Disney Risks Losing One of TV's Creative Geniuses in Fox Deal

(Bloomberg) -- Walt Disney Co.’s deal with 21st Century Fox Inc. is creating an opening for competitors to poach one of the most sought-after creative minds in television, a sign of the ripple effects of consolidation in Hollywood.

Ryan Murphy, creator of hits such as “American Horror Story” and “Glee,” is negotiating a new contract, and had been expected to renew his deal at Fox, according to people familiar with the matter. Now he’s giving more thought to a potential jump to a rival when his deal expires in mid-2018, said the people, who asked not to be identified discussing private deliberations. A move to an online service such as Netflix Inc. and Amazon.com Inc. is possible, they said.

Fox has been Murphy’s home for the past eight years and is where he has made almost all of his biggest hits. Yet Disney’s $52.4 billion deal to acquire Fox’s movie and TV studio and channels such as FX and National Geographic has put top executives of those divisions in limbo, emboldening other companies bidding for Murphy’s services. At least two other parties are pursuing Murphy in addition to Netflix and Amazon, the people said.

The streaming providers had once been considered long shots to wrest Murphy from Fox. But the merger mania overtaking the media industry, where Time Warner Inc., Scripps Networks Interactive Inc. and Starz agreed to sales in the past 18 months, is changing the calculus for top talent in the industry, making Netflix and Amazon look like relatively safe bets with their deep pockets and long-term commitments.

Nine Figures

Murphy, 52, and his representatives are asking for a deal that equals or tops the one Netflix gave to producer Shonda Rhimes, valued at more than $100 million, according to the people. Rhimes shocked Hollywood when she jumped to Netflix from Disney, where she produced hit shows “Grey’s Anatomy,” “Scandal” and “How to Get Away With Murder.”

Netflix, Fox and Disney declined to comment. Representatives for Murphy and Amazon didn’t respond to requests for comment.

Rhimes is one of many producers and filmmakers who have received offers of tens of millions of dollars from Netflix and Amazon to stray from traditional TV. Amazon poached “The Walking Dead” creator Robert Kirkman from AMC, the network that airs the zombie show, while Netflix has signed more expansive deals with “Stranger Things” producer Shawn Levy and “Orange is the New Black” creator Jenji Kohan.

Creative Freedom

Rhimes left Disney because she craved creative freedom she couldn’t find at ABC, a broadcast network that has to avoid some adult themes, grittier language and nudity because of its broad audience and government standards for the use of public airwaves. Fox also owns a broadcast network and has FX, a cable network renowned for dramas such as “The Americans” and “Legion.” Murphy has earned three Emmy Awards and 24 nominations for shows made for Fox and FX, compared with just three nominations and zero wins for Rhimes.
Murphy is also especially close to two Fox executives, Dana Walden and John Landgraf. Landgraf, chief executive officer of FX Networks, speaks to Murphy several times a week, the people said, while Walden, the co-head of Fox’s TV studio and broadcast network, is a close family friend.

Yet the sale to Disney has clouded the future for most of Fox’s senior executives, and Walden in particular. The Los Angeles native and former public relations executive oversees a mix of assets that are being split up by the deal. Fox’s TV studio, producer of “Modern Family” and “Homeland,” is going to Disney, while Fox’s broadcast network, mired in last place in the ratings, is staying with the remaining holdings controlled by Rupert Murdoch and his family.

Another Opportunity?

Walden rose to prominence running the studio, and would be unlikely to stay if her role is scaled back after a Disney deal, the people said. She could move to Disney in some new capacity or depart for another opportunity. Amazon has approached her about running its studio, according to Deadline. A representative for Walden declined to comment.

Walden’s departure would hurt Disney’s chances of maintaining Murphy, but wouldn’t destroy them. His friend Landgraf is likely to stay on at FX, the people familiar with the matter said. Disney can offer Murphy the chance to produce shows for broadcast network ABC, cable network FX and streaming outlet Hulu, which won the Emmy for best drama this year for “The Handmaid’s Tale.”

That prize has been elusive for Netflix despite offerings such as “The Crown” and “House of Cards,” and recruiting Rhimes and Murphy could help the company attain its goal -- or at least add to its library of exclusive, buzzworthy shows. Amazon, meanwhile, is refashioning its TV and movie production in the wake of studio chief Roy Price’s departure this year, and signing Murphy could help the company develop programs that catch on more with viewers.

No matter what happens, Netflix will be getting at least one show by Murphy. The streaming service won the bidding this year for “Ratched,” an origin story based on the “One Flew Over the Cuckoo’s Nest” character. In an example of the television industry’s tangled web of business relationships, the series is scheduled in mid-2018 to begin production -- through Fox’s TV studio. If Netflix wins its own deal with Murphy, it’ll be able to produce such programming in-house.

To contact the reporter on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Dan Reichl

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