it up.
MS. DUBUC: The importance of being a valued and trusted curator has never been more critical, and it's time to really hunker down and think hard about how you convey that through your brand. For a while, it's been certainly a ratings race and brands have been evolving, but it's never been more critical for our organization to make sure our brands are seen as valuable curators to the audiences that are passionate about them.
MR. LANDGRAF: The three of us spend a lot of time reading about the future of our industry, struggling over strategic decisions, business contracts and windowing strategies, but you know what? Great creative has a way of solving a lot of those problems. You could solve every business problem if you could just do fantastic work on the creative front. And that's hard, that's hard to do consistently, year in, year out, and that's the challenge of being a consumer brand -- you have to make things that they really, really love.
MR. COLLIER: We got great response to our upfront, and no one is mentioning our great data on multiplatform. You know what they're talking about? They're talking about how they met the showrunners and the talent behind the shows. The reason we asked our talent to join us is because we know that they're center of everything we do. I think the three of us and some other networks notably are places where people are bringing their passion projects and that is phenomenal. Vince [Gilligan] tells a story about when his agent said he was going to pitch "Breaking Bad" that day at AMC, he said, "Well, the show's about cooking, why don't you go to the Food Network, you know they're as likely to do it as AMC." But now people know we do this and they're trusting us for it. And probably most people look at our job and think we're all about branding to the consumer, but the amount of time the three of us spend making sure that people bring us their craziest ideas…
MS. DUBUC: Oh, it's the majority…
MR. COLLIER: We look over at A&E Networks and we say, 'Would I have greenlit "Storage Wars?" If someone pitched me "Pawn Stars" would I have said yes?'
MS. DUBUC: It was "Pawning History" until the week before, and they changed the title without telling anyone. "Pawn Stars" wasn't going to get approved at the highest level, there was no way.