Why FX Chief John Landgraf’s Warning of a TV Content ‘Bubble’ Has Jolted Industry

TCA 2015: “My sense is that 2015 and 2016 will represent a peak in U.S. TV, and afterward we’ll see a decline,” the executive says

FX Networks CEO John Landgraf lobbed a hand grenade into the midst of the Television Critics Association last week, warning that a glut of programming was drowning viewers and that the economic model supporting the golden age of television was not sustainable.

Langraf’s manifesto followed earnings reports from a number of media companies last week that suggested an accelerated pace of cord-cutting by consumers — Disney’s sports jewel ESPN lost a reported 3.2 million subscribers in a little more than a year, and shed 7.2 percent of its subscriber base since 2011 — and led to a stock sell-off that damaged the share price of top media companies including Disney, Comcast, Viacom and 21st Century Fox.

In the midst of this, Landgraf used his executive session at the TCA summer tour not to merely tout his network’s fall fare, as is usually the case, but to warn of a “bubble” in television programming that poses a major risk for all companies, especially smaller ones.

“This is simply too much television,” Landgraf said. “My sense is that 2015 and 2016 will represent a peak in U.S. TV, and afterward we’ll see a decline.”

That decline, he predicted, will have victims, particularly among smaller networks unaffiliated with conglomerates. “I don’t think that independent channels are going to fare particularly well in the future,” he said, adding that he anticipates “a culling of the herd” among networks, with larger groups such as HBO, AMC, and, of course, FX, best positioned to survive.

Landgraf predicted that 2015 will see more than 400 original scripted series across broadcast, cable, and streaming — up from 371 in 2014, and roughly double 2010’s total of 213. (See chart below)

The growth of that content bubble is due in part to streaming services such as Amazon, Netflix, and Hulu, which accounted for 26 original series in 2014 but only four in 2010. But basic cable has also seen big gains, growing from 70 scripted series in 2010 to 164 in 2014.

fx scripted series chart

Landgraf has a reputation as one of the smartest folks in television — a reputation he enhanced by using his TCA executive session to drop an hour of data-driven knowledge rather than talk ad nauseam about how great his shows are.

By laying out a vision for a future television landscape in which there are winners and losers, he provided a handy framework for the press to apply to the remainder of tour, and thus positioned himself as the tour’s thought-leader supreme. It appears to have worked.

On Sunday, the first day of post-FX sessions, Landgraf’s specter loomed large. Even Freddie Wong, creator and star of Hulu’s “RocketJump: The Show,” was asked about how a content bubble might impact his show.

Stan E. Hubbard, CEO of family-owned Reelz network, seemed to concede Landgraf’s point. “Independents are an endangered species,” he told reporters Sunday morning. “It’s giants verse giants and it’s all about shaving at the edges, and the independents are the first to go.”

Though there are no more streaming services presenting at TCA this week, expect more questions about the notion of a content bubble and its potential effects. How long can broadcasters like NBC and CBS aspire to reach broad audiences in an era of niche programming and media fragmentation? Can The CW’s continue to evolve as the younger audiences it focuses on abandon linear viewing? Can Showtime sustain the volume of high-quality content necessary to transform itself into a digital brand? Are NBCUniversal’s many cable brands overextending themselves by venturing into scripted programming?

But beyond the end of press tour, Landgraf’s presentation will linger as followers of the TV industry ponder a basic question: Just how long can this golden age of television last?

Spending on scripted shows cannot continue to grow unchecked while ad revenues decline and other forms of revenue have yet to mature. If the overwhelming wealth of quality shows everywhere from Netflix to HBO to WGN America to Crackle is the unsustainable product of an industry on the verge of contraction, then we are in the golden age’s latter days.

That doesn’t mean that great TV won’t continue to be made. But very soon there undoubtedly will be less of it. And the much ballyhooed creative freedom that comes from big budgets, widespread experimentation, and an expanding competitive landscape could give way to tighter reins and more calculated decision-making.

Four days before Landgraf addressed the critics, another, less likely doomsday prophet took the stage — actor Ron Perlman, who will star in Amazon’s upcoming series “Hand of God.” His message was similar to Landgraf’s, but more blunt.

“This is the most exciting period I’ve ever seen in television,” Perlman said. “Probably the most exciting place to be if you’re a storyteller is television, because of that very factor. Ten years from now, it’ll all be fucked up. But for right now, it’s a beautiful place.”