Shonda Rhimes Reportedly Unhappy With Netflix’s Recent Changes

Shonda Rhimes, the producer behind ABC’s Grey’s Anatomy and Netflix‘s Bridgerton, is reportedly unhappy with Netflix‘s decision to launch an ad-supported tier for subscribers seeking a cheaper option. Rhimes and other creators told Netflix executives they believe the commercials will interrupt their storytelling, sources told CNBC on Nov. 4. The report emerged a day after Netflix finally launched the “Basic With Ads” tier, which costs $6.99 per month.

The other creators named in CNBC‘s report are Trevor Macy and Mike Flanagan of Intrepid Pictures. Flanagan is the creator behind The Haunting of Hill House, The Haunting of Bly Manor, Midnight Mass, and The Midnight Club. The creators believe the ads hurt the flow of their storytelling. Netflix also told the creators it will not be sharing revenue from advertising, CNBC‘s sources said.

Although other streamers have ad tiers, Netflix shows like Bridgerton and Flanagan’s Haunting series were developed without commercials in mind. The streamer was famously against commercials for most of its existence. When Rhimes joined Netflix in 2021, Netflix was still against including advertising in its programming. Rhimes and Netflix did not comment on CNBC‘s report.

Netflix reportedly told creators that the advertising is placed at intervals that make sense with an episode’s story, sources said. They also told creators that they do not believe as many customers will sign up for the ad-supported tier as those who sign up for the ad-free tiers. “We’re using our internal content tagging teams essentially to find those natural breakpoints so that we can deliver the ad in the least obtrusive point,” Netflix operating chief Greg Peters said in October.

Still, that does not explain how Netflix would break up some of Flanagan’s shows, which are known for long, single-shot scenes used to build tension. One episode of The Haunting of Hill House, “Two Storms,” is famously made up of just five single-shot takes. How could those be broken up with commercials? Netflix was an attractive partner for Intrepid in 2019 because there were no commercials, so Flanagan had no restrictions for his 50-minute episodes. Intrepid has not publicly commented on the situation.

Other creators have not complained, like Ryan Murphy, who has plenty of experience in crafting television around commercials, and The Queen’s Gambit co-creator Scott Frank, CNBC‘s sources said. Netflix could get more creatives to support the ad tier if they shared revenue, but Netflix does not plan on doing so. The streamer owns the original shows produced for it, so it can add commercials without input from creatives.

There are some shows that Netflix can’t add commercials to because they are licensed from other studios. These shows are unavailable to Basic With Ads subscribers until the streamer reaches new deals with licensors. Coincidentally, Rhimes’ Grey’s Anatomy is one of those shows, as Netflix has not reached a new deal with Disney that would allow it to add commercials.