1 00:00:04,400 --> 00:00:07,800 Speaker 1: Welcome to Tech Stuff, a production from I Heart Radio. 2 00:00:12,039 --> 00:00:14,440 Speaker 1: Hey there, and welcome to tech Stuff. I'm your host, 3 00:00:14,640 --> 00:00:17,760 Speaker 1: Jonathan Strickland. I'm an executive producer with I Heart Radio 4 00:00:17,800 --> 00:00:20,919 Speaker 1: and I love all things tech and it's time for 5 00:00:21,000 --> 00:00:24,799 Speaker 1: us to continue our exploration of the history of Warner Media. 6 00:00:26,000 --> 00:00:28,800 Speaker 1: So in our last episode, I talked about the founding 7 00:00:28,960 --> 00:00:33,159 Speaker 1: of two major parts of Warner Media, which was a 8 00:00:33,360 --> 00:00:38,519 Speaker 1: Time Incorporated, a magazine publisher, and Warner Brothers as in 9 00:00:38,600 --> 00:00:42,239 Speaker 1: Warner Brothers Studios, the film and then later TV and 10 00:00:42,360 --> 00:00:46,360 Speaker 1: record label studios. I focused a lot on Warner Brothers 11 00:00:46,360 --> 00:00:49,440 Speaker 1: in that last episode for pretty obvious reasons, but it's 12 00:00:49,479 --> 00:00:54,240 Speaker 1: time to go back to Time Incorporated. That is for 13 00:00:54,280 --> 00:00:58,000 Speaker 1: a moment anyway. Now. In the last episode, I said 14 00:00:58,040 --> 00:01:02,280 Speaker 1: that Time grew as a publisher, adding more publications to 15 00:01:02,320 --> 00:01:05,319 Speaker 1: its name as it evolved, and that it continued to 16 00:01:05,440 --> 00:01:08,600 Speaker 1: do so right up to nine nine, when it would 17 00:01:08,600 --> 00:01:12,520 Speaker 1: begin the process of merging with a company that at 18 00:01:12,560 --> 00:01:15,679 Speaker 1: that point was called Warner Communications. And I'm not going 19 00:01:15,720 --> 00:01:19,560 Speaker 1: to go all over that again because it's crazy complicated, 20 00:01:19,600 --> 00:01:22,480 Speaker 1: and you know, I just did that in Monday's episode. 21 00:01:22,760 --> 00:01:25,759 Speaker 1: But one thing I did not cover was Times own 22 00:01:26,000 --> 00:01:29,480 Speaker 1: multimedia empire. See, Time wasn't just in the business of 23 00:01:29,520 --> 00:01:33,440 Speaker 1: publishing magazines or even those Time Life books. You might 24 00:01:33,480 --> 00:01:36,480 Speaker 1: remember if you grew up in the seventies and eighties 25 00:01:36,520 --> 00:01:38,759 Speaker 1: like I did, and you saw the commercials all the time. 26 00:01:38,920 --> 00:01:41,280 Speaker 1: You know, I never did get that series about ghosts, 27 00:01:41,319 --> 00:01:45,480 Speaker 1: but I always wanted it. Anyway, we're backtracking a bit 28 00:01:45,920 --> 00:01:49,440 Speaker 1: to the nineteen sixties to talk about another element of 29 00:01:49,480 --> 00:01:53,760 Speaker 1: the Warner Media empire, and it came to Warner Media 30 00:01:54,000 --> 00:01:57,600 Speaker 1: through Time Incorporated. And it's a very important piece of 31 00:01:57,640 --> 00:02:01,040 Speaker 1: that empire. In fact, it's a composent that would end 32 00:02:01,120 --> 00:02:04,600 Speaker 1: up being transformational, so much so that I've done a 33 00:02:04,600 --> 00:02:09,640 Speaker 1: full series about this company, or rather this channel, and 34 00:02:09,680 --> 00:02:14,080 Speaker 1: I'm talking about HBO or Home Box Office, the subscription 35 00:02:14,160 --> 00:02:17,840 Speaker 1: cable channel best known today for like original series like 36 00:02:17,960 --> 00:02:20,560 Speaker 1: Game of Thrones and stuff. So since I did a 37 00:02:20,600 --> 00:02:23,399 Speaker 1: full treatment of this company in the past in full 38 00:02:23,440 --> 00:02:26,440 Speaker 1: episodes of tech stuff, and in fact have aired some 39 00:02:26,520 --> 00:02:29,000 Speaker 1: of those episodes as classics, not not in the not 40 00:02:29,120 --> 00:02:33,080 Speaker 1: too distant past, I'm not going to dive into excruciating detail, 41 00:02:33,720 --> 00:02:35,519 Speaker 1: but we do need to cover some of it because 42 00:02:36,080 --> 00:02:40,720 Speaker 1: HBO is a really important part of Warner Media today. Alright, 43 00:02:40,760 --> 00:02:44,280 Speaker 1: so let's put ourselves in the mindset of the typical 44 00:02:44,360 --> 00:02:49,240 Speaker 1: American consumer, uh, someone who watches television back in the 45 00:02:49,320 --> 00:02:54,080 Speaker 1: nineteen sixties. This person has spent a not insignificant amount 46 00:02:54,120 --> 00:02:57,520 Speaker 1: of money to purchase a television set, and they most 47 00:02:57,560 --> 00:03:00,919 Speaker 1: likely get their television using an end anna to tune 48 00:03:00,960 --> 00:03:05,480 Speaker 1: into over the air broadcasts from nearby TV stations. Now, 49 00:03:05,600 --> 00:03:09,560 Speaker 1: maybe if they live in a rural area, or if 50 00:03:09,600 --> 00:03:13,000 Speaker 1: they're in a really dense urban area with lots of skyscrapers, 51 00:03:13,600 --> 00:03:17,239 Speaker 1: they would actually be using cable. It's more likely to 52 00:03:17,280 --> 00:03:19,800 Speaker 1: be in a rural area in the nineteen sixties because see, 53 00:03:20,280 --> 00:03:23,760 Speaker 1: over the air broadcasts have a limited range, and once 54 00:03:23,760 --> 00:03:26,600 Speaker 1: you get far enough out from where there's a transmitter, 55 00:03:27,000 --> 00:03:30,000 Speaker 1: the signal you pick up might be so weak that 56 00:03:30,240 --> 00:03:33,200 Speaker 1: you can't see or hear anything on a given channel, 57 00:03:33,800 --> 00:03:36,440 Speaker 1: or it's just you know, a really poor quality, like 58 00:03:37,400 --> 00:03:40,720 Speaker 1: a lot of static or whatever. So cable was a 59 00:03:40,760 --> 00:03:44,920 Speaker 1: way to deliver television signals to distant locations over a 60 00:03:44,920 --> 00:03:48,800 Speaker 1: physical wire or cable rather than over the air, and 61 00:03:48,920 --> 00:03:52,120 Speaker 1: by the nineteen sixties there were more than six hundred 62 00:03:52,240 --> 00:03:56,520 Speaker 1: cable systems in the United States. Mostly serving rural areas 63 00:03:56,560 --> 00:03:59,400 Speaker 1: that were not or you know, small towns that were 64 00:03:59,440 --> 00:04:03,040 Speaker 1: not close to transmitters. And the way most of these 65 00:04:03,080 --> 00:04:06,240 Speaker 1: worked was that you would have a dedicated antenna in 66 00:04:06,280 --> 00:04:08,960 Speaker 1: a location that could get a pretty good signal. So 67 00:04:09,440 --> 00:04:11,800 Speaker 1: you might build a really tall antenna at the top 68 00:04:11,800 --> 00:04:14,640 Speaker 1: of a hill, for example, and then you would pick 69 00:04:14,720 --> 00:04:17,840 Speaker 1: up signals using that antenna, and you'd send that signal 70 00:04:17,960 --> 00:04:21,320 Speaker 1: down cables to various households, which had to pay a 71 00:04:21,360 --> 00:04:25,800 Speaker 1: fee to access the cable feed. But the alternative was 72 00:04:25,880 --> 00:04:30,039 Speaker 1: to either get really cruddy TV signals or go with 73 00:04:30,120 --> 00:04:33,880 Speaker 1: nothing at all. So for some regions, cable TV was 74 00:04:34,000 --> 00:04:38,400 Speaker 1: really the only option if you actually wanted to watch television. Now, 75 00:04:38,400 --> 00:04:41,520 Speaker 1: it was a guy named Charles Dolan who really pioneered 76 00:04:41,640 --> 00:04:44,960 Speaker 1: cable for dense urban environments. Like I said, it was 77 00:04:44,960 --> 00:04:49,080 Speaker 1: already being done out in rural areas, but Dolan was 78 00:04:49,120 --> 00:04:52,640 Speaker 1: looking at places like New York City. Dolan had started 79 00:04:52,640 --> 00:04:55,640 Speaker 1: out as a film editor. He was splicing together stuff 80 00:04:55,680 --> 00:04:59,760 Speaker 1: like sports films and industrial films in Cleveland, Ohio. But 81 00:05:00,120 --> 00:05:03,000 Speaker 1: he got a lucrative offer to sell his business and 82 00:05:03,040 --> 00:05:05,799 Speaker 1: he took it. Then he relocated to New York City, 83 00:05:06,040 --> 00:05:08,919 Speaker 1: and that's where he saw the opportunity to potentially create 84 00:05:08,960 --> 00:05:11,560 Speaker 1: a cable system to serve the needs of folks who 85 00:05:11,600 --> 00:05:15,599 Speaker 1: were living in Downtown Manhattan and Lower Manhattan. Many of 86 00:05:15,600 --> 00:05:18,839 Speaker 1: these people, because of skyscrapers, weren't able to get a 87 00:05:18,880 --> 00:05:22,599 Speaker 1: good signal just using you know, antenna. Meanwhile, folks in 88 00:05:22,680 --> 00:05:26,640 Speaker 1: New Jersey could pick up signals from Manhattan without a problem. 89 00:05:26,760 --> 00:05:29,600 Speaker 1: So it was really a disconnect, right. You had people 90 00:05:29,960 --> 00:05:33,600 Speaker 1: living miles away who were picking up signals there were 91 00:05:33,640 --> 00:05:36,800 Speaker 1: just a few blocks away from Lower Manhattan, and the 92 00:05:36,800 --> 00:05:40,479 Speaker 1: folks at Lower Manhattan couldn't see anything. Well. Dolan decided 93 00:05:40,520 --> 00:05:43,960 Speaker 1: to start up a business called Sterling Information Services in 94 00:05:44,040 --> 00:05:48,400 Speaker 1: nineteen and the company's focus was to provide cable TV 95 00:05:48,480 --> 00:05:53,320 Speaker 1: service for Lower Manhattan. But while the demand for television 96 00:05:53,600 --> 00:05:57,600 Speaker 1: was there, the actual reality of wiring up customers was 97 00:05:57,640 --> 00:06:01,599 Speaker 1: another matter. Because after a mass of blizzard that happened 98 00:06:01,600 --> 00:06:03,680 Speaker 1: in the late nineteenth century, the city of New York 99 00:06:03,720 --> 00:06:08,200 Speaker 1: had made a decision regarding infrastructure. You know, back then, 100 00:06:08,839 --> 00:06:12,440 Speaker 1: numerous utility poles were destroyed in that blizzard, so New 101 00:06:12,520 --> 00:06:16,880 Speaker 1: York decided to install power lines underground rather than using 102 00:06:17,000 --> 00:06:20,520 Speaker 1: utility poles, and stringing them above ground. Now that meant 103 00:06:21,040 --> 00:06:23,840 Speaker 1: there were no utility poles for Dolan to use in 104 00:06:23,960 --> 00:06:27,800 Speaker 1: order to wire up cable, so that meant he was 105 00:06:27,839 --> 00:06:33,000 Speaker 1: going to have to lay cable underground. That is incredibly expensive. 