Netflix Snags Top ABC Producer Shonda Rhimes With Multiyear Deal

  • Deal reveals deeper rift between video service and Walt Disney
  • Streaming services poach some of legacy TV’s top talent

John Chachas, Methuselah Capital Advisors managing partner, discusses M&A activity in the media industry with Bloomberg's Alex Sherman on 'Bloomberg Markets.' (Source: Bloomberg)

Netflix Inc. signed a multiyear contract with Shonda Rhimes, poaching the creator of the hit TV series “Scandal” and “Grey’s Anatomy” from Walt Disney Co.’s ABC network.

Rhimes will produce new series and other projects, the companies said in a statement on the Netflix website. She will continue her existing work with ABC, but all new developments by her Shondaland production company will be for Netflix, the world’s largest paid online video service.

Shonda Rhimes

Photographer: Jay Goldman/Netflix

Looking to steal viewers from traditional TV, streaming services Netflix and Amazon.com Inc. are spending billions of dollars making shows and movies, and luring top talent. Last week, Netflix signed former CBS talk-show host Dave Letterman, while Amazon cinched a deal with Robert Kirkman, who created “The Walking Dead” graphic novels that are now a long-running hit on AMC.

Few showrunners have had more success over the past decade than Rhimes, the rare TV writer known to the public. Her shows combined the pulpy romantic subplots of soap operas with the professional intrigue of medicine and politics, as with “Grey’s Anatomy” and “Scandal.” ABC released Rhimes from the last year of her contract, according to the Wall Street Journal, which reported the expiring deal was worth more than $10 million annually.

That success earned her an entire night of ABC’s schedule -- and several awards. Her close relationship with Channing Dungey is one of the reasons ABC placed Dungey in charge of all its programming last year, making her the first black person to run a major network.

Diversity in TV

Rhimes is one of the few prominent black showrunners in Hollywood, and has led the way in creating more diversity onscreen.

While ABC has turned Rhimes into a household name, some of her biggest hits are nearing the end and the producer felt it was time for a new challenge. “Scandal” has just one season left, and ratings for “How to Get Away with Murder” have been in decline.

“I was looking for the opportunity to build a vibrant new storytelling home for writers with the unique creative freedom and instantaneous global reach provided by Netflix’s singular sense of innovation,” Rhimes said in the statement.

The departure is a blow to ABC, which finished the previous TV season in third place in total viewers and last among the big four networks with the 18-to-49-year-old audience that advertisers target. The company still has three Rhimes-produced shows on the air, three more in the pipeline and continues to work with many of the creative people she developed, the network said.

“I’m proud to have given a home to what have become some of the most celebrated and talked about shows on television,” Dungey, ABC’s president of entertainment, said in a statement.

New Rivalry

It also underscores a growing rift between Disney and Los Gatos, California-based Netflix. Last week, Disney announced it would be pulling some movies from Netflix to carry on its own online service. ABC released Rhimes from the final year of a contract with the network, freeing her to jump to Netflix.

There was a time when a producer never would have left broadcast TV, which offered the biggest paychecks and audiences. But no more.

Netflix offers greater creative control, as well as an audience even larger then she can find on broadcast. The streaming service has more than 100 million subscribers around the world and an annual budget that exceeds $6 billion.

Rhimes’s shows are already popular on Netflix, which licensed reruns of “Scandal.” Netflix uses rival media companies’ programming to figure out what its customers want and then spends large sums of money to steal talent from those companies.

Netflix has already stolen several major stand-up comedians from HBO and made its first big acquisition last week, acquiring the comic-book publisher Millarworld. While most of the service’s biggest originals shows have been produced by other companies, like “The Crown” from Sony Corp. and “Luke Cage” from Disney’s Marvel, Rhimes’s next show will only have one large public company behind it: Netflix.

— With assistance by Christopher Palmeri

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