Speaker 1: In Touch with Technology with tech Stuff from how stuff
Speaker 1: Works dot com either everyone, and welcome to tech Stuff.
Speaker 1: I'm Jonathan Strickland and I'm Lauren Boltman, and we're going
Speaker 1: to take you on a mega epic adventure. Uh. It's
Speaker 1: going to be a three parter, something we haven't done
Speaker 1: very frequently. But as we started researching this particular topic,
Speaker 1: we discovered there's just so much interesting stuff that affects
Speaker 1: so many different industries and technologies. We couldn't really wrap
Speaker 1: it up into a single episode or even a two parts.
Speaker 1: It is truly a special presentation. It in fact is
Speaker 1: a special presentation. And if you, like me, are a
Speaker 1: child of say the seventies and eighties, you might remember
Speaker 1: seeing special presentation on a certain pay television channel, HBO
Speaker 1: Home Box Office. That is what we are talking about
Speaker 1: for the next three episode because there's so much history
Speaker 1: involved and and I never realized it before we started
Speaker 1: researching this, but if it weren't for some of the
Speaker 1: people who were working in HBO's early days, we might
Speaker 1: not have cable TV or or satellite cable as we
Speaker 1: know it, right. Yeah, for example, all those other basic
Speaker 1: cable stations that you are familiar with may not have
Speaker 1: existed had it not been for some of the efforts
Speaker 1: on the part of multiple players in the story, and
Speaker 1: also some of the other issues everything from scrambling signals
Speaker 1: to piracy to streaming online. All of these things come
Speaker 1: into play with HBO and and original content as many
Speaker 1: many of you statistically probably no yes, whether whether you
Speaker 1: are subscribers or the other type. So we're going to, um,
Speaker 1: we're gonna have to journey back in time. So uh yeah,
Speaker 1: I know, we just we just tested it off recently,
Speaker 1: but it's going to get a workout. Let's file into
Speaker 1: the way back machine back in, is it tons out?
Speaker 1: We're gonna have to go far back, way before HBO
Speaker 1: was founded, all the way back to nineteen twenty two.
Speaker 1: So let's let's just set that right here and uh
Speaker 1: push the button. Lauren pushed, All right, here we are
Speaker 1: sunny nineteen two. That's when Henry Loose and Brittain hadn't
Speaker 1: decided to U, you know, pack it up. They had
Speaker 1: been working for the Baltimore News and they decided they
Speaker 1: didn't want to do that anymore. They cut their ties,
Speaker 1: said their goodbyes, and went to the Big Apple. Because
Speaker 1: if you can make it there well you know the rest.
Speaker 1: So they had this crazy idea they wanted together to
Speaker 1: launch a brand new magazine with the title of Time,
Speaker 1: and they got about eighty five thousand dollars in startup
Speaker 1: money from initial stockholders and uh AND incorporated in that
Speaker 1: November of That's right, So the very first issue of
Speaker 1: the magazine launched on March third, nineteen twenty three. Now,
Speaker 1: this company would actually debut lots of other titles. It
Speaker 1: wasn't just Time. Time was the starting point. But then
Speaker 1: they also launched Fortune in nineteen thirty, which was a
Speaker 1: year after the great stock market Crash of nineteen twenty nine,
Speaker 1: when a lot of people lost their fortunes. Uh. They
Speaker 1: also launched Life in nineteen thirty six. The magazine Life,
Speaker 1: the actual you know, point of existence, had existed for
Speaker 1: billions of years we know, yes, at least on Earth,
Speaker 1: perhaps longer in other places, but the magazine itself didn't
Speaker 1: come into existence still nineteen thirty six. And then, of
Speaker 1: course the most important magazine of all time nineteen fifty four,
Speaker 1: Sports Illustrated. I've never read a single issue I know
Speaker 1: of Sports, but it's pretty it's pretty big. All of
Speaker 1: these are pretty big. The company has certainly become a
Speaker 1: print media giant, and I mean, at the time was
Speaker 1: a print media giant and would go on to become
Speaker 1: an other media giants, right, because why why would you
Speaker 1: limit yourself to print media? They wanted to diversify. So
Speaker 1: moving into the nineteen sixties, just just come along with us.
Speaker 1: The nice thing about the way back machines that lets
Speaker 1: us go forward in time much faster than backward. We
Speaker 1: don't even have to get into it. So nineteen sixties,
Speaker 1: Time Incorporated starts looking at a way of getting into
Speaker 1: this crazy television business to branch out from print media,
Speaker 1: and so as doing that, they looked at a little
Speaker 1: company called Sterling Communications, and they bought up a twenty steak.
Speaker 1: In that company, there was a man running that by
Speaker 1: the name of Chuck Dolan, who um was it was
Speaker 1: a bit of a visionary, Yeah, oh, huge visionary. He's
Speaker 1: talked about sometimes. I mean despite the fact that he's
Speaker 1: kind of unassuming and and pretty soft spoken and doesn't
Speaker 1: really he's not a public figure the way that some
Speaker 1: of our other tech visionaries are. I mean he's not.
Speaker 1: He doesn't have the stage presence at say a Steve Job,
Speaker 1: but Nonetheless, without him, we probably would not have cable
Speaker 1: TV as we know it. Um He was born in
Speaker 1: Cleveland and served in the Air Force, dropped out of
Speaker 1: John Carroll University and started up a company that edited
Speaker 1: sports reels for TV syndication. Eventually he sold that and
Speaker 1: moved to New York where he founded Sterling in nineteen Yeah,
Speaker 1: that little company where he was adding sports footage. He
Speaker 1: did that out of his home. He and his wife
Speaker 1: and his wife in Cleveland in their house, ran this
Speaker 1: entire company, um and and sold it for enough money
Speaker 1: that he was able to found a cable television company.
