Kevin Beggs and Sandra Stern

May 14, 2012 World Screen Interviews

 This interview originally appeared in the L.A. Screenings 2012 issue of World Screen.

Lionsgate Television Group’s production philosophy of less is more has certainly paid off. At its inception, with fewer re­sources available than at the major studios, Lions­gate chose to focus on a lower volume of shows, but ones of high quality and distinctive subject matter. This stra­tegy has been rewarded with audience appreciation, critical acclaim and network renewals: the multiple–Emmy Award–winning Mad Men scored its highest ratings ever in March with the premiere of its fifth season, Kelsey Grammer earned a Golden Globe for Boss, Weeds is in its eighth season and Nurse Jackie is in its fourth. Not a studio to shy away from the provocative or controversial, Lionsgate is now producing the series Anger Management, loosely based on the feature film and starring Charlie Sheen. Kevin Beggs, the president of Lionsgate Tele­vision Group, and Sandra Stern, the COO of Lionsgate Television, talk about pursuing quality and using alternative financing models. 
 
WS: What has driven Lionsgate Television’s success?
BEGGS: A lot of factors: timing, a little bit of luck, maybe a little bit of skill—and also, the company building that Jon Feltheimer and Michael Burns have undertaken from the day they got here has given the TV unit more ways to monetize our content. When we were a tiny little startup company, we had no distribution, no home entertainment, digital wasn’t a business; we were just really a production company that happened to be Canadian, and that was meaningful for a few networks that needed alternative financing models, like PAX and Fox Family and Lifetime. But happily, as original series [caught on] in basic cable, some players got into the game, USA Network and then TNT, and initially we couldn’t work on any other model. It was really out of necessity, less than an elective for us, although it looks very brilliant now! But at the time we couldn’t go to broadcast networks because we couldn’t afford it—we could never deficit a pilot or an episode based on their numbers or the whole company would collapse. So we didn’t pitch the networks. We went to cable and had some success. We got The Dead Zone off the ground at USA, and then Monk hit for them three weeks later and USA, the one that we know today, was born. On the back of that, a lot of people were wondering how you can do shows economically that look like broadcast quality, and we were one of the only ones doing it. Those models weren’t that interesting to all the other studios based on the much greater profitability of a network hit. So we played in the margins and even when Feltheimer came along, which was right when Dead Zone was getting going, the movie model and the TV model were quite similar—don’t get ahead of yourself, don’t go crazy. One of these shows will develop into something that makes money. We’re not about 30 or 40 projects, we’re about 4 or 5 a year that look good and backdoor pilots and things that we can sell. So we stuck to our knitting and Dead Zone worked.
 
WS: And this success continued with Weeds.
BEGGS: Weeds was the first show in which we had more tools to work with. We had acquired Trimark, which had a home-video business that was quite substantial, and we had also started our own international distribution. Weeds was the test case. And if it worked on Weeds we’d keep doing it, and if it didn’t we’d say, “Scrap that.” Weeds took off and it was a success for Showtime, which had been in a pretty fallow period for series, and Bob [Greenblatt] had come, and this was one of his first originals that were on his watch. The world loved Weeds because it allowed people to laugh with and at Americans for their insane kind of schizophrenia about drugs. That was great for us, and it’s gone on to be a giant success, and one of its biggest revenue drivers has been home entertainment. Then Lionsgate acquired Artisan and we got even bigger in the home-entertainment space, and every step of the way, more assets have come in and we can help monetize them together.
 
If you skip all the way to [today]—we’ll come back to Mad Men—we have Charlie Sheen and Anger Management. That also was on the heels of a really shrewd acquisition of our friends at Debmar-Mercury, who pioneered this 10-90 model, which everyone is pretty enamored with when it works. It’s done very well for them, and Anger Management represented the first time that both their model and their unique distribution capabilities merged up with our creative team and production capabilities to do a show together, and that’s what we’re doing for FX.
 
WS: Tell us about the 10-90 model.
STERN: Debmar-Mercury are very, very smart guys. They’re sellers. And so the notion of taking a big risk—investing in a pilot and hoping that pilot hits and then maybe you get six episodes or 13 episodes—never worked for them. They’re syndication guys. They’re used to taking 100 episodes and selling them, and because they’re smart guys, they figured out a model to reduce risk and get a big chunk of episodes: taking risks up front but reducing risk down the line. So instead of doing a pilot, as one would ordinarily do for a network, they came up with the concept of doing what is essentially a ten-episode pilot, so you don’t have just one shot, you have ten episodes.
 
