By Joe Flint
Netflix Inc. has recruited prolific television producer Shonda
Rhimes, the creator of ABC hits such as "Scandal" and "Grey's
Anatomy," the clearest sign yet of an arms race for talent between
new and old entertainment industry giants.
Under the terms of the multiyear exclusive agreement, Netflix
said Ms. Rhimes, whose credits also include "How to Get Away with
Murder," would develop new shows for the streaming service. She
will move her production company ShondaLand from its current base
at Walt Disney Co.'s ABC Studios to Netflix, though she will
continue to be involved in her ABC shows currently on the air or in
development.
Ms. Rhimes's signing is part of Netflix's effort to create and
own more of its content and become less reliant on Hollywood
studios and production companies to supply programming. It also is
the latest twist in a battle between Disney and Netflix for
entertainment-industry supremacy: Just last week, Disney announced
it wasn't renewing a deal that provided many of its movies to
Netflix to stream after their theatrical run, and was launching its
own streaming service.
Netflix also faces increased competition from the likes of
Amazon.com Inc., which on Friday announced a development pact with
Robert Kirkman, the creator of the massive AMC Network hit "The
Walking Dead."
Signing up a superstar "showrunner" like Ms. Rhimes -- whose
work for ABC has generated over $2 billion in revenue from
advertising, rerun sales and international licensing, according to
people familiar with the matter -- underscores that Netflix intends
to poach the best talent from traditional studios, whether in front
of or behind the camera.
In the past week alone, Netflix announced signing movie
directors Joel and Ethan Coen to make a Western series and lured
former late-night star David Letterman out of retirement to make
new shows. It also acquired the comic book publisher Millarworld
and intends to use its characters to create new franchises.
"We have continued to move up the food chain in terms of getting
into the creation of content earlier," Netflix Chief Content
Officer Ted Sarandos said in an interview.
When Netflix first entered the original programming arena, it
relied mostly on outside suppliers for shows such as "House of
Cards" and "Orange is the New Black." More recent shows including
last year's surprise success "Stranger Things" have been wholly
owned by Netflix.
In an interview, Ms. Rhimes said she is going to Netflix to get
"new fresh creative energy." Unlike broadcast television, where
networks want shows to run at least five years and require anywhere
from 18 to 24 episodes per season, there is more flexibility for
creators at platforms such as Netflix or even Time Warner Inc.'s
HBO to do fewer episodes.
"I'm thrilled by the idea of a world where I'm not caught in the
necessary grind of network television," Ms. Rhimes said. In
addition, since Netflix doesn't have advertising, Ms. Rhimes
doesn't need to worry about language and nudity. Netflix, she said,
provides "larger creative freedom."
Other producers echo Ms. Rhimes's desire to be free of the
demands of broadcast television. David E. Kelley, whose broadcast
resume includes the hits "The Practice" and "Ally McBeal," has more
recently produced for HBO and Amazon Prime and said he has no
desire to go back to a broadcast or basic cable network.
"At this point in my career, I love the limited series format. I
have no interest in doing 100 episodes of anything," Mr. Kelley
said.
"We want to give creators a place to stretch out their muscles
and have the environment do the best work of their lives," Mr.
Sarandos said.
Ms. Rhimes's departure is a significant loss for Disney and ABC,
which she has called home for 15 years. Her pact with ABC Studios
had almost a year left on it, but the company agreed to release her
early.
Ms. Rhimes will continue to be involved in the shows still
running on ABC, as well as "For The People," a new legal drama
debuting this upcoming season, and a "Grey's Anatomy" spinoff in
the works. But Netflix will have the rights to new programs she
creates.
In a statement, ABC Entertainment President Channing Dungey
said, "I'm proud to have given a home to what have become some of
the most celebrated and talked about shows on television." ABC
Studios President Patrick Moran added, "The ShondaLand imprint will
always be an important part of ABC Studios."
Terms of Ms. Rhimes's deal with Netflix weren't disclosed, but
the streaming service has a reputation for deep pockets. Her
production deal with ABC is worth more than $10 million a year to
produce shows, people familiar with the pact said. On top of that,
she is a profit participant in her shows, meaning she gets a cut of
rerun and international sales.
Ms. Rhimes's longtime producing partner Betsy Beers will also go
to Netflix, along with approximately 30 ShondaLand employees. The
writers on her ABC shows, however, remain under contract with ABC
Studios.
Netflix's heavy spending continues to raise eyebrows in
Hollywood. It often doubles salaries to lure talent away from
traditional players. The company's spending on new and acquired
programs is expected to be more than $6 billion this year, compared
with $5 billion a year ago. That is more than twice what HBO spends
and five times as much as 21st Century Fox's FX or CBS Corp.'s
Showtime.
Mr. Sarandos, the Netflix content chief, and Ms. Rhimes have
known each for some time, and reruns of her shows have been hugely
successful on Netflix. The pair grew closer when Netflix moved its
Los Angeles offices from Beverly Hills to Hollywood, near where Ms.
Rhimes makes her shows.
They began to bump into each other quite frequently and Mr.
Sarandos said he would even solicit Ms. Rhimes's opinion on shows
in development at the streaming service.
Once, he personally dropped a DVD off at her house.
"That is persistence," Ms. Rhimes said.
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
August 14, 2017 00:15 ET (04:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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