The Reboot Is Out There

With its revival of ‘The X-Files,’ Fox aims to make the billion-dollar franchise work by tapping multiple revenue streams—and a rabid fan base
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Related: Fox Works to Win Over Skeptical X-Philes

The X-Files was ahead of its time. The spooky, conspiracy-minded series premiered on Sept. 9, 1993, when the TV business was simpler. It grew into a billion-dollar property for what is now 21st Century Fox by cashing in on new revenue streams and opportunities to engage fans that have grown in importance with the advent of digital technologies—advances that were merely science fiction back then.

Now, with The X-Files returning as a limited series beginning Jan. 24, in addition to the truth being out there, the big money is out there as well. Fox expects Agents Mulder and Scully to deliver for both fans and the company.

“I am very bullish that our fans are going to be attracted to it,” says Gary Newman, Fox Television Group chairman/CEO. And despite being a limited series, “It’s going to be a very good financial performer for us.”

Newman, a business-affairs exec at 20th Century Fox during the show’s original run, says he wishes that he had 60 new episodes to air instead of just six.

What a difference a generation makes. Unbridled optimism wasn’t exactly overflowing on the Fox lot as the 1990s began. When The X-Files was in development, Newman recalled, the studio brass wanted to get out of the drama business and produce just comedies. “Trust No One” was more like a drama-related network edict than a popular tagline for the series.

“There really was not a relevant broadcast syndication business for dramas,” Newman says. “It had become a half-hour business. We were competing with talk shows, game shows, news shows, and stations just didn’t want to put hour shows on in valuable time periods.”

Because of the hostile climate, X-Files was shot in Vancouver, where costs could be kept under control. It was also inexpensive because it had a largely unproven producer in Chris Carter and unknowns David Duchovny and Gillian Anderson in the starring roles.

Change in the Air

But times change. Dramas became hugely valuable again with the advent of cable syndication. In 1996, X-Files reruns were sold for a record $600,000 per episode to Fox sibling FX. In 2002, the reruns moved to Sci-Fi in primetime for $325,000 an episode and to TNT in fringe and late night for $225,000 per. The show was also syndicated to Fox Television stations.

X-Files was also a hit in the international market, which is now an even bigger deal. “The international payments going to long-form content from America is probably five times what is was back in 2000,” says Needham Securities analyst Laura Martin.

The modest VHS tape business would become a booming home video market with DVDs. And eventually streaming video would come along with billions to spend on content in studio libraries.

Since it’s been off the air, The X-Files has continued to generate revenue through cable syndication, international sales and streaming. “We’re pretty happy with the revenue we generate on it,” says Newman, who declined to provide specific figures. “The X-Files spanned a period of great change in the television business.”

Those changes have been good for shows such as The X-Files. “While there is more audience fracturing,” says Martin, “there is more money in the digital world. In the old days, it was easy to quantify what a series was worth. It’s more global and more complicated to calculate today.”

Sandy Grushow, who greenlit the X-Files pilot and ordered the show to series as president of Fox’s entertainment division, says that “in many ways this would be an ideal show for today’s media landscape, both from a creative and a business perspective.”

The X-Files wasn’t a particularly expensive show to produce, according to Grushow. “This wasn’t one of those $10-million pilots, $4-to-$5-million-per-episode price tags. This was an affordable television show, which made the bet easier for everyone,” he says.

Perfect Timing

The show became popular with both viewers and advertisers, spawning compelling mysteries about Mulder’s family origins and how characters such as the Smoking Man fit into the equation. By the 1996 upfront, spots on The X-Files cost $290,000, the most ever for a Fox series at the time.

Media buyer Chris Geraci, now OMD president for broadcast, recalls that X-Files was unique because it drew men. “Some advertisers who barely dabbled in primetime because they had a male target and basically bought sports would still want The X-Files when it was popular. There wasn’t much else like it on TV outside the tough police dramas like NYPD Blue,” says Geraci, a fan of the show.

X-Files also generated a lot of buzz, but in those days, it was physical conversations rather than on the Internet. That buzz was important because “there was an awful lot of client participation in program selection, and I distinctly remember that show being talked about an awful lot when you were presenting buys and taking clients through the upfront,” Geraci says.

The show remains popular with advertisers. “When we announced The X-Files coming back, a lot of people we’re still doing business with were very excited,” says Toby Byrne, president of advertising for Fox Networks Group. ”It was an easy sell into the market by virtue of it being a great and established brand.”

It’s Got Game

That meant Fox could get good prices. The new X-Files will get a boost by premiering after the NFC championship game, one of the three highest-rated shows of the year. Spots were sold for about $650,000 per :30, media buyers say. Subsequent episodes were going for about $250,000 per spot, slightly more than other popular new shows, such as NBC’s Blindspot.