Speaker 1: And at the time, cable was not what it is today, right. Yeah.
Speaker 1: In fact, cable at that time was really meant to
Speaker 1: deliver broadcast television as an over the air television. This
Speaker 1: is the stuff that normally you would put an antenna
Speaker 1: on top of your TV or perhaps on top of
Speaker 1: your home or apartment building, and you would get signals
Speaker 1: over the air which would then run down to your television.
Speaker 1: A lot of people considered this free television. It's not
Speaker 1: like you had to subscribe to it. However, it's add
Speaker 1: supported TV. But sure, and I mean, nothing's nothing's free
Speaker 1: there and yeah, so even public television that exists on
Speaker 1: on grants and and donations, the other commercial TV that
Speaker 1: existed through ads supported. But anyway, the issue was that
Speaker 1: in rural areas you couldn't necessarily get a good signal
Speaker 1: because if you did not live near a transmission tower,
Speaker 1: the transmission tower might not have enough power to put
Speaker 1: out there so that you could get the same sort
Speaker 1: of content that you could if you lived closer. Al Right,
Speaker 1: So cable stations were really just ways of getting TV
Speaker 1: regular old broadcast airway of TV out to those rural
Speaker 1: areas exactly. It didn't exist in big cities like New York, right,
Speaker 1: because the thing about New York was that you happen
Speaker 1: to live really close to all those transmission towers. Yeah,
Speaker 1: everything was being broadcast out of the Empire State Building basically.
Speaker 1: Except the thing is is that New York has other skyscrapers,
Speaker 1: and if you lived stay behind the skyscraper, you might
Speaker 1: not I mean, you absolutely wouldn't be able to get
Speaker 1: that signal from that tower. Right. If you got a
Speaker 1: signal at all, it would be really weak, so you
Speaker 1: would have lousy reception, which meant that there were people
Speaker 1: in New York who might live a few blocks away
Speaker 1: from the Empire State Building, but their reception on their
Speaker 1: televisions were worse than what you might see in the
Speaker 1: suburbs in New Jersey. You can get it better in Jersey.
Speaker 1: Why would why you come on? Look, you gotta pay
Speaker 1: to get out of Jersey. Why would you have to
Speaker 1: You know that that was the way they got you.
Speaker 1: You have to pay to get out. So then you're like, well,
Speaker 1: I get better TV over here. Anyway, I'll just stay
Speaker 1: in Jersey. I apologize everyone for starting Jonathan on that.
Speaker 1: I promise I won't I won't continue. I apologize as
Speaker 1: well that at any rate, this is exactly the case.
Speaker 1: So what Dolan thought was, why don't I bring cable
Speaker 1: into the city. That way we can have the same
Speaker 1: single over cable and even if you live right behind
Speaker 1: a skyscraper, you're still going to have great reception. Sure.
Speaker 1: The thing is is that it's really I mean, it
Speaker 1: was and still is really expensive to latest cable. We're
Speaker 1: talking copper cable at the time. By the way, fiber
Speaker 1: aptics wouldn't come into the picture until the nineteen eighties. Yeah,
Speaker 1: and not only that, but it was in New York.
Speaker 1: They had had a blizzard several decades earlier that had
Speaker 1: wiped out a lot of the power lines and and
Speaker 1: telephone lines, and as a result, city official said, hey,
Speaker 1: you guys, you're gonna have to bury this everything so
Speaker 1: that way we will never have an outage on this
Speaker 1: scale ever again, which meant that the cable that Dolan
Speaker 1: was gonna lay would have to be underground. Two. This
Speaker 1: meant that per mile of cable minimum, you'd have to
Speaker 1: spend ten thousand dollars per mile. Now in New York
Speaker 1: to get those uh apartment buildings, those high rise apartment
Speaker 1: buildings wired, you have to build a cable through the
Speaker 1: apartment building to eat with a branch to each unit, right,
Speaker 1: that's the only way you could do it. That made
Speaker 1: it go up to around three hundred thousand dollars per mile.
Speaker 1: And this is in nineteen sixties dollars. We're not talking
Speaker 1: about adjusting for inflation here, so this is really expensive stuff.
Speaker 1: And Dolan, you know, this was a very ambitious plan.