106 00:06:33,320 --> 00:06:35,920 Speaker 1: The estimates were somewhere in the neighborhood of three hundred 107 00:06:35,960 --> 00:06:39,679 Speaker 1: thousand dollars per mile of cable, and getting the cable 108 00:06:39,720 --> 00:06:42,279 Speaker 1: to a customer's location was just part of the problem. 109 00:06:42,480 --> 00:06:47,520 Speaker 1: Manhattan residents largely lived in apartment buildings, so Dolan would 110 00:06:47,520 --> 00:06:49,800 Speaker 1: not just have to get the cable to the building, 111 00:06:50,120 --> 00:06:53,320 Speaker 1: he would then have to install cable into the buildings themselves, 112 00:06:53,320 --> 00:06:56,200 Speaker 1: you know, snake it up through the structure itself, in 113 00:06:56,320 --> 00:06:59,280 Speaker 1: order to wire up each of the apartments that would 114 00:06:59,320 --> 00:07:03,240 Speaker 1: subscribe to his service. So by nineteen sixty seven, you know, 115 00:07:03,320 --> 00:07:06,520 Speaker 1: two years into his endeavor, Dolan had only signed up 116 00:07:06,560 --> 00:07:09,640 Speaker 1: four hundred customers and had spent more than two million 117 00:07:09,720 --> 00:07:13,600 Speaker 1: dollars in the process. And he was losing money at 118 00:07:13,640 --> 00:07:18,200 Speaker 1: that time, Like he the costs were vastly outpacing the revenue. 119 00:07:19,160 --> 00:07:23,200 Speaker 1: Dolan got an investor to help offset those costs, and 120 00:07:23,240 --> 00:07:27,320 Speaker 1: that kept him afloat. And that investor was drumroll, please, 121 00:07:28,160 --> 00:07:33,520 Speaker 1: Time incorporated. Time, the publisher was eyeing cable as a 122 00:07:33,560 --> 00:07:37,840 Speaker 1: possible means of diversifying its portfolio of businesses, and the 123 00:07:37,880 --> 00:07:42,800 Speaker 1: folks at Time had this feeling that cable TV could 124 00:07:42,840 --> 00:07:46,160 Speaker 1: become a really big thing. So Time bought a stake 125 00:07:46,400 --> 00:07:49,080 Speaker 1: in Sterling, which gave Dolan the money he needed in 126 00:07:49,160 --> 00:07:52,160 Speaker 1: order to stay in business. But Dolan was still having 127 00:07:52,240 --> 00:07:56,080 Speaker 1: trouble convincing people to actually sign up for the cable service. 128 00:07:56,680 --> 00:08:01,040 Speaker 1: The content that already existed for TV isn't always compelling 129 00:08:01,160 --> 00:08:04,360 Speaker 1: enough to convince most folks to agree to a subscription 130 00:08:04,480 --> 00:08:08,600 Speaker 1: based model in order to access it. See. The main 131 00:08:08,680 --> 00:08:12,120 Speaker 1: issue really was that TV content at that time was 132 00:08:12,400 --> 00:08:16,520 Speaker 1: free quote unquote free Now I say free because it's 133 00:08:16,760 --> 00:08:19,760 Speaker 1: free the same way this podcast is free, and that 134 00:08:19,840 --> 00:08:24,680 Speaker 1: the content on television received revenue from advertisers. Content was 135 00:08:24,800 --> 00:08:28,040 Speaker 1: ad supported. In other words, This also gave rise to 136 00:08:28,040 --> 00:08:31,960 Speaker 1: companies like Nielsen, which created systems that could measure the 137 00:08:32,000 --> 00:08:37,160 Speaker 1: relative popularity of different programs. That popularity would then lead 138 00:08:37,160 --> 00:08:40,480 Speaker 1: to estimates about how many people were watching any given 139 00:08:40,520 --> 00:08:43,440 Speaker 1: show at any given time. Yeah, this was done by 140 00:08:43,600 --> 00:08:48,240 Speaker 1: projecting numbers. You would distribute a number of devices that 141 00:08:48,280 --> 00:08:52,240 Speaker 1: would essentially monitor what channel televisions were set at in 142 00:08:52,320 --> 00:08:56,280 Speaker 1: a given time, and then you would multiply that number 143 00:08:56,280 --> 00:08:58,480 Speaker 1: by a factor in order to kind of project that 144 00:08:58,520 --> 00:09:01,679 Speaker 1: out to the general public. Not the most precise way 145 00:09:01,679 --> 00:09:04,200 Speaker 1: of doing things, but it was the only real way 146 00:09:04,200 --> 00:09:08,320 Speaker 1: of handling it at the moment. So that popularity level 147 00:09:08,360 --> 00:09:11,360 Speaker 1: would lead to, you know, estimates about how many people 148 00:09:11,400 --> 00:09:13,560 Speaker 1: were watching at any given show at any given time, 149 00:09:13,559 --> 00:09:16,880 Speaker 1: and that gave TV executives an idea of what their 150 00:09:16,880 --> 00:09:21,080 Speaker 1: most popular programming was. That would lead to TV executives 151 00:09:21,160 --> 00:09:24,640 Speaker 1: being able to negotiate bigger ad deals for the most 152 00:09:24,720 --> 00:09:27,880 Speaker 1: popular programs. And all of this makes sense, right, I mean, 153 00:09:28,120 --> 00:09:30,880 Speaker 1: you can ask for a higher price to run an 154 00:09:30,920 --> 00:09:35,560 Speaker 1: ad during a really popular show because presumably way more 155 00:09:35,559 --> 00:09:38,760 Speaker 1: people are going to see ads that run on that 156 00:09:38,800 --> 00:09:41,520 Speaker 1: show than they would if you had an episode of 157 00:09:41,520 --> 00:09:47,600 Speaker 1: I don't know, Johnny tech boy talks about gadgets. Trust me, 158 00:09:47,640 --> 00:09:51,400 Speaker 1: I should know. Anyway, this sort of set up a 159 00:09:51,440 --> 00:09:56,720 Speaker 1: general expectation among viewers TV programming was quote unquote free. 160 00:09:57,160 --> 00:09:59,760 Speaker 1: And it's funny because the same sort of thing happened 161 00:10:00,120 --> 00:10:03,400 Speaker 1: the Internet, right People got used to this idea that 162 00:10:03,480 --> 00:10:06,679 Speaker 1: they could access content on the Internet for free, which 163 00:10:06,720 --> 00:10:11,480 Speaker 1: meant when some companies try to generate revenue not through advertising, 164 00:10:11,880 --> 00:10:15,480 Speaker 1: which has its own set of drawbacks, but rather through 165 00:10:15,520 --> 00:10:18,880 Speaker 1: things like subscriptions or paid for content. A lot of 166 00:10:19,120 --> 00:10:22,880 Speaker 1: people balked at that the so called paywall became a 167 00:10:22,920 --> 00:10:25,880 Speaker 1: barrier to entry, and I get it. You're asking people 168 00:10:26,160 --> 00:10:29,840 Speaker 1: to pay out of pocket for something when there's tons 169 00:10:29,920 --> 00:10:32,760 Speaker 1: of other stuff out there that does not require that 170 00:10:32,840 --> 00:10:35,880 Speaker 1: kind of direct investment. It's one of the big reasons 171 00:10:36,040 --> 00:10:39,520 Speaker 1: we don't go for paid subscription approaches with our podcasts 172 00:10:39,559 --> 00:10:42,640 Speaker 1: in general. We feel that anytime you put a paywall 173 00:10:42,720 --> 00:10:45,360 Speaker 1: in front of content, you're going to see a much 174 00:10:45,400 --> 00:10:48,760 Speaker 1: smaller audience, and we would rather be able to reach 175 00:10:48,800 --> 00:10:51,640 Speaker 1: a lot of people, because it turns out we like 176 00:10:51,800 --> 00:10:56,600 Speaker 1: people anyway. The landscape and TV was that most people 177 00:10:56,640 --> 00:10:59,400 Speaker 1: were used to getting their programming for free, and so 178 00:10:59,480 --> 00:11:03,600 Speaker 1: a lot of just didn't see the value in subscribing 179 00:11:03,640 --> 00:11:06,800 Speaker 1: to a service to get something that other people got 180 00:11:06,840 --> 00:11:09,920 Speaker 1: just by using an antenna. So Dolan would end up 181 00:11:09,920 --> 00:11:12,439 Speaker 1: doing something that lots of other people and companies had 182 00:11:12,480 --> 00:11:16,640 Speaker 1: tried before. He would create content that would not be 183 00:11:16,720 --> 00:11:20,120 Speaker 1: available anywhere else, and the only way you would be 184 00:11:20,120 --> 00:11:22,600 Speaker 1: able to get it is if you bought into the 185 00:11:22,720 --> 00:11:26,360 Speaker 1: cable subscription. Our c A essentially did this back in 186 00:11:26,400 --> 00:11:29,560 Speaker 1: the day with radios. The company made radio sets, but 187 00:11:30,000 --> 00:11:33,120 Speaker 1: it really got into the radio station business largely because 188 00:11:33,280 --> 00:11:36,960 Speaker 1: it created the demand among consumers to buy the radios themselves. 189 00:11:37,040 --> 00:11:39,640 Speaker 1: Right Like, you wouldn't buy a radio if there were 190 00:11:39,640 --> 00:11:42,440 Speaker 1: no stations to tune into. So our c A had 191 00:11:42,480 --> 00:11:44,800 Speaker 1: to get into the radio station business to create the 192 00:11:44,880 --> 00:11:47,520 Speaker 1: content so that people would want to go out and 193 00:11:47,559 --> 00:11:51,720 Speaker 1: buy the radio sets. It's this kind of cyclical approach. Now, 194 00:11:51,720 --> 00:11:54,560 Speaker 1: the story goes that Dolan went on vacation with his 195 00:11:54,640 --> 00:11:57,880 Speaker 1: family and took a cruise to France aboard the ship 196 00:11:57,960 --> 00:12:01,320 Speaker 1: the Queen Elizabeth the Second, and on that trip he 197 00:12:01,400 --> 00:12:04,720 Speaker 1: came up with this idea for an exclusive channel that 198 00:12:04,760 --> 00:12:09,079 Speaker 1: would only go to his cable subscribers, and his working 199 00:12:09,200 --> 00:12:12,120 Speaker 1: name for the channel at that point was the Green Channel. 