Josh Sapan’s drama lessons

AMC has struck pay (TV) dirt three times with Mad Men, Breaking Bad and The Walking Dead among the most iconic series ever. AMC Networks boss Josh Sapan tells Stewart Clarke about the company’s new shows, how technology is boosting TV drama and how AMC will grow its international business following the US$1 billion acquisition of Chellomedia.

Josh Sapan acknowledges that making TV cannot be reduced to a scientific process and that there is some good fortune in having hit shows. But the AMC Networks president and CEO quickly adds that AMC has helped pioneer a new, more filmic approach to making cable TV’s current breed of genre-defining dramas.

In the new world of content, Sapan says, TV dominates the conversation. “The TV has replaced the allowance for focus that used to be with the movies,” he says. “Cinephiles are being replaced with what you might call telephiles.”

AMC Networks’ AMC Sundance, IFC and WE tv are not premium channels and generated US$663 million in ad revenues in 2013, a 26.7% year-on-year increase. They have to take a middle ground, winning eyeballs to lure advertisers while providing the high-end content that hooks subs and platform operators. However, there is a connection between AMC and its premium brethren, according to Sapan.

“In the US you can see that premium cable dramas are allowing people the time to engage with a programme because [premium channels] don’t rely on advertising and can have more patience,” he says. “We try to also have some of that patience.”

The patient approach has yielded Mad Men (above), a critical if not huge ratings hit; Breaking Bad, a slow-burning ratings hit now considered one of TV’s greatest ever shows; and The Walking Dead, both a critical and off-the-scale ratings hit.
Technology is shaping the new world of drama, and Sapan says the ubiquity of DVRs, TV Everywhere services and social media is changing the way content is developed.

“It is influencing what writers in Hollywood write and what directors are directing, and then the success of dramas in the outside world,” he says. “People can discover good material on their own time, and if they like it can refer it to friends – ‘referral’ is the new watercooler.” The evolution of scripted content in particular speaks to this trend. “Drama used to be sort of bland and easy to view so that if you were watching in the kitchen, you could sort of follow along,” the AMC boss says. “But when these advances occurred, it allowed these series to become more nuanced, with deeper and more immersive characters. This technology created a different mindset.”

Given that AMC wants to boost the footprint of its channels in the US and internationally, it is a strong message to operators that the programming on the channels is driving the new ways consumers access content.  It has also been making select investments in the digital space, buying into Drama Fever, the New York-based OTT service that is programmed with Korean drama. It has also put cash into YouTube channel Dance On.

“The plan is not to have our existing brands and content on these services, but we are interested in how that world operates,” Sapan says.

AMC’s Breaking Bad and The Walking Dead (above) have both become franchises, with accompanying talk shows Talking Bad and The Talking Dead and spin-off and companion pieces to come. Sony Pictures TV-produced Better Call Saul (below) is launching early next year. The series will inevitably be compared with its predecessor, but Sapan says: “It is important to stay with what made Breaking Bad good: craft, character and story. Swinging for the fences in terms of ratings can have a negative effect. We need to let the characters and series have their own life.”

The series has today been commissioned for a second season, despite the first being pushed from a November 2014 debut to an early 2015 TV date, with a number of cast members from Breaking Bad set to appear. The second will go out in 2016.

Meanwhile, the Walking Dead companion piece (not, Robert Kirkman was keen to emphasise at Comic-Con, a ‘spin-off’, as it will not feature any characters from the original series) is in very early development. The key figures behind the original, Kirkman and Gale Anne Hurd, are both on board. The otherwise convivial Sapan becomes tight-lippped when asked about the project and will not be drawn on details aside from saying it will be true to the voice of the original and the team will work on the project in the same way they did with the first show.

AMC has tweeted the first snap from the Better Call Saul set

With Breaking Bad finished and Mad Men coming to an end after two more seasons (it won’t get a spin-off), the challenge for AMC Networks is to generate new hits. Red Road, about two warring communities, is next up for Sundance, which counts Rectify among previous originals. There is also the Maggie Gyllenhaal limited (meaning eight-episode) series The Honorable Woman. On AMC there’s US Revolutionary War spy thriller Turn and 1980’s Silicon Valley drama Halt & Catch Fire, both out of in-house production unit AMC Studios.

Given the strong growth in 2013, spurred by the performance of some key originals, year-on-year comparisons will be tough in 2014. Deep pockets are a prerequisite for any channel group that wants a slate of scripted series, and AMC Networks’ latest results show programming costs were largely responsible for a sharp uptick in expenses, and AMC recorded a write-down of over US$50 million relating to the decisions to end the US version of The Killing after three seasons and Low Winter Sun after one.

There will, however, be more money sunk into programming as the business grows in the US and internationally. “We are increasing our investment in content, and that does require greater top-line growth, and we think it makes sense,” Sapan says.

Learning Chello

The US generated over 90% of AMC Networks’ revenues in 2013 – US$404 million versus S$34 million from international – but the US$1 billion acquisition of channel operator Chellomedia, which closed earlier this year, will radically change that mix. The contribution of international to the overall bottom line jumps from 7% to 20% with Chello included.

“We were attracted to the asset as it was – and given the opportunity of what we think it can become over time,” Sapan says. “It also allowed us to diversify and increase our geographical exposure. We were particularly attracted to the fact that Chello channels have such strong local attraction and constituencies, and we have the opportunity to bring our global content.”

AMC and Entertainment One struck a distribution deal last year, and the latter is distributing AMC’s scripted content in international markets for at least three years. The pair had already worked together, with eOne selling The Walking Dead in some territories and shopping Hell on Wheels (above) , with both shows on the AMC network in the US. A separate deal means that Endemol Worldwide Distribution sells AMC’s unscripted programming, which includes Small Town Security, Freakshow and Comic Book Men. Distribution of AMC’s older current series is tied up with, for example, Lionsgate selling Mad Men and Sony Pictures Television Breaking Bad.

Getting US shows on to the international channels is part of the plan: “We are looking forward to moving closer to a point in time where we can deploy our shows on our own platform simultaneously and widely throughout the globe,” Sapan told analysts in February.

The process has started with Mad Men on many of the international channels in second windows and Breaking Bad in first and second windows. Newer shows including Rectify and now Red Road will also be appearing on Sundance internationally in the first window. “We want to retain rights where possible, and we want to own content where we can and control it where we can’t,” says Sapan.

Now the Sundance Global channel is in 60-plus territories it can sometimes justify taking the premium windows, says AMC/Sundance Global president Bruce Tuchman. Chellomedia bought the MGM channels in 2012 and Tuchman, who ran the studio’s international channels business before joining AMC, is expected to play a key role in their future rollout now they are part of the AMC fold.

With the Chello deal closed, its four regional heads report into AMC Networks COO Ed Caroll, as does Tuchman, while the integration process is worked through. Meanwhile, channels from the Chello bouquet could be rebranded to help Sundance get greater traction and Sapan will not rule out IFC and AMC launching outside North America for the first time. The mature nature of the US market, meanwhile, means it is highly unlikely that any of the Chello channels will join their AMC counterparts Stateside.

Sundance in the US last year became the first commercial network to air a subtitled series, French mystery drama Les Revenants (The Returned). But will the investment in US-originated drama pay off internationally? “We don’t know yet,” says AMC Networks boss Sapan. “Today, local content has an appeal that is profound and of great strength and at the same time there are certain [US] shows that are brands and global in their appeal.”