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