200 00:12:12,840 --> 00:12:16,120 Speaker 1: The Green Channel would have to have special programming on it, 201 00:12:16,360 --> 00:12:18,600 Speaker 1: It had to have stuff that you just couldn't find 202 00:12:18,800 --> 00:12:22,000 Speaker 1: on over the air broadcasts had to be set apart 203 00:12:22,360 --> 00:12:25,720 Speaker 1: with premium content. And this was going to be a 204 00:12:25,840 --> 00:12:29,480 Speaker 1: pretty big gamble because other people had attempted to create 205 00:12:29,800 --> 00:12:32,559 Speaker 1: versions of pay TV in the past, and no one 206 00:12:32,559 --> 00:12:35,440 Speaker 1: had really succeeded at it so far. Now. Some of 207 00:12:35,440 --> 00:12:39,200 Speaker 1: those schemes involved over the air transmissions. Those are kind 208 00:12:39,200 --> 00:12:42,600 Speaker 1: of hard to do as a pay TV service because 209 00:12:42,600 --> 00:12:44,880 Speaker 1: there's always a chance for people to try and pirate 210 00:12:45,040 --> 00:12:48,600 Speaker 1: the air waves and thus watch that precious content without 211 00:12:48,640 --> 00:12:51,559 Speaker 1: actually paying for it. And because it's over the air broadcasts, 212 00:12:51,920 --> 00:12:53,880 Speaker 1: you would have no way of knowing as a broadcaster 213 00:12:53,960 --> 00:12:55,720 Speaker 1: that people were doing that, right, I mean, you're just 214 00:12:55,800 --> 00:12:59,160 Speaker 1: sending a signal out. There's no return signal that tells 215 00:12:59,200 --> 00:13:02,160 Speaker 1: you if people are, you know, legit paying for your service, 216 00:13:02,240 --> 00:13:05,319 Speaker 1: or if they're just stealing it like the dirty TV 217 00:13:05,520 --> 00:13:10,479 Speaker 1: thieves that they are. There were also encoding and decoding strategies, 218 00:13:10,480 --> 00:13:13,960 Speaker 1: in other words, scrambling a signal, which in theory, on 219 00:13:14,000 --> 00:13:16,760 Speaker 1: the other end, when you have a paying customer, would 220 00:13:16,760 --> 00:13:19,880 Speaker 1: be de scrambled to play properly on the television. But 221 00:13:19,920 --> 00:13:22,839 Speaker 1: a lot of those approaches were really limited and not 222 00:13:23,160 --> 00:13:26,280 Speaker 1: very good. So there were a lot of legit customers 223 00:13:26,320 --> 00:13:29,480 Speaker 1: who were getting poor experiences on the other end, like 224 00:13:29,920 --> 00:13:33,600 Speaker 1: they were actually paying for the service, but the results 225 00:13:33,640 --> 00:13:38,840 Speaker 1: were subpar cable bypassed those types of issues, and it 226 00:13:38,880 --> 00:13:42,320 Speaker 1: had another benefit because it wasn't broadcast over the air 227 00:13:43,040 --> 00:13:47,520 Speaker 1: because the f c C was trailing behind technology, FCC 228 00:13:47,640 --> 00:13:51,560 Speaker 1: restrictions that applied to over the air providers did not 229 00:13:51,920 --> 00:13:57,280 Speaker 1: apply to cable. Time surveyed potential customers. That is, Time 230 00:13:57,320 --> 00:14:01,720 Speaker 1: Incorporated surveyed potential customers for this new cable service with 231 00:14:01,800 --> 00:14:05,920 Speaker 1: a premium channel, and the results were not exactly promising. 232 00:14:05,960 --> 00:14:09,000 Speaker 1: They looked pretty bad, and they actually did a couple 233 00:14:09,040 --> 00:14:11,880 Speaker 1: of surveys and a lot of them looked bad. However, 234 00:14:11,960 --> 00:14:15,440 Speaker 1: after Time suggested that the first month of service would 235 00:14:15,480 --> 00:14:20,040 Speaker 1: be free and the installation charges would be refundable, they 236 00:14:20,080 --> 00:14:22,680 Speaker 1: got a slightly better response, though it still wasn't like 237 00:14:22,800 --> 00:14:27,240 Speaker 1: overwhelmingly positive. It was essentially like a fift approval. Meanwhile, 238 00:14:27,600 --> 00:14:30,880 Speaker 1: the Green Channel went through a name makeover. No one 239 00:14:30,880 --> 00:14:33,400 Speaker 1: had really come up with a killer name yet, so 240 00:14:33,600 --> 00:14:37,240 Speaker 1: they had a placeholder, a temporary name, and this was 241 00:14:37,280 --> 00:14:41,600 Speaker 1: called Home Box Office, which everyone was absolutely sure would 242 00:14:41,640 --> 00:14:46,800 Speaker 1: be changed before it launched, and it totally didn't. Interestingly, 243 00:14:47,400 --> 00:14:50,880 Speaker 1: when HBO was finally ready to debut, it wouldn't do 244 00:14:51,040 --> 00:14:54,920 Speaker 1: so on Sterling Communications. That is, it would not be 245 00:14:55,040 --> 00:15:00,840 Speaker 1: on Dolan's cable network UH. Instead, it was a community 246 00:15:00,920 --> 00:15:05,520 Speaker 1: in Allentown, Pennsylvania that Time would choose as the debut 247 00:15:05,640 --> 00:15:09,560 Speaker 1: spot for HBO, at least initially UH, and it was 248 00:15:09,600 --> 00:15:12,040 Speaker 1: wired up on a totally different cable service that was 249 00:15:12,080 --> 00:15:14,600 Speaker 1: created by a guy named John Walson. That's the man 250 00:15:14,640 --> 00:15:17,320 Speaker 1: who actually gets the credit for inventing cable TV in 251 00:15:17,320 --> 00:15:21,400 Speaker 1: the first place. However, Time then changed its mind decided 252 00:15:21,440 --> 00:15:25,440 Speaker 1: to actually pilot the service in Wilkes Bar, Pennsylvania. The 253 00:15:25,480 --> 00:15:28,880 Speaker 1: reason for the shift was that some of the programming 254 00:15:29,000 --> 00:15:32,960 Speaker 1: that HBO wanted to carry happened to be NBA basketball games. 255 00:15:33,160 --> 00:15:37,960 Speaker 1: But the NBA, like a lot of sports organizations, has 256 00:15:38,000 --> 00:15:41,120 Speaker 1: a blackout rule, and that blackout rule says you are 257 00:15:41,200 --> 00:15:44,640 Speaker 1: not allowed to broadcast a game played within a certain 258 00:15:44,760 --> 00:15:48,840 Speaker 1: radius of where that game is taking place unless that 259 00:15:48,920 --> 00:15:51,800 Speaker 1: game happens to be sold out. This is a way 260 00:15:51,840 --> 00:15:55,280 Speaker 1: to make sure that venues like stadiums are selling as 261 00:15:55,280 --> 00:15:58,680 Speaker 1: many tickets as possible. The idea being that if you 262 00:15:58,680 --> 00:16:01,760 Speaker 1: can stay home and why the game on TV, you 263 00:16:01,880 --> 00:16:04,400 Speaker 1: might not make the effort of buying a ticket and 264 00:16:04,480 --> 00:16:06,400 Speaker 1: going to the stadium. I mean that would be much 265 00:16:06,400 --> 00:16:11,200 Speaker 1: more expensive. So these blackouts meant that if you happened 266 00:16:11,200 --> 00:16:14,200 Speaker 1: to be within a certain region, like a certain range 267 00:16:14,440 --> 00:16:18,000 Speaker 1: from the stadium, you could not broadcast there. Well, Allentown 268 00:16:18,040 --> 00:16:20,480 Speaker 1: was a little too close to Philadelphia for that to 269 00:16:20,520 --> 00:16:24,840 Speaker 1: work out, So wilkes Bar was outside that range and 270 00:16:25,320 --> 00:16:28,000 Speaker 1: thus wouldn't have any issues. It wouldn't It would mean 271 00:16:28,000 --> 00:16:31,880 Speaker 1: that HBO wouldn't have to go dark for certain types 272 00:16:31,920 --> 00:16:35,960 Speaker 1: of programming. So Time moves the pilot program to wilkes Bar, 273 00:16:36,400 --> 00:16:41,160 Speaker 1: and again that was outside of that that UH radius. Now, initially, 274 00:16:41,160 --> 00:16:45,000 Speaker 1: the subscription for HBO to add HBO to your cable 275 00:16:45,080 --> 00:16:48,200 Speaker 1: plan if you lived in wilkes Bar at this time 276 00:16:48,960 --> 00:16:52,840 Speaker 1: was six dollars a month. Fewer than four hundred people 277 00:16:52,880 --> 00:16:55,440 Speaker 1: signed up for it when it launched on November eighth, 278 00:16:55,600 --> 00:16:59,040 Speaker 1: ninety two, and the first two pieces of programming on 279 00:16:59,200 --> 00:17:04,119 Speaker 1: HBO included a hockey game of the Rangers versus the Canucks, 280 00:17:04,160 --> 00:17:08,520 Speaker 1: followed by a movie from nineteen seventy called Sometimes a 281 00:17:08,560 --> 00:17:13,720 Speaker 1: Great Notion. The growth of HBO at first wasn't exactly inspiring. 282 00:17:14,160 --> 00:17:19,560 Speaker 1: Time incorporated oversaw deals with various regional cable companies, most 283 00:17:19,600 --> 00:17:23,359 Speaker 1: of them in Pennsylvania, and got agreements for them to 284 00:17:23,400 --> 00:17:26,160 Speaker 1: be able to carry the channel in return for subscriptions. 285 00:17:26,680 --> 00:17:29,679 Speaker 1: Customers of those cable companies would still have to add 286 00:17:30,040 --> 00:17:33,520 Speaker 1: a subscription to HBO in order to actually access that channel. 