Sat, Oct 22, 2016 - Page 14 News List

Netflix storms Tinseltown

The company is taking over Hollywood, and Hollywood isn’t thrilled

By Lucas Shaw  /  Bloomberg

Tituss Burgess, left, and Ellie Kemper appear in a scene from the Netflix sitcom Unbreakable Kimmy Schmidt.

Photo: Eric Liebowitz/Netflix via AP

Tara Flynn, a rising star in show development at TV studio Fox 21, walked into her boss’s office in August to announce she was leaving for a job at Netflix.

Her boss said she was under contract, and Flynn replied that she wasn’t asking permission, according to people familiar with the conversation. She had little to lose. Netflix said her contract wasn’t enforceable in California, and promised to cover any legal fees, said the people, who asked not to be identified discussing private information.

AGGRESSIVE SCOUTING

Flynn’s departure is just one of the latest examples of Netflix’s aggressive hiring as it builds its own empire. Netflix plans to release 1,000 hours of original video next year, up from 600 this year, and is taking on dozens of new employees to help it find, produce and market TV shows and movies. That ambition is ruffling feathers in Hollywood, a place where professional jealousies and big egos are the norm.

Netflix plans to spend US$6 billion on programming next year, up 20 percent from this year. Much of that will be spent on shows and movies produced by rival media companies, but more and more is devoted to original shows. Headcount almost doubled last year to 3,700, and the company has 36 open job listings for marketing and 24 for public relations, almost all tied to original productions.

SWANKY DIGS

The company is about to move into a swanky new office tower in the heart of Hollywood that will serve as one of its hubs for original programming. The 323,000 square-foot (30,000 square-meter) new building, which includes stages and production offices, was the largest office lease in Hollywood history when Netflix signed it last year.

By producing a show from soup to nuts, Netflix controls global rights, which are key as the company attempts to offer a similar library of shows and movies around the world. Companies like Amazon.com have stepped up to start bidding against Netflix for those rights.

“The more they own, the more they control, the more flexible they can be at deploying shows around the world,” said Joe Dennison, an associate portfolio manager at Zevenbergen Capital Management. “It’s a smart investment upfront since the return takes a long time.”

Netflix wants to determine “how we continue to maintain exclusivity, where we’re not seeing the content against our wishes go into other markets, into syndication and DVD and others,” Ted Sarandos, the company’s chief content officer, said on a call with analysts this week. “We’re able to produce it at a very high quality and also much more efficiently.”

BIG AMBITIONS

FX Chief Executive Officer John Landgraf has warned that Netflix’s ambitions are so great that it could develop a monopoly over content production, just like its Silicon Valley peers have grabbed large market share in social networking, search and mapping. FX just had a banner year, even though it lost out on the rights to a couple hits to Netflix, such as Aziz Ansari’s Master of None.

Parent company 21st Century Fox took its grievances a step further, suing Netflix last month for allegedly encouraging Flynn and a film marketing executives to break their contracts.

“Netflix is defiantly flouting the law by soliciting and inducing employees to break their contracts,” the media company said in its statement. “We intend to seek all available remedies to enforce our rights and hold Netflix accountable for its wrongful behavior.” Netflix declined to comment on the suit. Flynn referred questions to Netflix.

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