Amazon, Netflix, Hulu threaten TV business with loss-leader strategies, FX’s Landgraf says

Traditional TV programmers are under pressure from large digital giants that spend money on original series that aren’t benchmarked by ratings, FX President John Landgraf says. (Image: FX)

After solidifying himself as a TV business pundit three years ago, speaking to the glut of original series and the so-called Peak TV phenomena, FX President John Landgraf said the television business has another threat to fear: loss-leader competition from digital companies.

“Understand that a good share of [original series] programming is being produced at a loss, in the belief that it will drive a massive shift in the share of consumption” that will swamp competitors,” said Landgraf on his favorite pulpit, the biannual Television Critics Association Press Tour in Beverly Hills, California. (The event was covered by the Washington Post and a number of other major media outlets.)

Landgraf said FX and other traditional TV programming business incumbents are under pressure from large digital giants that spend money on original series that aren’t benchmarked by ratings and/or profitability, but rather the ability of the programming to gain market share. 

This dynamic doesn’t just impact programmers. Hulu, for example, is spending more than $4 billion a year on programming production and acquisition to not only prop up its subscription video on demand business, but also its newly launched virtual MVPD component. 

RELATED: Hulu losses spike 81% to $353M in 2017 as originals investment soars 

Based on 10Q SEC reports filed by Hulu’s parents, which include FX parent 21st Century Fox, Hulu lost $353 million in the first half of 2017.

The competition from companies that operate by such different metrics “is a stiff headwind for anybody,” Landgraf added. 

Indeed, with Landgraf working for a multinational that is itself closing in on a purchase of Britain’s Sky, some of his arguments against deregulation and consolidation Wednesday rang a bit hollow. 

For his part, Landgraf tried to fly above this weather, claiming defense of art, not commerce.

“I don’t want artists to find themselves in a situation where there’s only two buyers that matter,” he added.