287 00:17:34,160 --> 00:17:37,280 Speaker 1: This would go on top of their normal cable subscription, 288 00:17:37,359 --> 00:17:40,399 Speaker 1: so they're already paying their cable bill, they'd have to 289 00:17:40,400 --> 00:17:42,680 Speaker 1: pay extra to get HBOS, something that I think most 290 00:17:42,680 --> 00:17:44,359 Speaker 1: of us are familiar with because that's kind of how 291 00:17:44,359 --> 00:17:47,680 Speaker 1: it operates now. And this was still a pretty hard 292 00:17:47,760 --> 00:17:51,040 Speaker 1: sell at that point. There were also other paid cable 293 00:17:51,119 --> 00:17:54,679 Speaker 1: channels emerging around this time, including one that would be 294 00:17:54,720 --> 00:17:58,479 Speaker 1: called Star Channel, which was part of Kenny National Company 295 00:17:58,600 --> 00:18:03,200 Speaker 1: slash Warner Community Sans within a division of Warner Communications 296 00:18:03,200 --> 00:18:08,840 Speaker 1: called Warner Cable. Meanwhile, the Sterling Cable Company was still 297 00:18:08,920 --> 00:18:12,440 Speaker 1: struggling in New York and losing money. The subscriber base 298 00:18:12,600 --> 00:18:15,520 Speaker 1: was modest, and the cost of installing cable in Manhattan 299 00:18:15,760 --> 00:18:19,639 Speaker 1: had not gotten any cheaper. Time acquired controlling Steak in 300 00:18:19,720 --> 00:18:24,440 Speaker 1: Sterling and then renamed it Manhattan Cable Television in nineteen three. 301 00:18:25,200 --> 00:18:28,240 Speaker 1: The growth in HBO largely came from a new method 302 00:18:28,320 --> 00:18:31,760 Speaker 1: of distributing signals so early on the way that Time 303 00:18:32,000 --> 00:18:36,240 Speaker 1: would broadcast HBO to cable stations. Is so they've got 304 00:18:36,280 --> 00:18:39,679 Speaker 1: their starter signal. They would then send that signal to 305 00:18:39,960 --> 00:18:44,399 Speaker 1: a microwave transmitter. And you have a tower, a radio 306 00:18:44,480 --> 00:18:47,960 Speaker 1: tower that can send out microwave transmissions. This tower would 307 00:18:47,960 --> 00:18:51,159 Speaker 1: beam out of microwave signal that carries that channel to 308 00:18:51,320 --> 00:18:55,360 Speaker 1: various cable stations in the region. These stations would receive 309 00:18:55,480 --> 00:18:59,560 Speaker 1: that transmission using a microwave antenna, and then they would 310 00:18:59,760 --> 00:19:03,400 Speaker 1: say and that signal through their cables to their customers. 311 00:19:03,880 --> 00:19:06,800 Speaker 1: But this new approach would go much further. In fact, 312 00:19:06,840 --> 00:19:09,120 Speaker 1: it went all the way out into space. The new 313 00:19:09,160 --> 00:19:12,920 Speaker 1: approach involved beaming the channel signal up to a communications 314 00:19:13,000 --> 00:19:16,960 Speaker 1: satellite in orbit, which then could beam down that same 315 00:19:17,000 --> 00:19:21,160 Speaker 1: signal to a receiving antenna connected to various cable stations. 316 00:19:21,560 --> 00:19:24,480 Speaker 1: This removed the need to build out microwave transmission antenna 317 00:19:24,520 --> 00:19:28,800 Speaker 1: across the United States and helped HBO to go national. Now, 318 00:19:28,800 --> 00:19:31,440 Speaker 1: when we come back, will transition over to some other 319 00:19:31,480 --> 00:19:34,639 Speaker 1: elements that would become part of the Time Warner slash 320 00:19:34,680 --> 00:19:39,639 Speaker 1: Warner Communications slash Warner Media Empire, and some that would 321 00:19:39,640 --> 00:19:43,000 Speaker 1: not stand the test of time. But first let's take 322 00:19:43,200 --> 00:19:54,000 Speaker 1: a quick break. HBO would continue to grow year over year, 323 00:19:54,080 --> 00:19:56,160 Speaker 1: and of course it got into the business of creating 324 00:19:56,160 --> 00:19:59,680 Speaker 1: original content on top of carrying stuff like sports events, 325 00:20:00,200 --> 00:20:03,720 Speaker 1: films that had recently left their theatrical runs. It also 326 00:20:03,760 --> 00:20:06,960 Speaker 1: created a companion channel that was a slightly lower tier 327 00:20:07,160 --> 00:20:12,159 Speaker 1: premium subscription channel. That channel was Cinemax, which launched in 328 00:20:12,240 --> 00:20:16,960 Speaker 1: nineteen Cinemax would focus solely on carrying movies at first, 329 00:20:17,280 --> 00:20:20,800 Speaker 1: while HBO continued to carry a variety of programming. The 330 00:20:20,880 --> 00:20:24,760 Speaker 1: reason Time launched Cinemax was primarily to compete with the 331 00:20:24,800 --> 00:20:27,520 Speaker 1: Movie Channel, which at that point was part of the 332 00:20:27,560 --> 00:20:32,119 Speaker 1: Warner Amex satellite entertainment venture. The Movie Channel, by the way, 333 00:20:32,280 --> 00:20:35,680 Speaker 1: would merge with another channel called Showtime, and that new 334 00:20:35,760 --> 00:20:40,400 Speaker 1: channel would just be called Showtime. Ultimately, Warner an American 335 00:20:40,440 --> 00:20:45,680 Speaker 1: Express would sell off this joint venture to Viacom. Anyway, 336 00:20:45,880 --> 00:20:49,200 Speaker 1: Cinemax would go on to experiment with various content over 337 00:20:49,240 --> 00:20:51,720 Speaker 1: the years, and while from the outside it seemed like 338 00:20:51,760 --> 00:20:54,720 Speaker 1: it was kind of a competing cable service to HBO, 339 00:20:54,880 --> 00:20:59,000 Speaker 1: in reality, both entities fell under the umbrella of Time 340 00:20:59,200 --> 00:21:05,320 Speaker 1: and after nine Time Warner. Okay, so that's the basis 341 00:21:05,480 --> 00:21:08,800 Speaker 1: of the HBO and Cinemax elements of what is now 342 00:21:08,960 --> 00:21:12,240 Speaker 1: Warner Medium. I'm sure we're gonna come back because we're 343 00:21:12,280 --> 00:21:14,600 Speaker 1: gonna have to talk about HBO Max later on that 344 00:21:14,600 --> 00:21:16,320 Speaker 1: that's going to have to come in the next episode. 345 00:21:16,480 --> 00:21:19,760 Speaker 1: And we've got a lot more to cover because there's 346 00:21:19,760 --> 00:21:22,800 Speaker 1: just so much and it is exhausting. But let's let's 347 00:21:22,800 --> 00:21:26,080 Speaker 1: take quick stock before we move on. So we're up 348 00:21:26,119 --> 00:21:31,719 Speaker 1: to about Time Warner has merged, So Time Incorporated and 349 00:21:31,760 --> 00:21:35,520 Speaker 1: Warner Communications are now Time Warner, and we've got a 350 00:21:35,520 --> 00:21:38,720 Speaker 1: true goliath of a multimedia company, one that would set 351 00:21:38,760 --> 00:21:41,840 Speaker 1: the stage for other massive media companies in the future. 352 00:21:42,280 --> 00:21:44,919 Speaker 1: So you had the assets of Time, which included a 353 00:21:45,000 --> 00:21:50,600 Speaker 1: publishing company with several popular weekly magazine titles, plus books 354 00:21:50,640 --> 00:21:54,200 Speaker 1: and beyond. That also includes the pay cable channels and 355 00:21:54,400 --> 00:21:58,760 Speaker 1: HBO and Cinemax, which we're now established entities, and they 356 00:21:58,760 --> 00:22:03,119 Speaker 1: were solid revenue general raiders. By nine. You had the 357 00:22:03,320 --> 00:22:07,760 Speaker 1: Warner Brothers movie and animation studios. UH Animation at this 358 00:22:07,800 --> 00:22:09,960 Speaker 1: point was it was a little quiet, but they still 359 00:22:10,000 --> 00:22:13,560 Speaker 1: had them. You also had the Warner Brothers television studios. 360 00:22:14,119 --> 00:22:16,880 Speaker 1: You still had the Warner Music Group, which was kind 361 00:22:16,880 --> 00:22:20,360 Speaker 1: of an umbrella for numerous music companies, not just Warner records. 362 00:22:21,000 --> 00:22:25,880 Speaker 1: Warner had sold off its stake in cable channels like MTV, Nickelodeon, 363 00:22:25,880 --> 00:22:29,600 Speaker 1: and Showtime to Viacom, so those were gone, but the 364 00:22:29,640 --> 00:22:33,640 Speaker 1: company still had actual cable operations as in cable service, 365 00:22:34,080 --> 00:22:36,680 Speaker 1: that is, the ability to act as a cable service provider. 366 00:22:36,960 --> 00:22:40,399 Speaker 1: That was Warner Cable. Oh and they also owned d 367 00:22:40,640 --> 00:22:45,400 Speaker 1: C Comics. Time had also acquired a cable service provider 368 00:22:45,480 --> 00:22:49,440 Speaker 1: called American Television and Communications or a TC, back in 369 00:22:49,560 --> 00:22:54,439 Speaker 1: nineteen seventy three, So Warner Cable became Time Warner Cable 370 00:22:54,560 --> 00:22:59,280 Speaker 1: after the merger, and a t C became Time Warner Communications. 371 00:23:00,240 --> 00:23:03,600 Speaker 1: Both of these divisions were then lumped in together into 372 00:23:03,680 --> 00:23:08,320 Speaker 1: a collected division called Time Warner Cable Group. However, this 373 00:23:08,440 --> 00:23:10,800 Speaker 1: part of the Time Warner would not stick around by 374 00:23:10,800 --> 00:23:12,960 Speaker 1: the time we get to Warner Media. This is a 375 00:23:13,000 --> 00:23:15,399 Speaker 1: part of the company that would get spun off and 376 00:23:15,480 --> 00:23:18,560 Speaker 1: sold off. The Time Warner Company would spend off Time 377 00:23:18,560 --> 00:23:21,360 Speaker 1: Warner Cable as an independent company in two thousand nine. 378 00:23:21,440 --> 00:23:23,560 Speaker 1: But let's just follow that bunny trail a bit more 379 00:23:23,920 --> 00:23:26,439 Speaker 1: because it is interesting. So we're gonna flash forward to 380 00:23:26,520 --> 00:23:31,760 Speaker 1: two thousand thirteen and in Time Warner Cable, which remember 381 00:23:31,800 --> 00:23:34,480 Speaker 1: at this point is an independent company. It's no longer 382 00:23:34,560 --> 00:23:38,479 Speaker 1: part of Time Warner itself. Uh. It was looking at 383 00:23:38,480 --> 00:23:41,719 Speaker 1: the possibility of finding a buyer to take over the company, 384 00:23:41,960 --> 00:23:46,680 Speaker 1: and old t WC founded two suitors in Charter Communications 385 00:23:47,080 --> 00:23:51,879 Speaker 1: and Comcast. These two companies competed for the lovely hand 386 00:23:51,960 --> 00:23:56,600 Speaker 1: of Time Warner Cable in proverbial marriage, and Comcast looked 387 00:23:56,600 --> 00:23:59,320 Speaker 1: like it was going to win out, but then the 388 00:23:59,440 --> 00:24:01,400 Speaker 1: US depart I'm gonna have justice stepped in and said, 389 00:24:01,440 --> 00:24:05,040 Speaker 1: hang on, Comcast, if you buy out Time Warner Cable, 390 00:24:05,280 --> 00:24:07,480 Speaker 1: then you're going to have control of more than half 391 00:24:07,960 --> 00:24:11,720 Speaker 1: of all broadband connections in the United States, and that's 392 00:24:11,800 --> 00:24:15,480 Speaker 1: just a bit too anti competitive for our tastes, which 393 00:24:15,560 --> 00:24:18,159 Speaker 1: was probably a good thing because Comcast was also building 394 00:24:18,160 --> 00:24:22,040 Speaker 1: out its own ginormous media empire, which is a totally 395 00:24:22,080 --> 00:24:26,480 Speaker 1: different story. By Comcast had enough with all the various 396 00:24:26,560 --> 00:24:29,439 Speaker 1: inquiries and pushbacks and they jumped out of the picture. 