Speaker 1: And Dolan saw the long tail, right. He saw that
Speaker 1: this could be profitable, but it was going to require
Speaker 1: a lot of work, and it perhaps more work than
Speaker 1: he anticipated when he first got into the business. Yeah,
Speaker 1: Sterling almost certainly would have gone bankrupt if it hadn't
Speaker 1: been for Times investment in them at that at that
Speaker 1: time exactly. So I'm just gonna say the word time
Speaker 1: as many times. There's no way of avoiding it. Uh,
Speaker 1: just wait till Warner gets in there, because I use
Speaker 1: that word all the time. Nineteen seventy one. So, still
Speaker 1: trying to make Sterling Communications a profitable company, Dolan begins
Speaker 1: to brainstorm ideas that would convince subscribers to join on
Speaker 1: to this, to to actually willingly become a customer of cable,
Speaker 1: because again, you have to convince people, Hey, I know
Speaker 1: you could get this free over the air on your antenna,
Speaker 1: but the reception is lousy. Pay for it on cable,
Speaker 1: you'll get it. You'll get a great experience. And the
Speaker 1: people who they were contacting, we're saying, but why would
Speaker 1: I do that? Yeah, I mean, yeah, the stuff I
Speaker 1: get over the air is lousy. But if it's going
Speaker 1: to be the same thing, just better quality on cable,
Speaker 1: I feel like I'm getting the rough end of the
Speaker 1: deal here if I have to pay for it. So
Speaker 1: he says, what what can I do to differentiate cable
Speaker 1: to make it more more attractive. Ah, what if we
Speaker 1: made a special channel just for cable. It's not for
Speaker 1: over the air, Only people who are subscribers to the
Speaker 1: cable will get it. And it has to be something
Speaker 1: that's really really compelling, something maybe that carries a lot
Speaker 1: of sports with it. That was his first approach, and
Speaker 1: he called this idea the Green Channel. He he referred
Speaker 1: to it and as the Macy's of television. And this
Speaker 1: was not an entirely new idea. Actually, our CIA had
Speaker 1: created a radio network specifically to give people a reason
Speaker 1: to go out and buy our Cia radios. So why
Speaker 1: would you buy something where there's no content? This is
Speaker 1: sort of the argument people have about four K televisions
Speaker 1: right now. Why would you go out and get a
Speaker 1: four K TV if there are no same argument? That
Speaker 1: argument has been around ever since we started making this
Speaker 1: kind of tech. Oh yeah, and and understand that at
Speaker 1: the time there was some programming on cable stations, but
Speaker 1: most of it was either extremely load budget or or
Speaker 1: very local like a clock streaming the local time, or
Speaker 1: just weather reports, or at the very best, public access.
Speaker 1: Although that didn't become a mandatory thing. Uh, you know,
Speaker 1: branching into the Wayne's World kind of kind of end
Speaker 1: of the deal until after the FCCS Telecommunications Act of two,
Speaker 1: wherein they said that any station that had more than
Speaker 1: subscribers had to have public access content. Yeah this time,
Speaker 1: but but not even that. I mean we we did
Speaker 1: not even have Wayne's World, so that it was not
Speaker 1: party time, It was not excellent, it was not and
Speaker 1: nor Anton Jessip. We had no doctor Anton jessep that. No,
Speaker 1: I don't want to imagine a world where there's no
Speaker 1: Anton Jessip. But so so it was considered a very
Speaker 1: commercially unviable space exactly. Yeah, this was really again just
Speaker 1: an alternative to deliver broadcast over the air TV. It
Speaker 1: wasn't thought of as a way to create new types
Speaker 1: of content, and also very regionalized, very much spread out
Speaker 1: and separated. Like we didn't have these massive cable companies
Speaker 1: that had enormous networks. You had all these different, smaller
Speaker 1: regional companies that serviced little rural areas. And so even
Speaker 1: if you wanted to launch a big idea, like a
Speaker 1: big program, let's say that it's a company that's out
Speaker 1: in the middle of nowhere, in the in the middle
Speaker 1: of a state, where there's hardly anything else, and they think,
Speaker 1: we've got a great idea of our show. We're gonna
Speaker 1: produce a show. They might only be able to deliver
Speaker 1: that show to a very small audience because it wasn't
Speaker 1: a nationwide network. So very different world than the one
Speaker 1: we live in now. So how do you make the
Speaker 1: Green Channel a must buy product? You know, we had
Speaker 1: a lot of these attempts to make pay television channels before,
Speaker 1: but they had failed. And again that over the air
Speaker 1: for free model was very compelling. Well, nineteen seventy two,
Speaker 1: Dolan decides to pitch this idea to Time, which had
Speaker 1: invested in Sterling Communications. Right. He wound up talking with
Speaker 1: one of their lawyers, a man named Jerry Levin, and
Speaker 1: the two convinced the company to take on the idea. Yeah,
Speaker 1: and so, fifty years after the founding of Time Incorporated,
Speaker 1: remember those back in n Now we're in nineteen seventy two,
Speaker 1: Time Incorporated launches a new cable television channel. They had
Speaker 1: taken the Green Channel idea. They renamed it after a
Speaker 1: series of long and arduous meetings, and they figured that
Speaker 1: this name wouldn't really stick for that long because it
Speaker 1: was pretty lame. Yeah, this was supposed to just be
Speaker 1: a temporary kind of placeholder home box office. That was
Speaker 1: the name HBO for short. They thought, well, we'll home
Speaker 1: box office until we figure out something better. They never
Speaker 1: figured out anything better and they went with it. Uh
Speaker 1: So this was again the idea originally was a paid
Speaker 1: television premium channel that would carry uncut, uncensored movies that
Speaker 1: you wouldn't find on broadcast television, plus a few live
Speaker 1: sports events from Madison Square Gardener. Right, So again very
Speaker 1: new thing. The cable television itself did not have that
Speaker 1: many subscribers, and they time was not ready to commit
Speaker 1: full on with this, you know, and so the well,
Speaker 1: let's find a test market, let's look around and see
Speaker 1: if we can figure out what we can, you know,
Speaker 1: how to develop the strategy to make sure it works
Speaker 1: before we really throw in. And they did have on
Speaker 1: their side the fact that TV execs were eager for
Speaker 1: a way to make television unfree. I mean, you know,
Speaker 1: if if you can turn a profit on something, that's
Speaker 1: always better than giving it away for free. And um,
Speaker 1: and stealing cable is a lot harder than it is
Speaker 1: to steal signals out of thin air, right, Yeah, if
Speaker 1: you were just broadcasting this over the air, then obviously
Speaker 1: anyone with an antenna could get at it. There'd have
Speaker 1: to be some other kind of scrambling thing. And we'll
Speaker 1: talk about scrambling later on in another episode. Sure, but okay,
Speaker 1: So that so this test market wound up being um
Speaker 1: in Pennsylvania and New York. Yeah, so the very first
Speaker 1: one was just Wilkes bar Pennsylvania, tiny community like people. Yeah,
Speaker 1: we're talking. I mean, I think they had four hundred
Speaker 1: subscribers at first. I think three five was the estimate.