WS: And you commit to ten from the get-go?
STERN: We commit to ten, the network commits to ten from the get-go and there is no mystery; it is a for­mula. We do ten episodes, the network commits to airing the ten episodes. And if those airings achieve a certain rating, the network must pick up 90 more. There was a little twist on the Charlie Sheen Anger Management deal, which was very smart. The network felt that ten episodes might not be as reflective of success for the series as it is with a regular show, because Charlie is not only very well liked, but very controversial, and he’s going to be the subject of great interest. Their feeling was everybody was going to tune in for episode one, but they may not stay [for the rest]. So instead of the ten episodes having to achieve a certain ratings number, they threw out episodes one and two—in terms of the calculation, not in terms of the airing—and the number has to be achieved based on episodes three to ten. They wanted to make sure that it was not just a curiosity factor, that the numbers would hold, so the later episodes had to retain 80 percent of the viewership of the early episodes. So even if the number is through the roof, unless it continues to be through the roof, they don’t have to continue. The FX guys are very, very good, talented, creative guys. They wanted to make sure that they were not simply filling space on their network, but that they would have a show that would perform and continue to perform and hold an audience. We gave them a lot of research on Two and a Half Men, of how that show sustained, and that’s what we’re trying to duplicate for them.
 
WS: Tell us a little about Anger Management.
BEGGS: We pitched it to Charlie. We got a great showrunner in Bruce Helford, who did The Drew Carey Show and George Lopez. They saw eye to eye immediately. We have the amazing title that Joe Roth brought to the mix, along with his producing acumen. Anger Management is based on the movie. It’s really basically just taking shades of the Jack Nicholson character and adding them to a character that is very Charlie-like. But it represents the next evolution for him past Two and a Half Men, personally, and also within the show, and that will come out, because he’s in anger management and needs as much or more counseling as his patients. So there’s a certain self-awareness; we think that’s relevant. And there’s a certain self-awareness that Charlie has that he’s been quite clear about, about the good, the bad and the mistakes that were made in between, and everyone loves a redemption story.
 
WS: And what about the phenomenon that is Mad Men?
STERN: When we first identified the project at AMC, it was a challenge. AMC was new to original series. Rob Sorcher, who was then the head creative guy at AMC, felt that originals were a way to build his network. He recognized that he was going to have to perhaps overpay a bit. He was going to have to do provocative programming—he was going to have to make noise and convince people that it was worth making noise with him. So because we did not have the ability to shoot Mad Men in some place that provided tax credits—it was a condition of Matt Weiner’s deal that we shoot in Los Angeles so he could have as much of a normal family life as possible—the network paid extra. They gave us rights that we might not otherwise have had and we’ve done very, very well on that show with a large budget that was for us, at the time, 20 percent to 25 percent higher than we had ever spent before. But we were able to do that. We ultimately made a very nice Netflix deal because we had the right to do that. We made a very nice iTunes deal because we had the right to do that.
 
WS: How has Mad Men been received by international buyers?
BEGGS: All the buyers who had initially seen or heard that we were getting involved were quite reluctant. “Oh, this won’t work for us. No one cares about advertising. No one cares about America in the ’60s. It’s so quaint. It’s slow.” All those things were leveled at Mad Men in the first season, and then the awards started to roll in and then there was some rethinking: “Well, maybe…I do like it myself, I don’t know if my audience will like it but I’m willing to entertain that they might.” And so on and so forth. A few more Golden Globes and a few more Emmys and it has become a big international success for us.
 
We wouldn’t have been able to take that swing on Mad Men had not Dead Zone worked, had not Weeds worked, had not [Trimark and Artisan] been in place, had we not seen with Weeds and Showtime, Dead Zone and USA, that being on the ground floor of a channel launching a rebrand around a show would be meaningful. Because being one of nine shows on another network might not have been as attractive for Mad Men. Mad Men represented the real launch of AMC’s original programming. People think AMC and they think Mad Men at the same time. That’s great as a supplier because they really need you and you’re built into their marketing DNA, as opposed to “I’ve got 12 of these shows and I’m out after four seasons.” They’re in it for the long haul. We’re doing seven seasons together.
STERN: One of the things that we like doing at Lionsgate is breaking in new networks. We like being the first in. Sometimes when you’re the first in you have the ability to shape your world a little bit better—you have a little bit more control over it; you get to work more closely with the network because you and your network partners are all rolling up your sleeves and trying to figure it out, so good relationships develop.
 
WS: How have you looked for less expensive ways of producing, while maintaining quality on the screen?
STERN: When we got an order for Wildfire from ABC Family, the business model was very challenging, but I had a cousin who was a communications director for Governor Bill Richardson. My cousin got me a meeting with him and we convinced the governor that it would be a good idea for the state of New Mexico to invest in its citizens by coming up with tax credits. He insisted as part of the tax-credit legislation that we put a training program in place so that the people of New Mexico who would get jobs could then keep jobs. He was very, very focused on job creation and we put that plan in place. It’s now thriving. Sony is producing Breaking Bad there and we did Crash in New Mexico. It’s a place we like very much. But it was a way for us to figure out how to get money to put on the screen so that we could afford to do a series that we very much wanted to do. Since then, most every other state has put tax benefits in place, and [they’ve] done very well for all of their people. But we try very hard to take shows to places where we can get soft money and we can then in turn take that money and put it on the screen.