397 00:24:29,760 --> 00:24:33,159 Speaker 1: So Charter went on to acquire Time Warner Cable and 398 00:24:33,240 --> 00:24:36,240 Speaker 1: eventually phased out the branding to merge it with Charters 399 00:24:36,440 --> 00:24:40,240 Speaker 1: brand Spectrum, so that former part of Time Warner is 400 00:24:40,320 --> 00:24:44,520 Speaker 1: now with Charter as Spectrum. Okay, so we've dealt with 401 00:24:44,600 --> 00:24:52,719 Speaker 1: that piece. What's next? Alright? Okay, Turner Broadcasting CALSA. All right, 402 00:24:52,800 --> 00:24:59,399 Speaker 1: So Time Warner acquired Turner Broadcasting in NIX. But that 403 00:24:59,480 --> 00:25:01,280 Speaker 1: means we need to learn at least a little bit 404 00:25:01,359 --> 00:25:04,680 Speaker 1: about Turner Broadcasting. And this is kind of getting into 405 00:25:04,760 --> 00:25:07,880 Speaker 1: my own backyard here as I live in Atlanta, Georgia. 406 00:25:08,320 --> 00:25:12,879 Speaker 1: So this is largely the story of Ted Turner. Now, 407 00:25:12,960 --> 00:25:16,240 Speaker 1: Ted Turner came from money. His father owned an advertising 408 00:25:16,320 --> 00:25:21,440 Speaker 1: company that actually was mostly focused on billboard advertising, and Ted, 409 00:25:21,640 --> 00:25:28,639 Speaker 1: after some uh Shenanigan's in college that got him booted 410 00:25:28,760 --> 00:25:33,359 Speaker 1: from college, he joined the family business in nineteen sixty. Tragically, 411 00:25:33,960 --> 00:25:37,680 Speaker 1: Ted Turner's father committed suicide in nineteen sixty three, and 412 00:25:37,800 --> 00:25:41,359 Speaker 1: at that point Ted took over the family business and 413 00:25:41,600 --> 00:25:45,320 Speaker 1: the company was struggling at at that time, but Turner 414 00:25:45,400 --> 00:25:49,160 Speaker 1: was able to move the business around, get it back 415 00:25:49,280 --> 00:25:52,280 Speaker 1: on its feet, and made it profitable again. Now having 416 00:25:52,359 --> 00:25:56,320 Speaker 1: succeeded at rescuing one business, Turner saw a chance to 417 00:25:56,359 --> 00:25:59,560 Speaker 1: do it again, but in a totally different industry. So 418 00:25:59,680 --> 00:26:04,080 Speaker 1: there was this ultra high frequency or UHF television station 419 00:26:04,200 --> 00:26:07,680 Speaker 1: out of Atlanta that was having its own financial struggles 420 00:26:07,800 --> 00:26:10,280 Speaker 1: and was in danger of going on a business so 421 00:26:10,560 --> 00:26:15,320 Speaker 1: Turner purchased this company and within three years turned it around. 422 00:26:15,440 --> 00:26:19,440 Speaker 1: Two it was making a profit, and in nineteen seventy five, 423 00:26:19,560 --> 00:26:22,720 Speaker 1: Turner did something pretty forward thinking. He made a deal 424 00:26:23,119 --> 00:26:26,320 Speaker 1: that allowed him to beam this station's signal up to 425 00:26:26,359 --> 00:26:30,400 Speaker 1: a satellite and broadcast it to various keble television audiences. 426 00:26:30,680 --> 00:26:33,440 Speaker 1: So not that different from what channels like HBO we're doing. 427 00:26:33,800 --> 00:26:37,399 Speaker 1: Only Turner's station was ad supported, so it didn't require 428 00:26:37,440 --> 00:26:41,800 Speaker 1: a special subscription. He called it w TBS or just 429 00:26:42,240 --> 00:26:46,480 Speaker 1: TBS for Turner Broadcasting System, and Turner reorganized the parent 430 00:26:46,600 --> 00:26:50,520 Speaker 1: company for TBS and named it Turner Communications Company later 431 00:26:50,680 --> 00:26:54,560 Speaker 1: on just changing that to Turner Broadcasting System Incorporated. He 432 00:26:54,720 --> 00:26:57,840 Speaker 1: launched the first twenty four hour news channel that was 433 00:26:58,119 --> 00:27:02,320 Speaker 1: CNN in nineteen eighty. He also launched t NT or 434 00:27:02,440 --> 00:27:07,280 Speaker 1: the Turner Network Television station, in nine Um let's see. 435 00:27:07,320 --> 00:27:10,400 Speaker 1: He bought the Atlanta Braves baseball team in nineteen seventy six. 436 00:27:11,320 --> 00:27:15,120 Speaker 1: He bought the Atlanta Hawks basketball team in nineteen seventy seven. 437 00:27:15,440 --> 00:27:19,680 Speaker 1: He bought the MGM Slash United Artists Entertainment Company in 438 00:27:19,800 --> 00:27:23,320 Speaker 1: nineteen eighty six that included a library of more than 439 00:27:23,400 --> 00:27:26,680 Speaker 1: four thousand movies. He did not hold on too that, however, 440 00:27:27,160 --> 00:27:32,160 Speaker 1: that story by itself MGM story that one also will 441 00:27:32,200 --> 00:27:34,800 Speaker 1: make your head spend, but I'll not go into a 442 00:27:34,880 --> 00:27:39,359 Speaker 1: lot of detail here. In ninetee, Turner entered a joint 443 00:27:39,480 --> 00:27:43,080 Speaker 1: venture with Apollo Investment Fund to acquire the Hanna Barbera Studio. 444 00:27:43,480 --> 00:27:47,280 Speaker 1: Hanna Barbara was in animation studio um known for producing 445 00:27:47,400 --> 00:27:51,719 Speaker 1: tons of famous cartoons, including Johnny Quest, The Flint Stones, 446 00:27:51,880 --> 00:27:56,320 Speaker 1: The Jetsons, Yogi Bear, Scooby Doo, tons of them. He 447 00:27:56,480 --> 00:28:01,200 Speaker 1: also acquired a lot of other studio libraries. He managed 448 00:28:01,240 --> 00:28:05,400 Speaker 1: to acquire the pre nineteen fifty Warner Brothers Film Library, 449 00:28:06,119 --> 00:28:09,080 Speaker 1: He got the a AP Library, which included some Warner 450 00:28:09,119 --> 00:28:12,680 Speaker 1: Brothers animation in it, and the Fleischer Studios Library, which 451 00:28:12,720 --> 00:28:15,639 Speaker 1: included Popeye cartoons plus lots of other stuff. So he 452 00:28:15,840 --> 00:28:19,119 Speaker 1: was just acquiring all this content. He also purchased w 453 00:28:19,280 --> 00:28:22,920 Speaker 1: c W, the Professional Wrestling Federation in nineteen eight nine. 454 00:28:23,359 --> 00:28:26,320 Speaker 1: But all these acquisitions accrued an enormous amount of debt 455 00:28:26,560 --> 00:28:29,520 Speaker 1: for Turner, so he also sold off some of them 456 00:28:29,640 --> 00:28:33,320 Speaker 1: pretty quickly. So MGM u A went fairly early on 457 00:28:33,440 --> 00:28:35,520 Speaker 1: In fact, Turner sold it back to the guy who 458 00:28:35,640 --> 00:28:39,160 Speaker 1: sold it to him, but Turner was holding onto the 459 00:28:39,280 --> 00:28:43,760 Speaker 1: library of films, which is why the recently announced Amazon 460 00:28:43,880 --> 00:28:48,280 Speaker 1: acquisition of MGM doesn't necessarily include all of the movies 461 00:28:48,400 --> 00:28:50,920 Speaker 1: that MGM has made over the years, because a lot 462 00:28:51,000 --> 00:28:54,120 Speaker 1: of those rights don't belong to MGM anymore. But again, 463 00:28:54,200 --> 00:28:58,920 Speaker 1: that's a story for another incredibly complicated podcast episode. Anyway, 464 00:28:59,280 --> 00:29:02,440 Speaker 1: Turner also oversaw the creation of the Cartoon Network in 465 00:29:02,520 --> 00:29:07,120 Speaker 1: nine and Turner Movie Classics in nineteen. He supervised the 466 00:29:07,200 --> 00:29:11,240 Speaker 1: acquisition of both New Line Cinema and Castle Rock Entertainment, 467 00:29:11,440 --> 00:29:14,720 Speaker 1: a pair of motion picture production companies, And then we 468 00:29:14,840 --> 00:29:19,320 Speaker 1: get to nineteen six. So in nineties six, Time Warner 469 00:29:19,440 --> 00:29:22,640 Speaker 1: made Turner and offer he couldn't refuse. It was a 470 00:29:22,800 --> 00:29:28,200 Speaker 1: seven point five billion dollar acquisition deal for Turner Broadcasting System. 