Speaker 1: I saw a title so even even fewer than that.
Speaker 1: But the reason for that, well, they wanted to do
Speaker 1: Wilkes Barre, Pennsylvania mainly because is one of the big
Speaker 1: partnerships that Time had struck was with the NBA, and
Speaker 1: the idea was to be able to cover NBA games
Speaker 1: live so that people who wouldn't have access to that
Speaker 1: kind of programming could actually watch it live and that
Speaker 1: would be really exciting and be a good reason to
Speaker 1: subscribe to the service. However, the NBA, like a lot
Speaker 1: of different sporting organizations, has blackout rules where where they
Speaker 1: don't want you to uh to publish too broadcast broadcast
Speaker 1: a game within a certain radius of the stadium where
Speaker 1: it's being played exactly. And so if they had launched
Speaker 1: in say Alan Town or Philadelphia, that would have been
Speaker 1: in the radius for all the Philadelphia teams. So they said, well,
Speaker 1: why don't we do Wilkes Bar. It's just outside that radius.
Speaker 1: We're not going to be hit by any blackout dates.
Speaker 1: It will be the best possible experience and that will
Speaker 1: give us the test that we need that can be
Speaker 1: used as word of mouth. So subscriptions six dollars per
Speaker 1: month for HBO. So uh. It goes live on November eighth,
Speaker 1: nineteen seventy two. And the very first movie carried on
Speaker 1: HBO was titled Sometimes a Great Notion, a fantastic film
Speaker 1: about logging. Yeah, Henry Fondo was in it and Paul
Speaker 1: Newman was in it, and it was really a story
Speaker 1: about individualism and being able to strike out on your
Speaker 1: own and to survive against odds both from nature and man.
Speaker 1: And I'm making it sound way more exciting than what
Speaker 1: it really was. But yes, that's that was the movie.
Speaker 1: And then the other thing that they aired was a
Speaker 1: hockey game, not an NBA after a Yeah, the NBA
Speaker 1: does not tend to play in hockey games. Uh. This
Speaker 1: was a game featuring the Rangers against the Canucks, and
Speaker 1: I know you're all dying to know who won, Rangers
Speaker 1: five to alright, spoilers. Yeah, well, you know, for those
Speaker 1: other people who are using way back machines of their
Speaker 1: own to go back into nineteen seventy two and watch
Speaker 1: all those games, forget I said that. So back in
Speaker 1: these early years, the service would only be on the
Speaker 1: air for a few hours each day. It was not
Speaker 1: a twenty four hour channel, all right. They would sign
Speaker 1: off at a certain point. Yeah. I actually watched the
Speaker 1: little cartoon that used to play at the very end.
Speaker 1: It's very cute. This is actually like several minutes long.
Speaker 1: It wasn't like a little twenty second thing. But it's
Speaker 1: a cartoon showing, you know, lights going out in the
Speaker 1: city and setting an alarm clock and fluffing a pillow.
Speaker 1: And this is all cartoonish, right, all cartoons. It was
Speaker 1: essentially saying good night, good night. Yeah, almost almost had
Speaker 1: a night veil moment again there. Boy, it just creeps in,
Speaker 1: doesn't it. So meanwhile, on the back, on the corporate
Speaker 1: side of things, So so that's what's going on on
Speaker 1: the actual television. On the corporate side of things, you
Speaker 1: have Time Incorporated, and they had to carve out space
Speaker 1: for this new uh, this new enterprise HBO. So originally
Speaker 1: they started making space in their own office building, and
Speaker 1: Time Incorporated its headquarters in New York, which was already
Speaker 1: a bustling office. Yeah. So that meant that as h
Speaker 1: began to grow, and it grew pretty quickly, Uh, it
Speaker 1: meant that they had to start getting creative finding places
Speaker 1: to stick people. So departments wouldn't necessarily be all set together.
Speaker 1: You might have a department head who's on a different
Speaker 1: floor from the rest of the office. Uh. There were
Speaker 1: stories about people having to find an office space in
Speaker 1: an old broom closet, or or four or five people
Speaker 1: all sharing a common office area that used to be
Speaker 1: a meeting room. That kind of stuff, things that we
Speaker 1: can kind of identify with here at how stuff works.
Speaker 1: But the interesting thing was that this actually promoted a
Speaker 1: kind of camaraderie among the office workers. They had a
Speaker 1: closeness and kind of a party atmosphere too. Is this
Speaker 1: idea that we're all in it together, We're doing this
Speaker 1: exciting thing. A lot of the people who were working
Speaker 1: there were very young. It was. It was a very happening,
Speaker 1: very startup kind of vibe in despite the fact that
Speaker 1: it was being owned and operated by this very large
Speaker 1: company exactly that had been in business for fifty years,
Speaker 1: and yet it had a very start up feel. That's
Speaker 1: a very good way of putting it. So yeah, very exciting,
Speaker 1: and uh, we can't wait to talk about where it
Speaker 1: went after that first year. I mean, we've only made
Speaker 1: it up to the actual year in which HBO premiered.
Speaker 1: We've got so much more to talk about. But before
Speaker 1: we get into that, let's take a quick break to
Speaker 1: thank our sponsor. All Right, we're back and it's nineteen.
