Back in 2002, when AMC was airing old movies and looking for its Sopranos, The X-Files was spawning some of the talent that would go on to create Peak TV. Among them was Vince Gilligan, who was ending his stint as a regular writer and then producer. Gilligan was a screenwriting prodigy, discovered in Virginia by producer Mark Johnson, who recalled, “I just felt I’d never read a voice so original.” He produced two scripts Gilligan had written right out of NYU film school, Home Fries and Wilder Napalm.
Gilligan was casting about for his next gig when a friend who also worked on X-Files mentioned that he had read about a guy who made meth in his RV. Gilligan promptly wrote a script about a guy who made meth in his RV. His guy is a brilliant, self-sabotaging chemist who fumbled a chance to make billions and finds himself juggling test tubes in front of glassy-eyed, pimply high school kids in Albuquerque. He’s so poorly paid that he has to moonlight at a car wash to support his pregnant wife and son afflicted with cerebral palsy. Going from bad to worse to worst, a routine checkup turns into his death sentence: a diagnosis of Stage 4 lung cancer. Untreatable.
Wouldn’t that turn you on to making meth if you could? It did Walter White in Breaking Bad.
Like The Shield creator Shawn Ryan, like The Americans creators Joe Weisberg and Joe Fields, like Nip/Tuck creator Ryan Murphy, Gilligan’s ambition was to take advantage of the series format to portray someone who changes, unlike the static characters on network shows who never changed. As he was fond of saying, he wanted to take Walter White from Mr. Chips to Scarface.
Johnson arranged a meeting with Sony TV, where he had a deal. Gilligan had a meal with executives Zack Van Amburg and Jamie Erlicht. He might have been desperate, but so were they because, according to AMC’s head of production, Vlad Wolynetz, “Sony was going to shut the division down.”
Sony TV agreed to produce Breaking Bad, but found it next to impossible to find a cable company to air it. Gilligan quipped to his agent, “Why don’t you send it to the Food Network? It is a show about cooking, after all.” HBO was the first port of call for unconventional scripts, especially if you were desperate. Gilligan met with Carolyn Strauss. “I couldn’t tell whether she was loving it or hating it or even listening,” Gilligan recalls. Echoing Weiner, he complained she wouldn’t even give him a no. He continued, “They were basically like, ‘Just get out of the office, please.’ ”
With HBO off the list, Sony found it a home at FX, until executive John Landgraf dropped it in favor of Damages. It was back to square one, namely AMC. Recalls Gilligan, “Breaking Bad was dead by the time AMC came into the picture. I was emotionally moving on to other things, thinking, Well, we fought the good fight, but this show was just too damn crazy.”
Gilligan’s agent hit AMC in the wake of Mad Men madness. Executive Christina Wayne read it and was ecstatic, but Sony wasn’t convinced that AMC was actually in the series business, nor was AMC, despite Mad Men. It didn’t fit the brand, whatever that was. AMC was owned by Cablevision, and “It was like making TV for Con Edison,” says Wolynetz.
The naysayers felt, “We could be licensing more John Wayne movies and exploiting the blue chip advertisers that Mad Men had leveraged. We don’t need to do two shows.” But the creative executives argued, “Are you nuts? You’ll have the two biggest shows on TV, you’ll look brilliant.” The are-you-nutsers? won, and AMC did look brilliant.
Gilligan delivered a letter-perfect pilot. He screened it for AMC at the IFC Center in New York City’s Greenwich Village. Executive Ed Carroll greenlit it on the spot. The AMC folks went to a bar around the corner on University Place to celebrate, until Carroll announced, “When I said that you have a green light, I apparently don’t have the power to do that!” The celebration turned into a wake. VP of original programming, Rob Sorcher and general manager Charlie Collier, et al., had to drive out to Deathpage (AMC staffers’ nickname for headquarters in Beth Page, Long Island) to screen the pilot for Tom Rutledge, one of Cablevision’s senior executives. When it was over, Rutledge said, “That was very interesting. Have you heard about our new cable set-top box technology?” Then he got up and left. Sorcher screamed, “Wait a minute! What about our fucking show!?” Sorcher chased his car down the Long Island Expressway and caught him at a helipad where he was about to take a chopper to the city. Collier jumped in with him, and by the time they landed, he had talked him into it.