471 00:29:29,040 --> 00:29:32,680 Speaker 1: This meant the Time Warner and thus Warner Communications and 472 00:29:33,040 --> 00:29:37,280 Speaker 1: thus Warner Brothers Studio had a lovelier reunion with the 473 00:29:37,440 --> 00:29:42,440 Speaker 1: pre nineteen fifties Warner Brothers Film Library because Turner owned that. 474 00:29:42,960 --> 00:29:46,680 Speaker 1: So yeah, this particular acquisition also meant that some Warner 475 00:29:46,760 --> 00:29:50,120 Speaker 1: Brothers rights which had been sold off years earlier to 476 00:29:50,200 --> 00:29:53,520 Speaker 1: help cover debt came back to the entity that first 477 00:29:53,600 --> 00:29:57,239 Speaker 1: created those works, sort of. I mean a lot had 478 00:29:57,400 --> 00:30:01,000 Speaker 1: changed by then. The Warner of nine six was very 479 00:30:01,040 --> 00:30:06,400 Speaker 1: different than pre nineteen fifties Warner, but TBS, TNT, CNN, 480 00:30:06,680 --> 00:30:11,680 Speaker 1: New Line Cinema, Castle Rock Entertainment, Hanna Barbera, the Cartoon Network, 481 00:30:11,760 --> 00:30:14,480 Speaker 1: et cetera. All of these things made their move over 482 00:30:14,880 --> 00:30:18,280 Speaker 1: to Time Warner, as did Ted Turner. He became an 483 00:30:18,320 --> 00:30:22,160 Speaker 1: executive for Time Warner. While the acquisition of Turner Broadcasting 484 00:30:22,200 --> 00:30:25,280 Speaker 1: System was taking hold, Time Warner also got involved in 485 00:30:25,360 --> 00:30:29,440 Speaker 1: the launch of a new broadcast television network. That network 486 00:30:29,640 --> 00:30:32,960 Speaker 1: was the w B, which launched on January eleven, nine, 487 00:30:33,880 --> 00:30:37,560 Speaker 1: and this was a joint venture between Time Warner, specifically 488 00:30:37,600 --> 00:30:40,840 Speaker 1: the Warner Brothers Entertainment division of Time Warner and a 489 00:30:40,920 --> 00:30:45,280 Speaker 1: company called Tribune Broadcasting. The WB would stick around a 490 00:30:45,360 --> 00:30:48,360 Speaker 1: little more than a decade, during which time it served 491 00:30:48,400 --> 00:30:51,440 Speaker 1: as the launchpad for shows like The Steve Harvey Show, 492 00:30:52,080 --> 00:30:57,000 Speaker 1: Buffy the Vampire Slayer, Dawson's Creek, Felicity, and Charmed, among 493 00:30:57,200 --> 00:31:00,560 Speaker 1: many many others. Oh yeah, Supernatural was one of the 494 00:31:00,600 --> 00:31:03,320 Speaker 1: shows that debuted on the w B. Because I keep 495 00:31:03,360 --> 00:31:07,000 Speaker 1: forgetting that that show was on the air forever. That show, 496 00:31:08,040 --> 00:31:12,040 Speaker 1: I think it ran fifteen seasons, which I mean, all 497 00:31:12,080 --> 00:31:13,840 Speaker 1: it did was really teach me that if you hear 498 00:31:13,920 --> 00:31:16,280 Speaker 1: the song carry on my Wayward Son, it means that 499 00:31:16,400 --> 00:31:18,200 Speaker 1: one of two brothers is going to have a really 500 00:31:18,360 --> 00:31:23,000 Speaker 1: terrible time, and possibly both of them. But as I said, uh, 501 00:31:23,200 --> 00:31:25,320 Speaker 1: it only stuck around a little more than a decade. 502 00:31:25,400 --> 00:31:28,080 Speaker 1: So by the mid two thousand's, the w b's numbers 503 00:31:28,120 --> 00:31:33,840 Speaker 1: were in decline. Meanwhile, over at Viacom CBS, there was 504 00:31:33,880 --> 00:31:37,320 Speaker 1: another network called up N that was facing a similar situation. 505 00:31:38,320 --> 00:31:40,400 Speaker 1: By the way, the story of Viacom and CBS is 506 00:31:40,520 --> 00:31:44,360 Speaker 1: just as convoluted as this history of Warner Media is. Now, 507 00:31:44,480 --> 00:31:47,560 Speaker 1: both channels w B and up N we're trying to 508 00:31:47,640 --> 00:31:50,880 Speaker 1: compete with Fox, and Fox was performing far better than 509 00:31:51,040 --> 00:31:53,680 Speaker 1: either of the other two channels. So both the w 510 00:31:53,840 --> 00:31:56,200 Speaker 1: B and up N were losing money somewhere in the 511 00:31:56,200 --> 00:31:59,840 Speaker 1: neighborhood of like two billion dollars total between them. So 512 00:32:00,280 --> 00:32:04,000 Speaker 1: CBS and Warner Brothers Entertainment decided to join forces rather 513 00:32:04,080 --> 00:32:07,560 Speaker 1: than compete against each other. Both the w B and 514 00:32:07,800 --> 00:32:10,360 Speaker 1: up N would shut down within a couple of days 515 00:32:10,360 --> 00:32:13,920 Speaker 1: of each other and CBS and Warner would then launch 516 00:32:14,000 --> 00:32:18,160 Speaker 1: a joint venture television network called the c W. I 517 00:32:18,280 --> 00:32:21,400 Speaker 1: took the C from CBS and the w from Warner Brothers. 518 00:32:22,280 --> 00:32:24,960 Speaker 1: Some shows from both networks made the jump over to 519 00:32:25,040 --> 00:32:28,760 Speaker 1: this new network, like Supernatural and Smallville came over from 520 00:32:28,880 --> 00:32:31,200 Speaker 1: the w B to the c W, and to this day, 521 00:32:31,320 --> 00:32:34,520 Speaker 1: Warner Media owns half of the c W, with the 522 00:32:34,600 --> 00:32:38,280 Speaker 1: other half belonging to CBS, So we can put that 523 00:32:38,560 --> 00:32:43,480 Speaker 1: in the big old bucket of Warner assets. Okay, we're 524 00:32:43,640 --> 00:32:46,680 Speaker 1: zeroing in on what Warner Media is today, but we 525 00:32:46,760 --> 00:32:48,800 Speaker 1: still have a lot of ground to cover, and part 526 00:32:48,840 --> 00:32:51,239 Speaker 1: of that ground means going over what has frequently been 527 00:32:51,320 --> 00:32:55,880 Speaker 1: called one of the worst mergers of all time. So 528 00:32:56,040 --> 00:32:59,840 Speaker 1: when we come back, it'll be time to get back online. 529 00:33:00,480 --> 00:33:12,320 Speaker 1: But first, let's take another quick break. All right, time 530 00:33:12,400 --> 00:33:14,720 Speaker 1: for yet another quick history lesson, and this time we're 531 00:33:14,720 --> 00:33:18,320 Speaker 1: going to be talking about America Online a k A 532 00:33:19,080 --> 00:33:21,360 Speaker 1: a O L. Now I've done episodes about A O 533 00:33:21,520 --> 00:33:23,920 Speaker 1: L as well, so we're going to get the summarized 534 00:33:23,960 --> 00:33:29,000 Speaker 1: account of its history, because again, uh, extra bonkers really, So, 535 00:33:29,120 --> 00:33:33,200 Speaker 1: America Online started out as an online service provider or 536 00:33:33,320 --> 00:33:39,280 Speaker 1: OSP and Technically was founded in nine in Dulles, Virginia. Now. 537 00:33:39,360 --> 00:33:41,960 Speaker 1: The company grew out of a couple of earlier ventures 538 00:33:42,040 --> 00:33:45,320 Speaker 1: that focused on connecting computers with each other through modems 539 00:33:45,360 --> 00:33:48,960 Speaker 1: and phone lines. And when I say an online service provider, 540 00:33:49,400 --> 00:33:52,920 Speaker 1: I'm really talking about something that's sort of a predecessor 541 00:33:53,200 --> 00:33:57,280 Speaker 1: to the Internet, or rather, it existed while the Internet existed, 542 00:33:57,360 --> 00:34:00,480 Speaker 1: but it was something that was publicly accessible, and the 543 00:34:00,560 --> 00:34:05,000 Speaker 1: Internet typically wasn't unless you were part of an academic 544 00:34:05,280 --> 00:34:09,279 Speaker 1: institution or research facility or something like that. So back 545 00:34:09,320 --> 00:34:15,120 Speaker 1: in the day, OSPs had their own networks, their own contained, 546 00:34:15,360 --> 00:34:17,600 Speaker 1: you know, closed off networks, so customers could use a 547 00:34:17,680 --> 00:34:20,680 Speaker 1: modem and they would dial into an OSP and they 548 00:34:20,719 --> 00:34:24,719 Speaker 1: would access various features. These typically included stuff like, you know, 549 00:34:24,800 --> 00:34:29,400 Speaker 1: you could get news headlines or weather forecasts, or contact lists, 550 00:34:29,560 --> 00:34:32,279 Speaker 1: assuming that your contacts were, you know, using the same 551 00:34:32,360 --> 00:34:35,880 Speaker 1: service you were using, and also some messaging services like 552 00:34:36,040 --> 00:34:40,759 Speaker 1: email or early instant messages. But again, these tools only 553 00:34:40,840 --> 00:34:43,200 Speaker 1: worked if the people you were chatting with were also 554 00:34:43,320 --> 00:34:45,040 Speaker 1: on the same service you were on. There wasn't a 555 00:34:45,080 --> 00:34:47,839 Speaker 1: lot of at least in the early days, there wasn't 556 00:34:47,840 --> 00:34:50,160 Speaker 1: a lot of opportunities to send messages to someone who 557 00:34:50,280 --> 00:34:54,040 Speaker 1: is on a different osph. Some of these OSPs also 558 00:34:54,120 --> 00:34:57,239 Speaker 1: had online games and a few other applications, and this 559 00:34:57,440 --> 00:35:00,080 Speaker 1: was before the debut of the World Wide Web, so 560 00:35:00,360 --> 00:35:05,120 Speaker 1: these were all kind of self contained islands. Now gradually 561 00:35:05,640 --> 00:35:08,719 Speaker 1: some of these islands made connections with one another, and 562 00:35:08,840 --> 00:35:13,200 Speaker 1: then the Web developed and these OSPs began to create 563 00:35:13,520 --> 00:35:16,560 Speaker 1: ways to access the Internet at large. So what started 564 00:35:16,600 --> 00:35:19,960 Speaker 1: off as a sort of walled off kingdom now became 565 00:35:20,000 --> 00:35:22,680 Speaker 1: a portal to the Internet at large, and A o 566 00:35:22,880 --> 00:35:25,440 Speaker 1: L was one of the big early players in the space. 567 00:35:26,080 --> 00:35:29,040 Speaker 1: This was helped considerably by the fact that at the time, 568 00:35:29,480 --> 00:35:33,560 Speaker 1: telecommunications companies had to abide by restrictions that kept them 569 00:35:33,600 --> 00:35:36,040 Speaker 1: from getting into the I s P business right away, 570 00:35:36,440 --> 00:35:40,120 Speaker 1: So businesses like A o L became associated with the Internet, 571 00:35:40,560 --> 00:35:43,320 Speaker 1: so much so that for some people A o L 572 00:35:43,480 --> 00:35:48,000 Speaker 1: and the Internet were effectively synonymous. In the early days, 573 00:35:48,320 --> 00:35:51,320 Speaker 1: A o L charged users on an hourly basis, so 574 00:35:51,640 --> 00:35:54,279 Speaker 1: the more time you spent online, the more you had 575 00:35:54,360 --> 00:35:57,759 Speaker 1: to pay. Toward the end of nineteen a o L 576 00:35:57,840 --> 00:36:00,960 Speaker 1: swapped over from hourly rates to a a monthly rate 577 00:36:01,000 --> 00:36:04,680 Speaker 1: of nineteen dollars and cents, and the service grew very 578 00:36:04,800 --> 00:36:08,000 Speaker 1: quickly after that. And it when I say grew very quickly, 579 00:36:08,040 --> 00:36:11,520 Speaker 1: I mean it was like Gangbusters. Now, this was the 580 00:36:11,719 --> 00:36:15,879 Speaker 1: heyday of the dot com bubble. Before the bubble would burst, 581 00:36:16,440 --> 00:36:20,680 Speaker 1: internet based companies were proliferating and growing like crazy, at 582 00:36:20,719 --> 00:36:24,560 