Speaker 1: This was the year that Time bought HBO outright from
Speaker 1: Chuck Dolan and the rest of the Sterling investors and
Speaker 1: was But poor Chuck Dolan, he must have i mean,
Speaker 1: he must have really missed out on everything, right that
Speaker 1: just uh yeah, no, no, not but the the the
Speaker 1: opposite of that. In fact, if we can set the
Speaker 1: way back machine to be the way forward machine for
Speaker 1: just a second, I'll just get on in here and
Speaker 1: you just you keep going. I'm gonna I'm gonna work
Speaker 1: on this, Okay, Okay, So Dolan would would use this
Speaker 1: buyout money to found Cable Vision, which would make him billions.
Speaker 1: Today it is the largest cable provider in the New
Speaker 1: York metro area. UM along with its spinoffs like AMC
Speaker 1: and i f C, the two very popular channels which
Speaker 1: you might know from everything from using your remote control, Yeah, well,
Speaker 1: walking Dead and etcetera. Madman UM and his resulting properties
Speaker 1: like Madison Square Garden and the New York Nixon Rangers.
Speaker 1: This from a guy who had a little business out
Speaker 1: of his kitchen right in Cleveland. Cleveland. Boy, so he's
Speaker 1: he's still kicking as at this podcast. He's worth some
Speaker 1: three point six billion. He has six children who UM
Speaker 1: more or less run a lot of his empire. And
Speaker 1: it's a huge success story. And someday he's a very
Speaker 1: interesting person and I would really like to do more
Speaker 1: on him and or Cable Vision and or all of that. Yeah.
Speaker 1: But okay, back in ninety three, I just got this
Speaker 1: thing fixed to go forward. Oh forget it, we'll just
Speaker 1: stay here, Okay, alright, So, uh, nine seventy three, Jerry
Speaker 1: Levin continues working with the HBO brand, but it only
Speaker 1: has about eight thousand subscribers. And uh, that's spread across
Speaker 1: maybe fourteen different cable opera rating systems, all of which
Speaker 1: are still in Pennsylvania. Yeah, it still hasn't moved into
Speaker 1: New York yet. So the big, the big irony here
Speaker 1: is that it was possible because of the stake in
Speaker 1: Sterling Communications, but that was based solely in New York,
Speaker 1: and Sterling Communications did not yet carry HBO. It was
Speaker 1: all still in Pennsylvania. Meanwhile, that same year, nineteen seventy three,
Speaker 1: you saw several other pay television channels launch. They had
Speaker 1: names like Star Channel from Warner Cable, Theater Vision and
Speaker 1: Channel one. And if you're asking yourself, okay, well where
Speaker 1: did those go? Yeah nowhere. Yeah they didn't. They did
Speaker 1: not succeed. They did not in the long run survive,
Speaker 1: so but they it did show that HBO was starting
Speaker 1: to kind of set a precedent, and other other companies
Speaker 1: were thinking, how can we also capitalize on this? They
Speaker 1: just hadn't quite figured out the best way of doing it.
Speaker 1: Nineteen seventy four, we see HBO clawing its weight, you know,
Speaker 1: just inch by inch, to fifty seven thousand subscribers in Pennsylvania,
Speaker 1: and finally also in New York, also finally available on
Speaker 1: Sterling Communications, but now Time had bought out the rest
Speaker 1: of the interest in Sterling and it renamed it Manhattan Cable.
Speaker 1: So yeah, yeah. In an effort to reach an even
Speaker 1: broader audience, Levin convinced the then president of Time to
Speaker 1: let HBO begin to deliver content via satellite. And this
Speaker 1: was crazy. No one, no one wanted to believe that
Speaker 1: this was going to work at all. This is the
Speaker 1: very first television station in the United States to use
Speaker 1: satellite as a means of distribution. And it didn't mean
Speaker 1: that they were using satellite to beam it two households
Speaker 1: that had satellite dishes, because satellite dishes at the time
Speaker 1: cost some seventy five thousand dollars in that day's money,
Speaker 1: something your average homeowner probably wasn't going to probably invest in.
Speaker 1: I wouldn't know. I wouldn't have either. So what they
Speaker 1: were doing was sending beaming the signal up to a
Speaker 1: satellite that would then beam down to satellite receiver dishes
Speaker 1: that were owned by other able systems. All right, So
Speaker 1: the cable operator would then send that signal out via cable.
Speaker 1: Right Because originally what these companies were doing was using
Speaker 1: microwave transmission. But microwave transmission has a limited range and
Speaker 1: you need line of sight for it to work. So
Speaker 1: in other words, if you had even a really powerful
Speaker 1: microwave radio station in say Pennsylvania, it's not going to
Speaker 1: reach all the way out to the other side of
Speaker 1: the United States, not without a bunch of relays exactly
Speaker 1: between exactly you'd have to end line of sight relays.
Speaker 1: So getting those rocky mountains be kind of tricky. But
Speaker 1: what they decided to do was instead use geo stationary satellites.
Speaker 1: So geo stationary orbit it means that the satellite is
Speaker 1: actually maintaining its position above a specific point on the Earth.
Speaker 1: And these satellites are way the heck out there. Okay,
Speaker 1: So our satellites that we tend to think of in
Speaker 1: our you know, the ones that by the way in
Speaker 1: the in the biziness, they're called birds. Apparently I did
Speaker 1: not know that until I started eating all the information
Speaker 1: to call them birds. So these birds up there, like
Speaker 1: if you're talking about normal ones that just pass over
Speaker 1: in low earth orbit, we're talking to maybe a hundred
Speaker 1: hundred fifty miles out from the surface of the Earth,
Speaker 1: like where the I S is. Yeah, these these satellites,
Speaker 1: they don't maintain a position directly over a point. You
Speaker 1: have to go much further out. So the Geo stationary
Speaker 1: UH satellites that that HBO was interested in were twenty
Speaker 1: two thousand, three hundred miles out because from that distance
Speaker 1: they had a broadcast footprint that covered all of North America.