That was it for Sorcher. “When I realized that the company could see something like that but didn’t have—that I was going to have to go through what I just went through on Mad Men again to get it done, I realized that it was just too difficult to work that way.”
Gilligan’s new series premiered three months after Mad Men’s first season wrapped, on January 20, 2008, and just shy of two months before The Wire ended. It was indeed controversial.
Gilligan tried and failed to make Walt impossible to root for. Like the fans of Vic Mackey, Raylan Givens, Tony Soprano, Al Swearengen, and the Jenningses, Walt’s fans didn’t care how bad he broke; they refused to break with him. According to Deadwood actress Robin Weigert, “Anna Gunn got a lot of hate mail from viewers who wanted her character to be a more supportive wife.”
Breaking Bad didn’t become the instant cultural phenomenon that was Mad Men, but the reviews were raves. Stephen King rated it better than Mad Men, writing, “Your uncle Stevie may not care much for Mad Men, but he has never seen anything like Breaking Bad.” Comparing it to The Shield and The Sopranos, he added, “Thank God for basic cable, if it can produce programming as strange and compelling as this.”
Still, by the summer of 2010, AMC was ready to call it quits, telling Gilligan that Season 3 would be its last. Sony quickly found several services that offered to back two more seasons, and AMC reversed itself. The first half of Season 5 premiered in 2012 to 2.6 million, but the finale of the second half of Season 5 aired on September 29, 2013, and jumped to a remarkable 10.28 million viewers, despite going head to head with Sunday Night Football, Homeland, Boardwalk Empire, and premieres of the scripted network shows. That episode ranked third in the history of cable finales, behind The Sopranos and Sex and the City.
What happened? Netflix happened!
All in all, party crashers like FX and AMC were doing HBO’s job better than HBO was. Moreover, halfway into the first decade of the new century, the purveyors of DVDs—not only Blockbuster, but Walmart, and Amazon—were trying to impersonate Netflix by developing algorithms of their own to predict users’ viewing habits, but they were notoriously prone to error. A red-faced Walmart had to disable its proprietary algorithm when it pointed customers looking for content related to Black History Month to Planet of the Apes. Netflix had a brush with death when Viacom invested a billion dollars in Blockbuster. Netflix CEO Reed Hastings thought, Uh-oh, we’re dead. They’re going to take over streaming and kill us. Instead, they used the money to open new stores! The CEO quit, sold his stock, and invested in Netflix.
Hastings faced a daunting task. He had to build a library that took legacy studios decades to create, while at the same time producing a steady stream of originals. He also wanted to free his algorithm, called Cinematch, from the crude ratings system by which customers made their preferences known. He was so obsessed by the viewing habits of those customers that one Christmas he sequestered himself in his Park City chalet with his algorithm during a skiing vacation, ignoring his children and deaf to his wife’s complaints.
Netflix found that individual film selection was a less reliable predictor of future purchases than groups of films selected, that is, “taste clusters.” Whatever they shared in common was what customers wanted. By 2005, Hastings had so refined its algorithms that he claimed they could predict within “a 10% range whether a movie will be a hit with a subscriber.” Tossing William Goldman’s old adage—“Nobody knows anything”—out the window, he replaced it with “Our algorithms know everything.”
Just as important, if not more so, than rating viewers’ tastes was coming up with the most effective way to deliver the films. Apple’s iTunes had been streaming music practically from Y2K, and Hastings had had streaming in his sights almost from the start, but was waiting for the moment when, as then-Netflix development chief Ted Sarandos put it, “Streaming economics made more sense than the postal economics,” which is say, it was cheaper to stream than to mail. That moment came in 2007—the same year HBO said goodbye to The Sopranos, AMC premiered Mad Men, and about 50% of American households had broadband access. Netflix membership ballooned to 31 million. Hastings boasted to The New Yorker’s Ken Auletta, “We are to cable networks as cable networks were to broadcast networks.” To him, they were horse and buggies.