Speaker 1: least on paper. A O L was flush with cash 583 00:36:24,800 --> 00:36:28,120 Speaker 1: and a sky high stock price really was fueling this. 584 00:36:28,920 --> 00:36:33,279 Speaker 1: In nine, in China during the fiftieth anniversary of the 585 00:36:33,440 --> 00:36:37,120 Speaker 1: establishment of the People's Republic of China, which I know 586 00:36:37,520 --> 00:36:39,879 Speaker 1: it sounds like I'm doing a non secretary, but stick 587 00:36:39,960 --> 00:36:43,160 Speaker 1: with me anyway. At this event, the celebration of the 588 00:36:43,280 --> 00:36:45,920 Speaker 1: founding of the People's Republic of China, there happened to 589 00:36:46,000 --> 00:36:49,759 Speaker 1: be two people important to our story. The then head 590 00:36:49,800 --> 00:36:54,240 Speaker 1: of Time Warner, Gerald m. Levin, happened to be sitting 591 00:36:54,760 --> 00:36:58,440 Speaker 1: right in front of a O L. Co founder Stephen Case, 592 00:36:59,000 --> 00:37:01,800 Speaker 1: and the two got chatting. Now, A O L was 593 00:37:01,880 --> 00:37:04,800 Speaker 1: already kind of looking to make a big acquisition of 594 00:37:04,840 --> 00:37:07,880 Speaker 1: a traditional company, with the goal being to form a 595 00:37:07,920 --> 00:37:12,480 Speaker 1: company that would define future corporations like the new media 596 00:37:13,000 --> 00:37:16,799 Speaker 1: meets the old world. So Time Warner popped up as 597 00:37:16,840 --> 00:37:21,120 Speaker 1: a possibility. I mean Time Warner represented old media, film 598 00:37:21,440 --> 00:37:26,520 Speaker 1: TV Music Publishing. Meanwhile, over at Time Warner, Levin was 599 00:37:26,560 --> 00:37:29,200 Speaker 1: in discussions about how to move the company into the 600 00:37:29,320 --> 00:37:32,560 Speaker 1: next century. Levin and his team recognize that there was 601 00:37:32,600 --> 00:37:35,640 Speaker 1: a digital revolution underway and that it would be good 602 00:37:35,840 --> 00:37:38,720 Speaker 1: to evolve Time Warner and stay ahead of this curve. 603 00:37:39,320 --> 00:37:42,560 Speaker 1: One possibility early on was a merger between Time Warner 604 00:37:42,640 --> 00:37:47,080 Speaker 1: and Yahoo, but Yeah Who's founder Jerry Yang ultimately decided 605 00:37:47,160 --> 00:37:50,880 Speaker 1: not to pursue that opportunity. Case and Levin had a 606 00:37:50,960 --> 00:37:54,240 Speaker 1: few more conversations with each other, and gradually the idea 607 00:37:54,320 --> 00:37:57,520 Speaker 1: came about of merging Time Warner with a O L. 608 00:37:57,840 --> 00:38:01,680 Speaker 1: Except really it was more more of an acquisition than 609 00:38:01,760 --> 00:38:04,400 Speaker 1: a merger because a O L's stock price was just 610 00:38:04,480 --> 00:38:10,439 Speaker 1: so incredibly high and Time Warners wasn't. So. This deal 611 00:38:10,600 --> 00:38:12,680 Speaker 1: that they worked out stated that a O L would 612 00:38:12,719 --> 00:38:16,640 Speaker 1: have fifty ownership of this new company and Time Warner 613 00:38:16,920 --> 00:38:20,040 Speaker 1: would have forty five percent ownership of it. The board 614 00:38:20,200 --> 00:38:23,320 Speaker 1: would have an equal number of folks from directors on 615 00:38:23,840 --> 00:38:26,520 Speaker 1: A O L side and directors from Time Warner side. 616 00:38:27,160 --> 00:38:30,560 Speaker 1: Eleven of Time Warner would become the CEO of the company, 617 00:38:30,960 --> 00:38:33,520 Speaker 1: and Case from a O L would be the chairman 618 00:38:33,600 --> 00:38:37,160 Speaker 1: of the board, and they kept this deal pretty darn quiet. 619 00:38:37,600 --> 00:38:41,000 Speaker 1: In fact, a lot of people in senior leadership positions 620 00:38:41,120 --> 00:38:44,279 Speaker 1: for both companies didn't find out about the merger until 621 00:38:44,320 --> 00:38:48,400 Speaker 1: the companies announced it publicly in early two thousand. In 622 00:38:48,480 --> 00:38:51,320 Speaker 1: a way, this sort of played right into the overall 623 00:38:51,480 --> 00:38:55,000 Speaker 1: narrative of Time Warner. After all, the Warner properties were 624 00:38:55,400 --> 00:38:59,840 Speaker 1: mostly focused on media like TV, film, music, publishing, and 625 00:39:00,239 --> 00:39:02,120 Speaker 1: you know that was it. And then a O L 626 00:39:02,160 --> 00:39:05,239 Speaker 1: would bring new media into the mix, adding in yet 627 00:39:05,280 --> 00:39:09,920 Speaker 1: another aspect to this already incredibly complex story. The combined 628 00:39:10,040 --> 00:39:12,440 Speaker 1: value of the companies was estimated to be more than 629 00:39:12,520 --> 00:39:17,160 Speaker 1: three fifty billion dollars, thus making this the largest merger 630 00:39:17,360 --> 00:39:21,160 Speaker 1: up to that point. And while they begin the merger 631 00:39:21,280 --> 00:39:24,760 Speaker 1: in two thousand, it would take a full year to complete. 632 00:39:25,360 --> 00:39:29,920 Speaker 1: In the meantime, things took a very serious turn. Actually, 633 00:39:29,960 --> 00:39:32,840 Speaker 1: it took a few turns, but one is one that 634 00:39:32,920 --> 00:39:35,759 Speaker 1: I'm sure most of you are already familiar with, and 635 00:39:35,880 --> 00:39:39,880 Speaker 1: that is the dot com bubble. In fact burst that 636 00:39:40,000 --> 00:39:42,759 Speaker 1: process was not instantaneous. I mean it sounds like it is, 637 00:39:42,800 --> 00:39:45,120 Speaker 1: because you're talking about a bubble bursting, and you know 638 00:39:45,440 --> 00:39:49,239 Speaker 1: when that happens, it's an instant that wasn't the case 639 00:39:49,320 --> 00:39:52,600 Speaker 1: with this. This was more of a very slow, painful, 640 00:39:52,840 --> 00:39:56,960 Speaker 1: dramatic decline and value. So the stock market value of 641 00:39:56,960 --> 00:40:01,520 Speaker 1: the internet companies that were really going like crazy. It 642 00:40:01,680 --> 00:40:04,239 Speaker 1: peaked in the early spring of two thousand. Like March 643 00:40:04,280 --> 00:40:07,400 Speaker 1: of two thousand, it was at its highest ever, but 644 00:40:07,680 --> 00:40:11,520 Speaker 1: a confluence of events led to much of the market collapsing, 645 00:40:11,920 --> 00:40:14,520 Speaker 1: with many companies going out of business as a result. 646 00:40:15,320 --> 00:40:18,160 Speaker 1: Some of the problem was because of the overvaluation of 647 00:40:18,280 --> 00:40:22,120 Speaker 1: companies that had yet to produce any revenue, and some 648 00:40:22,280 --> 00:40:25,960 Speaker 1: of them had no business plan whatsoever. So essentially these 649 00:40:26,000 --> 00:40:30,160 Speaker 1: were companies that, again they were incredibly valuable on paper 650 00:40:30,400 --> 00:40:33,640 Speaker 1: because people were pouring money into it from an investment standpoint, 651 00:40:34,200 --> 00:40:38,200 Speaker 1: but they didn't really have any means of generating revenue. Uh. 652 00:40:38,560 --> 00:40:40,520 Speaker 1: Some of this had to do with companies that were 653 00:40:40,560 --> 00:40:43,160 Speaker 1: over extending themselves. They got flush with cash, and then 654 00:40:43,200 --> 00:40:46,640 Speaker 1: they started spending the cash like crazy, either in order 655 00:40:46,760 --> 00:40:49,440 Speaker 1: to try and scale the business up as fast as 656 00:40:49,480 --> 00:40:56,080 Speaker 1: possible or on you know, luxuries like penthouse offices and 657 00:40:56,719 --> 00:40:58,960 Speaker 1: daily massages and all the kind of stuff you hear 658 00:40:58,960 --> 00:41:01,759 Speaker 1: about from the dot com days. Some of it also 659 00:41:01,840 --> 00:41:04,920 Speaker 1: had to do with economic recessions that happened in other 660 00:41:04,960 --> 00:41:07,120 Speaker 1: parts of the world, such as Asia that had an 661 00:41:07,160 --> 00:41:09,719 Speaker 1: impact on the tech sector. Some of it had to 662 00:41:09,800 --> 00:41:13,280 Speaker 1: do with proposed mergers that fell through. Not Time Warner 663 00:41:13,320 --> 00:41:15,080 Speaker 1: in a O L. That one did go through, but 664 00:41:15,200 --> 00:41:19,000 Speaker 1: other mergers that were planned fell flat, and that hurt 665 00:41:19,080 --> 00:41:22,959 Speaker 1: the market too, and thus stock prices began to fall. 666 00:41:24,080 --> 00:41:26,960 Speaker 1: By May of two thousand, a O L was having 667 00:41:27,120 --> 00:41:29,879 Speaker 1: to make some pretty tough choices in order to stay 668 00:41:29,960 --> 00:41:32,680 Speaker 1: on track with earnings in order to meet the requirements 669 00:41:32,719 --> 00:41:35,360 Speaker 1: that were set by the merger that was already in progress. 670 00:41:35,960 --> 00:41:39,479 Speaker 1: The market continued to go through a decline. Meanwhile, things 671 00:41:39,520 --> 00:41:42,800 Speaker 1: were not going smoothly between the two companies. There was 672 00:41:42,880 --> 00:41:46,440 Speaker 1: a serious clash of cultures between Time Warner and A 673 00:41:46,600 --> 00:41:49,600 Speaker 1: O L. And then there were some dealings of a 674 00:41:49,719 --> 00:41:53,520 Speaker 1: somewhat shady nature. So one day Alec Klein, who was 675 00:41:53,560 --> 00:41:57,160 Speaker 1: a reporter for the Washington Post, gets this anonymous tip 676 00:41:57,480 --> 00:42:00,520 Speaker 1: from someone at A O L. And that leads Alec 677 00:42:00,680 --> 00:42:05,040 Speaker 1: on this investigation, and that investigation uncovered that A O 678 00:42:05,280 --> 00:42:08,960 Speaker 1: L had been misrepresenting its AD revenue numbers. Big no 679 00:42:09,080 --> 00:42:11,440 Speaker 1: no for a publicly traded company. I mean that is fraud. 