Speaker 1: So with one satellite you could then being the signals
Speaker 1: that could be picked up across the United States. Because
Speaker 1: the further out you kind of think of it like
Speaker 1: a flashlight. The further out you go, the more area
Speaker 1: it covers. Yeah, yeah, absolutely, And I mean to put
Speaker 1: it in perspective. If you remember from our A T
Speaker 1: and T episode, the very first active communication satellite had
Speaker 1: only been launched like twelve years earlier, in nineteen sixty two.
Speaker 1: So so although twelve years is a long time and
Speaker 1: technological thinking, that's still this is this is cutting edge
Speaker 1: technolo time exactly. Yeah. No one else had done it yet,
Speaker 1: you know, no one else had managed to do the
Speaker 1: television stuff yet like HBO did. So they the technical
Speaker 1: term for beaming it up, that's using the up link
Speaker 1: satellite to antenna. So you're that's the transmission, use the
Speaker 1: up link to send it up to the satellite. The
Speaker 1: satellite has transponders on it specifically that have been leased
Speaker 1: by whatever company in this case HBO to then beam this,
Speaker 1: amplify that signal that it picks up, and then beam
Speaker 1: it back down to the Earth. And then you have
Speaker 1: the down link receiver dishes that capture that signal and
Speaker 1: then send it onto the cable station for transmission. It
Speaker 1: might do that might be transmitted over microwave at that point,
Speaker 1: depending upon whether or not the receiving station and the
Speaker 1: cable station are adjoining or if they're separated by several
Speaker 1: miles or whatever. So that was the basic principle behind it,
Speaker 1: and so on September, HBO was able to carry the
Speaker 1: Muhammad Ali Joe Frasier boxing match also known as the
Speaker 1: Thrill in Manila. They were the only live carrier in
Speaker 1: the US for for this programming, and the organizers time
Speaker 1: to the fight to happen during East Coast prime time,
Speaker 1: and so those Pennsylvania and New York subscribers who could
Speaker 1: already enjoy HBO because it was being transmitted via microwave
Speaker 1: transmission to to cable operators were joined by folks in Florida,
Speaker 1: like fifteen thousand of them who were able to see
Speaker 1: this simultaneously. Because of this, it actually could technically be
Speaker 1: picked up across the entire United States, just whichever ones
Speaker 1: were affiliated with HBO. Three towns in Florida. I think
Speaker 1: we're the only ones that actually had the satellite down
Speaker 1: link at that time. Yeah. So the thing was that
Speaker 1: because HBO was able to do this, and because they could,
Speaker 1: they could back up the claim that they could do
Speaker 1: this to anywhere in the United States that happened to
Speaker 1: have cable service as long as the cable operator carried HBO.
Speaker 1: So if they partner with us, we can let you
Speaker 1: see this stuff too. It ended up being a huge boon.
Speaker 1: In fact, uh, there there are reports that if someone
Speaker 1: came out to install cable in a neighbor's house and
Speaker 1: other neighbors notice, they would chase down the cable car
Speaker 1: they don't see HBO on the side of the van
Speaker 1: and like run down the street and like knock on
Speaker 1: the side, and so you could you also hook me up?
Speaker 1: I would love to have that too, So big big
Speaker 1: boost to HBO. If it hadn't been for the satellite move,
Speaker 1: it probably never would have gone much further than the
Speaker 1: regionalized paid TV network that it was. Maybe eventually would
Speaker 1: have crept further along, but it wouldn't be near where
Speaker 1: it is now, certainly. And by the end of nineteen
Speaker 1: seventy five, they had more than three hundred thousand subscribers
Speaker 1: in sixteen states to show for it. Furthermore, I mean,
Speaker 1: this really proved that there was a lot of money
Speaker 1: and space in the cable and satellite TV field. Yeah.
Speaker 1: And not only did they prove that to their subscribers,
Speaker 1: they proved it to competitors, all right, because in n Yeah,
Speaker 1: HBO had a rival pop up, a rival known as Showtime.
Speaker 1: Now here's an interesting thing to me, Lauren. Uh. You know,
Speaker 1: when I started doing the research for this episode and
Speaker 1: we started building out these notes, I did not realize
Speaker 1: that HBO dated all the way back to nineteen seventy two,
Speaker 1: Nor did I realize that Showtime dated back to nineteen
Speaker 1: seventy six, probably because I didn't have cable as a
Speaker 1: kid until I was at least seven or eight years old.
Speaker 1: Uh And and so to me, and and we didn't
Speaker 1: have Showtime, we did get HBO. But to me, I
Speaker 1: always thought of this why it must have been late seventies,
Speaker 1: maybe early eighties. I didn't realize that it was actually
Speaker 1: much older than that. Now Showtime very similar in concept
Speaker 1: to HBO. It also would run uncut, uncensored movies. In fact,
Speaker 1: HBO and Showtime would often have a very similar, if
Speaker 1: not nearly identical list of movies that they could run
Speaker 1: at any given time at this early beginning stage. Yes, yeah,
Speaker 1: and some would argue moving forward, same thing, um within
Speaker 1: two years. So nineteen seventy eight, Showtime would follow suit.