“It will provide a better dual audience [men-women] than a lot of the current programming,” says Geraci. And while there is more data available to evaluate how shows match up with target audiences, in broad terms what advertisers look for isn’t that different. “The technical part of the metric has changed to some degree [to include delayed viewing], but you’re still looking for a concentration of an age and sex demographic.”

One advertiser happy about X-Files’ return is Ford, whose vehicles were used during the entire run of the original series. A 2016 Ford Explorer will be integrated into the second episode.

Ford sponsored X-Files’ premiere event, and the relationship will be activated in social media as well. “Ford has a lot of confidence that the people who might want to drive their cars will be watching the show,” Byrne says.

Byrne says that Fox was careful not to overload XFiles with sponsors. But unlike when X-Files first aired, there are numerous other ways sponsors can link with shows they want their brands associated with, especially on digital platforms, where games, sweepstakes and Web-based companion series can extend viewer engagement.

Grushow, now CEO of Phase 2 Media, notes that even before X-Files grew into a hit, it had a base of hardcore fans. Today, “networks need to embrace shows that have passionate followings. They don’t necessarily need broad followings, just passionate followings. Otherwise you’re dead in the water,” he says.

And from a business perspective, The X-Files had many of the building blocks needed for success today. “In some ways it was ahead of its time,” Grushow says.

For one thing, the show was produced by Fox’s sister studio. Owning shows is a priority now for networks, but back then, “we weren’t talking about vertical integration,” Grushow says. The “fin-syn” rules that prevented networks from owning shows were just being repealed. They didn’t apply to Fox anyway, and the big studios weren’t keen to create shows for the upstart network at that point.

In addition to having the network and studio lined up, X-Files’ broadcast syndication went to the Fox stations. Cable nets were starting to spend real money on off-net shows, hence X-Files reruns were sold to FX.

The Rights Stuff

These days, keeping a show’s rights intact is important in being able to monetize it on multiple platforms—including those like streaming video-ondemand, which didn’t exist back then.

Fox was sued by Duchovny in 1999 over the network keeping those rights inside the family. His suit estimated X-Files would generate $1.4 billion in profits. This year, Fox faced a similar suit from profit participants in Bones claiming they were damaged when streaming rights were sold to Hulu, which is partly owned by 21st Century Fox—marking another way X-Files was ahead of its time.

Also, its home video sales were good, first through VHS tapes, then with DVDs, Grushow says. “And the show sold extremely well internationally,” he adds. “So again, from a business imperative standpoint, it would tick all the boxes today.”

Some things haven’t changed that much. Nowadays there may be more high-tech ways of prejudging audience sentiment. Netflix claims to use algorithms to ensure its subscribers will be attracted to its programs.

“Though the landscape has been altered dramatically and certain business considerations have evolved when you’re trying to determine whether a show is worth betting on or not, you’re really trusting your gut that you’re onto something that audiences will respond favorably to,” Grushow says.

It didn’t hurt that the show and the Internet seemed to evolve at the same time, creating a community of rabid fans that still debate what the famed “Clyde Bruckman’s Final Repose” episode means.

“The fact is that the growth of The X-Files in some ways coincided with the growth of the Web,” Grushow recalls. “I remember there were lots of X-Files fans who were very active on the Internet. I think they were called X-Philes. Those people were nuts,” Grushow says. “They were writing about episodes, they were reviewing episodes, they were forming communities. So there’s no reason to believe that fandom wouldn’t have extended to social media and perhaps had an even broader impact today.”

Indeed, streaming and other digital services have only reinforced Fox’s belief that The X-Files was a show that “had the potential to be somehow reimagined, re-exploited, brought back,” says Newman. And while the 2008 theatrical underwhelmed at the box office, anticipation for the new series—The XFiles airing in its natural form—has not disappointed.

“Clearly the audience has continued to demand it from us, and every development season since the show’s been off the air, you’d hear pitches at the network that start off with ‘this is The X-Files meets whatever,” Newman says.

The show has already been sold in many international territories, with the bidding particularly strong in Europe, Newman adds. “The digital platforms, both electronic sell-through as well as the streaming platforms, are great opportunities for our fans to watch it.”

The original episodes of X-Files are on Netflix. The new ones will appear first on Hulu as part of a Fox content agreement. No other streaming deals have been reached at this point for the six new episodes, Newman says, but “those conversations are ongoing.”

Related: Fox Works to Win Over Skeptical X-Philes

The X-Files was ahead of its time. The spooky, conspiracy-minded series premiered on Sept. 9, 1993, when the TV business was simpler. It grew into a billion-dollar property for what is now 21st Century Fox by cashing in on new revenue streams and opportunities to engage fans that have grown in importance with the advent of digital technologies—advances that were merely science fiction back then.

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