680 00:42:11,920 --> 00:42:15,560 Speaker 1: So Klein publishes a story, which then prompted the U. S. 681 00:42:15,640 --> 00:42:19,640 Speaker 1: Securities and Exchange Commission or SEC, and the Department of 682 00:42:19,719 --> 00:42:23,640 Speaker 1: Justice the good old d o J, to investigate another acronym, 683 00:42:24,120 --> 00:42:27,239 Speaker 1: a O L. That investigation eventually led to a O 684 00:42:27,400 --> 00:42:30,879 Speaker 1: L being required to pay some really big fines, which, 685 00:42:30,920 --> 00:42:33,640 Speaker 1: as you know, another big blow to a company that 686 00:42:33,719 --> 00:42:36,839 Speaker 1: was seeing its stock price plummet. And it also had 687 00:42:36,880 --> 00:42:39,879 Speaker 1: to post corrected past earnings, so, in other words, didn't 688 00:42:39,920 --> 00:42:43,040 Speaker 1: just have to pay a fine, it had to publish 689 00:42:43,800 --> 00:42:47,880 Speaker 1: earnings that that showed how they had fudged those numbers. 690 00:42:48,239 --> 00:42:50,200 Speaker 1: This was not a great moment for the new AO 691 00:42:50,520 --> 00:42:53,000 Speaker 1: L Time Warner, though it did give folks over on 692 00:42:53,080 --> 00:42:55,160 Speaker 1: the Time Warner side a little bit of a boost 693 00:42:55,200 --> 00:42:58,160 Speaker 1: because they suddenly saw that they're part of the company 694 00:42:58,480 --> 00:43:02,640 Speaker 1: was perhaps the more valuable piece In the meantime, The 695 00:43:02,960 --> 00:43:06,080 Speaker 1: terrorist attacks on the United States on September eleven, two 696 00:43:06,120 --> 00:43:10,720 Speaker 1: thousand one had obviously an enormous impact on all aspects 697 00:43:10,719 --> 00:43:14,080 Speaker 1: of life in America, and that included business. It also 698 00:43:14,160 --> 00:43:17,480 Speaker 1: exacerbated the market troubles for the dot com industry, which 699 00:43:17,600 --> 00:43:20,080 Speaker 1: continued to fall, and A O L, which had been 700 00:43:20,120 --> 00:43:22,960 Speaker 1: in such a dominant position at the end of nineteen 701 00:43:24,200 --> 00:43:26,440 Speaker 1: was in a very different state towards the end of 702 00:43:26,520 --> 00:43:29,400 Speaker 1: two thousand one, just a year into the merger with 703 00:43:29,600 --> 00:43:34,479 Speaker 1: Time Warner. Levin retired in December two thousand one. Case 704 00:43:34,600 --> 00:43:37,120 Speaker 1: stayed on a bit longer, but ultimately decided to not 705 00:43:37,480 --> 00:43:40,640 Speaker 1: run again for Chairman of the board in two thousand three. 706 00:43:41,040 --> 00:43:43,560 Speaker 1: He had received a pretty good deal of abuse from 707 00:43:43,680 --> 00:43:48,160 Speaker 1: shareholders and leadership of both companies about the merger, about 708 00:43:48,200 --> 00:43:51,359 Speaker 1: the falling stock price for the company, about the need 709 00:43:51,440 --> 00:43:54,360 Speaker 1: to get things moving in a better direction. According to 710 00:43:54,440 --> 00:43:58,320 Speaker 1: Ted Turner, who was once the largest shareholder of A 711 00:43:58,440 --> 00:44:01,560 Speaker 1: o L. Time Warner, he had continued to sit on 712 00:44:01,680 --> 00:44:04,279 Speaker 1: the board of directors for a while. According to him, 713 00:44:04,480 --> 00:44:07,239 Speaker 1: it cost him around eighty percent of his worth, which 714 00:44:07,520 --> 00:44:13,320 Speaker 1: he said amounted to around eight billion dollars yikes. The 715 00:44:13,400 --> 00:44:17,359 Speaker 1: executives on the Time Warner side were resentful, largely because 716 00:44:17,440 --> 00:44:20,239 Speaker 1: A o L, which initially was seen as the juggernaut 717 00:44:20,400 --> 00:44:23,279 Speaker 1: with huge momentum, was now viewed as a kind of 718 00:44:23,440 --> 00:44:26,640 Speaker 1: anchor weighing down the rest of the company. The A 719 00:44:26,800 --> 00:44:29,680 Speaker 1: O L. Time Warner years had to be really hard 720 00:44:29,800 --> 00:44:33,680 Speaker 1: ones for people at both companies. The period lasted for 721 00:44:33,840 --> 00:44:36,480 Speaker 1: less than a decade, with the company announcing in two 722 00:44:36,520 --> 00:44:41,279 Speaker 1: thousand nine the Time Warner, which remember was effectively acquired 723 00:44:41,560 --> 00:44:44,600 Speaker 1: back in two thousand uh, that it was going to 724 00:44:44,719 --> 00:44:47,759 Speaker 1: spin off a O L as an independent company. So 725 00:44:47,840 --> 00:44:51,360 Speaker 1: now the acquired company has is acting like the parent company. 726 00:44:51,880 --> 00:44:55,360 Speaker 1: So when we talk about Warner Media, one property that 727 00:44:55,480 --> 00:44:58,239 Speaker 1: does not come up is a O L. That that 728 00:44:58,440 --> 00:45:00,960 Speaker 1: is not part of Warner Media any more. But we 729 00:45:01,239 --> 00:45:03,640 Speaker 1: still have to talk about a O L because that 730 00:45:03,760 --> 00:45:08,160 Speaker 1: merger was a transformative experience for both companies. I suspect 731 00:45:08,480 --> 00:45:11,879 Speaker 1: a huge combination of things like culture clashes, the dot 732 00:45:11,960 --> 00:45:16,640 Speaker 1: com market collapsing, poor communication, a failure to align the 733 00:45:16,719 --> 00:45:19,720 Speaker 1: missions of both companies so that they supported one another. 734 00:45:20,120 --> 00:45:23,680 Speaker 1: I think all of those are partly to blame for 735 00:45:24,400 --> 00:45:27,480 Speaker 1: this mess. And the vision was to create the media 736 00:45:27,560 --> 00:45:30,680 Speaker 1: company of the future, but the reality saw just chaos 737 00:45:30,920 --> 00:45:35,360 Speaker 1: that did not work. AOL. Time Warner was in a 738 00:45:35,480 --> 00:45:38,200 Speaker 1: rough spot, and you know, in two thousand two it 739 00:45:38,239 --> 00:45:41,680 Speaker 1: had reported a loss of ninety nine billion dollars billion. 740 00:45:41,800 --> 00:45:44,279 Speaker 1: That was a third of the company's value lost in 741 00:45:44,360 --> 00:45:47,000 Speaker 1: a year, and at that point it was the largest 742 00:45:47,120 --> 00:45:49,839 Speaker 1: loss any company had ever reported in a single year. 743 00:45:50,120 --> 00:45:52,440 Speaker 1: So there were a lot of executive shuffles there, with 744 00:45:52,640 --> 00:45:56,000 Speaker 1: leaders shifting into new roles or taking on joint responsibilities 745 00:45:56,040 --> 00:45:58,520 Speaker 1: for both companies, and it was a very messy time. 746 00:45:59,000 --> 00:46:01,720 Speaker 1: And one of those executive to try and hold things together, 747 00:46:02,200 --> 00:46:05,080 Speaker 1: only to ultimately resign from the company in two thousand 748 00:46:05,160 --> 00:46:09,239 Speaker 1: two was Bob Pittman, who today is the leader of 749 00:46:09,360 --> 00:46:14,680 Speaker 1: I Heart Media. Howdy Boss. Anyway, Pittman was one of 750 00:46:14,880 --> 00:46:18,640 Speaker 1: several executives who really tried to align the companies together 751 00:46:19,239 --> 00:46:23,319 Speaker 1: but faced enormous hurdles along the way. And Pittman had 752 00:46:23,400 --> 00:46:26,239 Speaker 1: a long history in media already. He was one of 753 00:46:26,280 --> 00:46:29,080 Speaker 1: the co founders of MTV back in the day, and 754 00:46:29,360 --> 00:46:31,479 Speaker 1: so he had worked on the Time Warner side before 755 00:46:31,520 --> 00:46:34,600 Speaker 1: the merger. Maybe one day I'll convince him to come 756 00:46:34,640 --> 00:46:37,240 Speaker 1: onto the show and talk about his various experiences, because 757 00:46:38,160 --> 00:46:40,439 Speaker 1: I'm sure that guy's got some stories. He has seen 758 00:46:40,520 --> 00:46:44,360 Speaker 1: it all. He's the head of a big media company today, 759 00:46:45,080 --> 00:46:51,080 Speaker 1: co founded MTV, he played an enormous part in the 760 00:46:51,680 --> 00:46:55,720 Speaker 1: development of media in America over the last thirty years. 761 00:46:55,960 --> 00:46:58,640 Speaker 1: So maybe I can get him on the show sometime. 762 00:46:59,440 --> 00:47:02,520 Speaker 1: That brings us up to ten and we still have 763 00:47:02,640 --> 00:47:04,600 Speaker 1: a lot more story to get through. Heck, we haven't 764 00:47:04,600 --> 00:47:07,480 Speaker 1: even mentioned A T and T yet, And in our 765 00:47:07,560 --> 00:47:10,880 Speaker 1: next installment will learn where Time Warner would go next 766 00:47:11,080 --> 00:47:14,520 Speaker 1: after parting ways with A O. L. And where Warner 767 00:47:14,640 --> 00:47:17,400 Speaker 1: Media would come from and why A T and T, 768 00:47:17,560 --> 00:47:21,040 Speaker 1: which currently holds Warner Media, is now looking to spend 769 00:47:21,040 --> 00:47:23,040 Speaker 1: off the company so that it can merge with my 770 00:47:23,200 --> 00:47:28,080 Speaker 1: old employer, Discovery Communications. So that'll be our episode on 771 00:47:28,480 --> 00:47:31,839 Speaker 1: Monday next week, which is a holiday, so I'm gonna 772 00:47:31,960 --> 00:47:37,360 Speaker 1: have to get it recorded soon. Note to self, I promised, Harry. Anyway, 773 00:47:37,960 --> 00:47:40,239 Speaker 1: that's it. If you have suggestions for topics you would 774 00:47:40,280 --> 00:47:42,720 Speaker 1: like me to cover on future episodes of tech Stuff, 775 00:47:42,920 --> 00:47:44,880 Speaker 1: reach out to me on Twitter. The handle for the 776 00:47:44,920 --> 00:47:48,399 Speaker 1: show is tech Stuff H. S W and I'll talk 777 00:47:48,400 --> 00:47:57,080 Speaker 1: to you again really soon. Tech Stuff is an I 778 00:47:57,200 --> 00:48:01,279 Speaker 1: Heart Radio production. For more podcasts from Heart Radio, visit 779 00:48:01,320 --> 00:48:04,320 Speaker 1: the I Heart Radio app, Apple Podcasts, or wherever you 780 00:48:04,480 --> 00:48:10,400 Speaker 1: listen to your favorite shows. H