Two pieces of information that speak to the modern realities of running a cable television network were buried in the middle of FX Networks president John Landgraf's address to reporters at the beginning of FX's day at the Television Critics Association winter press tour.
The first was that FXX — FX's ratings challenged kid brother — saw its numbers jump 146 percent after adding exclusive cable reruns of The Simpsons.
The other was Landgraf's insistence that the race for best network on television was between HBO and FX, not a dead certain call in favor of HBO. He based this claim on how many shows from each network various critics had placed in their top 10 lists. Both HBO and FX crested 200 total mentions, with HBO narrowly ahead. No other network topped 100 mentions.
On the surface, these two points of interest seem to have nothing to do with each other. The first is about raw business considerations. The second is about creative concerns. To a lot of casual observers, the first is the necessary evil that supports the second. But that doesn't go far enough, most of the time. See, reappropriation of other networks' programming — what FXX does with The Simpsons — is the whole reason those creatively acclaimed shows even exist. Without that cushion, most of these shows would fail.
Modern TV economics
Now, this is not to say that every show FX produces on its own is a financial flop. Far from it. Sons of Anarchy, the network's signature hit (which just ended its run), was almost certainly wildly profitable, and it's likely American Horror Story is as well. And thanks to streaming deals the network has made with Amazon Prime and Hulu, much of the rest of its programming also probably breaks even.
But "breaks even" doesn't pay the bills for the sheer amount of programming FX puts on the air. To be sure, FX is helped by fees your cable provider pays it to keep it in your cable package, and it garners money from advertising as well. But in the history of television, original programming has always been a long-term investment, losing money (often lots of it) in the early going and then hopefully, eventually recouping that investment.
For years, for instance, FX's schedule was positively crammed full of Two and a Half Men reruns. It also aired a huge number of movies it had procured, often at a hefty price. But the thing about those reruns and movie rebroadcasts is that they required an initial cash outlay, but very little money spent thereafter. Original programming, meanwhile, requires new money spent on every single episode and eventually adds up to be far more expensive than those movies and reruns.
Eventually, the money the network sells in advertising for those reruns becomes almost pure profit — which is then funneled back into original programming development. And as a bonus, networks can sometimes sell ads on those reruns as part of a package deal with original programming, which advertisers often have a bias toward, because it's more inherently "prestigious."
Hence, The Simpsons. The show's performance for FXX has lifted the whole network to a place where original programming has more of a cushion to fall back on. So much of television right now is about building out brand names, about getting you to associate the name "FX" with "quality programming." That was what Landgraf's larger point about FX getting within spitting distance of HBO was all about.
But the bulk of the money is still made in acquisitions from movie studios and other networks. FXX paid so much money — $750 million — for The Simpsons because it knew this, and because The Simpsons was one of the few remaining cash cows without a cable deal. The slow collapse of broadcast television, then, isn't just of concern to ABC, CBS, NBC, and Fox. It's also of concern to all of the networks reliant on the big four's hand-me-downs. And that includes everybody from Netflix to Comedy Central to, yes, FX.