Speaker 1: It would follow HBO's example and go nationwide with a
Speaker 1: satellite service, which at that time had only been done
Speaker 1: by one other channel besides HBO, which was Ted Turner's
Speaker 1: superstation w tb S also known as just to TBS,
Speaker 1: our Turner Broadcast System. So TBS and HBO together were
Speaker 1: companies that made cable subscriptions more attractive. Keep in mind
Speaker 1: it's still really expensive to install cable into cities. It
Speaker 1: wasn't just New York that was a special case. That
Speaker 1: was an example that was mirrored in cities across the
Speaker 1: United States. So although supposedly Ted Turner and and TBS
Speaker 1: got into the game because he heard about HBO, mostly
Speaker 1: after that that big prize fight had occurred. Legend has
Speaker 1: it that someone said, yeah, someone convinced Time to to
Speaker 1: use the satellite hookup and they're and they're getting to
Speaker 1: fight live. It's on HBO, And he was like, what's
Speaker 1: an HBO, which was a common refrain at the time.
Speaker 1: Apparently right in those early days before that boom, no
Speaker 1: one had really heard of it, but everyone was fascinated
Speaker 1: once they did, because again, in those early days, it
Speaker 1: was only available to a few tens of thousands of people.
Speaker 1: So if you were didn't live in one of those
Speaker 1: regions that that was currently served by HBO, why would
Speaker 1: you have heard of it? So, yeah, it was one
Speaker 1: of those things where Turner ended up jumping on that
Speaker 1: that strategy, even though he had not really heard of
Speaker 1: the the channel that had already done it. It's also
Speaker 1: why we all got to enjoy Georgia Championship Wrestling, So
Speaker 1: thank you, Mr Turner. Um. So, then uh, we start
Speaker 1: seeing some competition showing up with showtime there and some
Speaker 1: actual competition that that lasts. It's not like those other
Speaker 1: channels we mentioned earlier that yeah, that made it go
Speaker 1: into it and didn't succeed. So nineteen seventy seven, HBO,
Speaker 1: for the first time since it started in nineteen seventy two,
Speaker 1: turns a profit, which not been again not very surprising.
Speaker 1: You've got a lot of money that has to go
Speaker 1: out from HBO for it to be able to run
Speaker 1: its business. It had to pay licensing fees to movie
Speaker 1: studios in order to get the rights to show the
Speaker 1: movies on HBO. So it had to spend money in
Speaker 1: order to even have content, and then it had to
Speaker 1: try and make that up in subscriptions. That in structure
Speaker 1: was certainly not cheap. Right. So, while HBO probably didn't
Speaker 1: have to foot the bill for most of that, considering
Speaker 1: that they would partner with cable companies, they had to
Speaker 1: convince cable companies to go through the trouble of installing
Speaker 1: all that cable into major metropolitan areas, uh in order
Speaker 1: to have a larger subscription base, right, I mean, they
Speaker 1: had to say, like, hey, cable company that services Nashville, Tennessee,
Speaker 1: you want to put cable in all your homes. I
Speaker 1: know that it's a lot of money, poor concrete and
Speaker 1: build a nine foot dish to get a satellite down
Speaker 1: link so that you can run you know, dollars worth
Speaker 1: of cable per miles. But just keep in mind that
Speaker 1: over the long term, you're gonna make lots of money.
Speaker 1: So that was an argument they had to make over
Speaker 1: and over again. They got really good at making that argument. Also,
Speaker 1: in seven a Law your name, Michael Fooks came over
Speaker 1: to HBO from the William Morris Agency. He'll be pretty
Speaker 1: important later on in the story. That's why I decided
Speaker 1: to mention when he showed up resolutely. Um, but at
Speaker 1: the time in so, at this point, HBO has about
Speaker 1: one point five million subscribers, but they are losing tens
Speaker 1: of thousands. Yeah, because of a pretty nasty business move
Speaker 1: on the part of Showtime. So here's the thing about
Speaker 1: the cable business, y'all. It's it's not polite. This is
Speaker 1: it is a competitive, cutthroat business, so that the gloves
Speaker 1: are off. Yeah. No, we've seen this in multiple ways,
Speaker 1: both as consumers and on the other side. I mean,
Speaker 1: there are a lot of considerations you have to make
Speaker 1: when you're running a cable business. Whether you're an operator,
Speaker 1: there are a lot of of considerations you have to make,
Speaker 1: or if you're a content creator, there are a lot
Speaker 1: of considerations you have to make absolutely um and so okay,
Speaker 1: so so Showtime. Showtime's parent company was Viacom. Yeah, big
Speaker 1: big company, big competitor to Time, and they had made
Speaker 1: a deal with a cable provider call Teleprompter, which was
Speaker 1: the largest cable operator in the United States, to be
Speaker 1: their exclusive pay TV movie channel, which meant that any
Speaker 1: Teleprompter subscriber could get Showtime, but would not be able
Speaker 1: to get HBO even if they wanted it. It was
Speaker 1: not an option. So that meant that HBO was suddenly
Speaker 1: cut off from a large portion of potential customers. So
Speaker 1: what does Time Incorporated do? They purchase American Television and
Speaker 1: Communications Corporation, which was the second largest cable system operator
Speaker 1: in the US. They were hoping that perhaps the siv
Speaker 1: thousand or so customers would also subscribe to HBO. And
Speaker 1: HBO also continued to add premium films to its collection,
Speaker 1: making some pretty interesting business deals. They were able to
Speaker 1: negotiate a block of forty MGM and United Artist titles
Speaker 1: for about thirty five million dollars. Now, these were titles
Speaker 1: that were movies. Some of them hadn't come out yet,
Speaker 1: so this was just kind of uh, you know, here's
Speaker 1: thirty five million. We want to be able to grab
Speaker 1: forty titles that you guys come up with, right right.