The pipeline was ready, but there was precious little to push through it. Netflix started its streaming service offering subscribers no more than a paltry 6,000 titles. Initially, the old-line studios refused to license their wares to Netflix, invoking the specter of digital piracy. As they were at the dawn of TV in the 1950s, they were wary that the new technology would enable their golden goose to lay its eggs in baskets other than their own. Moreover, the premium cablers had already locked up the best of the new titles in long-term deals. Hastings found himself at the end of a lengthy queue.
The content dam finally broke in 2008 when Netflix paid Starz $25 million in licensing fees for 2,500 movies and series over four years that included Sony and Disney shows. One financial analyst called it one of the “dumbest deals ever.” In 2010, Netflix signed a deal with Epix, and then again in early 2011 with CBS and ABC, to stream NETWORK TV hits like Lost, Grey’s Anatomy, and Desperate Housewives.
The Netflix formula was simple: spend its way to profit. As summarized by Sarandos, it was, “More shows, more watching; more watching, more subs; more subs, more revenue; more revenue, more content.”
Netflix’s business model had always seemed wonky, so much so that many players, not just HBO president and CEO Jeff Bewkes, expected the company to collapse under its own weight. It borrowed $16 billion in fewer than 10 years to create its content library. Says director Steven Soderbergh, “Netflix may end up being the Theranos of the entertainment industry.” Vulture’s Josef Adalian, a dedicated Netflix watcher, quoted one analyst saying, “A wise investor once remarked to us, ‘If Jesus were a stock, he’d be Netflix. You either believe or you don’t.’ ”
Meanwhile, former HBO programming genius Chris Albrecht, now at Starz, was convinced that he would be slitting his own throat by allowing Netflix members to see Starz’s shows without paying for a Starz subscription. He was one of the few who realized early on that Netflix was more likely to be an enemy than a friend. As that deal neared its end in 2011, Netflix upped its offer to renew. Albrecht, calling the previous deal “awful,” not only demanded 10 times as much from the service, but also required that Netflix subscribers pay an add-on over and above the $8 per month subscription fee. Netflix refused, and the deal lapsed in 2012, so in 2013 about 1,800 titles disappeared from the Netflix library.
The Starz debacle, however, wasn’t the end of the story. Hastings was not about to accept defeat and went directly to the source, striking a licensing deal with Disney in 2016 that included access to that company’s vast library, as well as Disney Animation, Marvel, and Pixar, worth $300 million plus, annually. It cemented Netflix’s dominance over potential challengers like Hulu and what was then called Amazon Instant Video, not to mention the cable channels. In another expression of confidence, Netflix, which had been expanding internationally at a rate of one or two countries at a time, jumped into 130 countries at once.
David Zaslav, CEO of Discovery and eventually of Warner Bros. Discovery, says, “Studio executives [thought Netflix] was never going to really interfere with the core ecosystem. And it ended up eating the core ecosystem. They fed Netflix when Netflix looked like a harmless animal. And then they were stuck having to continue to feed it, when it was clear that Netflix was a beast.”
Wall Street had fallen in love with Netflix. Rather than valuing its stock according to quarterly profits, as it did every other company, it was blinded by its explosive growth and power to attract new subscribers. As Bob Greenblatt puts it, “Everyone was scratching their heads about the debt thing for years, but Wall Street is Wall Street.”
Netflix was responsible, as we have seen, for the success of Breaking Bad. The first three seasons went viral on Netflix, one of the first manifestations of the so-called “Netflix effect.” By the time the first half of Season 5 premiered in July 2012, all four seasons were available. Ultimately more people viewed the show on Netflix than on AMC. Netflix paid dearly for the privilege of airing Breaking Bad—an estimated $800,000 an episode for streaming rights to those first three seasons and eventually more for the remaining two seasons, to the tune of $78 million total. Streaming opened up a new revenue source for network and cable shows that had previously made most of their money in syndication. The exposure provided by Netflix led Variety to wonder whether AMC should have been paying Netflix, rather than the reverse.
Gilligan acknowledged, Netflix “saved our bacon.”
Adapted from PANDORA’S BOX: How Guts, Guile, and Greed Upended TV by Peter Biskind. Copyright © 2023 by Peter Biskind. Reprinted courtesy of William Morrow, an imprint of HarperCollins Publishers.