How Much Is Shonda Rhimes’ Netflix Deal Worth?

Netflix scored a major win Monday, stealing Shonda Rhimes, creator of shows like “Grey’s Anatomy” and “Scandal,” away from ABC. Rhimes, in a multiyear deal, will produce new series and projects for the streaming service.

Specifics of the deal, which include bringing over Rhimes' production company, Shondaland, weren’t disclosed, but is likely in excess of $40 million. The Wall Street Journal, who first reported the deal, said Rhimes was making over $10 million a year in her four-year deal with ABC. The new contract’s timeline is similar, but worth more, Deadline reporter Nellie Andreeva wrote Monday.

Carnegie Mellon University information systems professor Rahul Telang didn’t want to speculate on a number, but said the writer would likely earn a large sum of money. A major move like this was predictable for Netflix. “This was likely to happen. The market is getting more competitive,” said Telang to International Business Times Monday.

ABC’s parent company, Disney, announced last week it would pull it’s movies from Netflix and will start its own streaming service around Disney, and another one around another one of its properties, ESPN.

Netflix spent $5 billion on content last year and is expected to spend over $6 billion this year. In addition to Rhimes, Netflix hooked David Letterman for a show and acclaimed directors Joel and Ethan Coen to create a Western show for Netflix.

Amazon’s streaming service is also spending a great deal of money on content like inking a $50 million deal earlier this year for the right to carry 10 Thursday night NFL games. Last year, Amazon spent over $3 billion on content, according to USA Today.

How long it will last for companies to spend so much on content remains to be seen.

“The more they spend the more they need to recoup,” said Thom Gencarelli, chair of the communications department at Manhattan College, to International Business Times Monday. “In the long run they will need to figure out how much the need to charge subscribers … and it comes down to how much people are willing to pay.”

For artists, the appeal of the streaming service is money and creative liberty. Without advertisers, Netflix producers have full artistic license — unrestrained by television censorship for nudity or violence. Netflix also doesn’t have commercial breaks, so shows don’t need to run on a rigid network clock like they would on ABC. More, episodes in a series don’t have to be the same length.

“They made her an offer she couldn’t refuse … and she will have full creative control without a network looking over her shoulder,” said Gencarelli.

Rhimes said that freedom was one aspect of why she took the deal.

“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,” said Rhimes in a press release from Netflix.

Rhimes began Shondaland in 2005 with her producing partner, Betsy Beers, who will also move over to Netflix from ABC. Shondalfand’s first major hit was “Grey’s Anatomy,” which still runs on the channel. Rhime’s ABC shows will stay on the channel for now. She had a little over a year left in her contract with ABC, who allowed her to sign with Netflix.

Rhime’s publicist and representation did not respond for comment. Spokespersons for Netflix said they had nothing more to add beyond the press release.​