Speaker 1: They were investing in pre production in return for exclusive
Speaker 1: rights to these films, um and it was a huge
Speaker 1: gamble because you don't know if that film is going
Speaker 1: to be a flop or not. You you don't know
Speaker 1: if people are going to want to subscribe to your service.
Speaker 1: Right right, you might be like, wow, HBO has exclusive
Speaker 1: rights to some of the worst movies I've ever had
Speaker 1: in Fever. That's great. Yeah, sorry, Cabin Fever. I'm not
Speaker 1: sure where that came from, but yeah, sometimes it paid off,
Speaker 1: sometimes it didn't. And in fact, they also began to
Speaker 1: learn lessons down the line. One of the early lessons
Speaker 1: they learned, actually, I guess it wasn't that early. One
Speaker 1: of the lessons they would eventually learn is that they
Speaker 1: could set minimums for how much money they would spend
Speaker 1: for a title. This was something that was negotiated with
Speaker 1: the movie studio. So they might say, all right, at minimum,
Speaker 1: will pay you fifty dollars for this title. That's I'm
Speaker 1: just pulling a number out of the air. By the way,
Speaker 1: that's not necessarily a real number, but what they didn't
Speaker 1: think to do is set a cap on how much
Speaker 1: ultimately a movie might be valued at. And if they
Speaker 1: entered an agreement ahead of time to purchase a certain
Speaker 1: number of movies from a certain studio and one of
Speaker 1: those movies becomes a runaway hit and they are obligated
Speaker 1: to purchase the rights to that movie, and the movie
Speaker 1: studio is in the the the bargaining position where they
Speaker 1: can demand huge amount of money for that. That became
Speaker 1: a huge, uh expense for RHO. We'll talk about a
Speaker 1: specific example of that a little bit later on in
Speaker 1: another episode. So yeah, yeah, big risks, but it also
Speaker 1: what meant that it was paying off and helping differentiate
Speaker 1: HBO from Showtime. Now we move up to nineteen seventy nine.
Speaker 1: This is where we're going to conclude this episode. But
Speaker 1: ninety nine we see a man named Jeff Bukes who
Speaker 1: had started as a trainee at City Bank in their
Speaker 1: law department, and also, by the way, is rumored to
Speaker 1: have had a very what's HBO of response when he
Speaker 1: first heard about the network and figured out what the
Speaker 1: network was and and left his entire career in order
Speaker 1: to go be a part of this new media company. Yeah,
Speaker 1: he had worked he had entered City Banks trainee program.
Speaker 1: He worked there in the law department for two years
Speaker 1: and then said I'm going to HBO. And I'm sure
Speaker 1: some of the people at that time said, what's HBO.
Speaker 1: So he would end up doing pretty well over at HBO.
Speaker 1: We'll talk more about Bukes throughout the next few episodes,
Speaker 1: but in general, just to give you a little preview,
Speaker 1: in he became president of HBO. So no, pretty good,
Speaker 1: became the CEO's that's even better. And in two thousand
Speaker 1: eight he became CEO of the parent company Time Warner
Speaker 1: than now granted, Time Warner itself is still off in
Speaker 1: the future. It's back in nineteen nine. It was still
Speaker 1: just Time Incorporated. But yeah, he he became the head honcho.
Speaker 1: And the same year, back in nine, HBO decided to
Speaker 1: experiment with launching a complementary pay TV channel that ran
Speaker 1: more kid friendly PG rated movies and was priced at
Speaker 1: a lower price point because some people were saying, you know,
Speaker 1: it's too expensive of or I don't really want all
Speaker 1: this sex and violence on my television, and so they thought, oh, well,
Speaker 1: well we'll cater to this. This group of people will
Speaker 1: be able to get people who can't justify the expense
Speaker 1: of a monthly subscription to HBO or who wants something
Speaker 1: that's kid friendly, Well we'll give them this and it'll
Speaker 1: be terrific. We'll call it Take two, which if you
Speaker 1: start searching for it's gonna take you a while to
Speaker 1: find because it didn't know Yeah, no one really cared.
Speaker 1: It died out pretty quietly. Um So yeah, finding finding
Speaker 1: mentions of Take two somewhat challenging. I mean, I'm pretty
Speaker 1: sure Wikipedia has a short little entry about not not
Speaker 1: an entry on Take two, but I think it mentions
Speaker 1: it in the overall article for HBO. It's a little
Speaker 1: red lenk. Yeah, probably. Yeah, one of those things where
Speaker 1: like you've you may have heard of it if you
Speaker 1: worked for HBO. That's how how scared we're talking. Well,
Speaker 1: we've got so much more to talk about with HBO.
Speaker 1: We have a lot of of interesting information about what
Speaker 1: it did into the eighties and of course the the
Speaker 1: easing uh crazy boom and original content and uh and
Speaker 1: where it stands today. Yeah, so keep with us, guys.
Speaker 1: We've got two more episodes to go with this, and
Speaker 1: in the meanwhile, if you're thinking, you know, I really
Speaker 1: like how they're doing this in depth coverage of a
Speaker 1: specific topic. I want to hear this kind of of
Speaker 1: depth on this other topic. Get a let us now,
Speaker 1: because otherwise we're just we're just turning the lights off
Speaker 1: and groping around in the dark and to try and
Speaker 1: talk about something, and half the time that ends up
Speaker 1: this being installation film, because that's all this room is
Speaker 1: filled with. So guys, if you have an idea for
Speaker 1: an episode, let us know. Send us an email. That
Speaker 1: address is text up at Discovery dot com, or drop
Speaker 1: us a line on the various social networks we'd like
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Speaker 1: The handle there is tech stuff hs W and Lauren
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