HBO began as an experiment. It was a method to get folks to change from getting TV over broadcast antennas to cable by providing occasions you’d in any other case want tickets to see: sports activities, performs, motion pictures. That’s the place the title Residence Field Workplace comes from.

However it grew from there in stunning methods: HBO was a significant innovator in satellite tv for pc distribution, in working with cable operators across the nation, and naturally in programming. The corporate’s style and magnificence have influenced and formed tradition for a era now. And importantly, HBO did it with none actual knowledge: the cable firms owned all of the subscribers, so HBO made choices via intuition and expertise.

The superb factor about HBO is that it has stayed true to itself via a completely tumultuous set of possession modifications and technique shifts. When you’re a Decoder listener, you already know concerning the chaos of AT&T and HBO Max and the sale to Discovery to create Warner Bros. Discovery, nevertheless it’s a lot twistier than that.

I talked via all of these twists with Felix Gillette and John Koblin, authors of the terrific e book It’s Not TV: The Spectacular Rise, Revolution, and Way forward for HBO. Felix and John additionally peeled again the curtain in your favourite HBO exhibits, from Intercourse and the Metropolis to Recreation of Thrones.

Earlier than we get into the episode, I’ve to do our regular set of disclosures: I’m a Netflix govt producer. We made a Netflix present known as The Future Of. You need to watch it. I’m hopelessly biased in favor of the present we made. Additionally, Vox Media has a minority funding from Comcast. They don’t like me very a lot. And I labored at AOL Time Warner. I give up to begin The Verge. 

Okay, that’s that. Let’s get into the interview — it’s one.

Felix Gillette, you might be an editor and author at Bloomberg Information.

And John Koblin, you’re a reporter at The New York Occasions.

Collectively, you might be authors of It’s Not TV: The Spectacular Rise, Revolution, and Way forward for HBO. Welcome to Decoder.

JK: Thanks for having us.

I’m actually enthusiastic about this episode. I cherished the e book. I’m fully obsessive about no matter is occurring with Time Warner, the corporate that will get handed round from firm to firm over time. It looks as if for those who purchase Time Warner, you’re doomed. One thing very unhealthy has gone on. However HBO is that this shining jewel that appears to persist no matter that noise. I believe that’s a very fascinating factor to unpack, and the e book does a very good job of that, so thanks for approaching. I additionally wish to commend you. Bloomberg and the Occasions are fairly fierce rivals, but you got here collectively to write down a e book.

FG: Effectively, we’re long-time buddies. It did take just a little smoothing over, nevertheless it labored out effectively ultimately.

We’re doing a media episode of the present, however there’s additionally a media subplot right here, which is that you simply guys needed to easy that over. It’s good. 

Let’s begin with the start of HBO. I believe most individuals listening to Decoder consider HBO as a legacy model, as this factor that will get handed round that has to make the shift to streaming within the context of Netflix and all this different stuff. It’s really a way more fascinating story. It principally began out as a value-add to a neighborhood cable system in New York. Take us via the genesis of HBO.

FG: Within the early days, it was principally Charles Dolan, who went on to Cablevision fame and proudly owning the New York Knicks and the New York Rangers. It was Dolan’s concept initially. He received backing from Time Life, which at that time was {a magazine} empire that was trying to diversify. Dolan’s concept was principally like, “I’m attempting to construct out the primary cable system in decrease Manhattan.” 

There have been neighborhoods in New York that simply couldn’t get good broadcast tv protection as a result of the buildings would block the indicators. They have been like, “Oh, we’re going to construct cable within the metropolis,” nevertheless it was an enormous mess. It was struggling and dropping some huge cash. 

Whereas on trip in France, he thought, “What’s a method to entice folks to really pay for TV when most individuals are already getting it totally free?” He thought that possibly folks would pay in the event that they began a channel the place you may get Hollywood motion pictures and a few sports activities from Madison Sq. Backyard. That was its humble origin, and it actually didn’t work for a lot of, a few years. It nearly died instantly, so it’s type of unimaginable it survived.

What’s the flip that made it work in these early cable days?

JK: I imply, as Felix put it earlier than, it was a novel idea to pay for a TV community. Even going again to the times of radio, you anticipated that to return into your house totally free. HBO determined, “All proper, let’s simply have a look at that title: Residence Field Workplace. Allow us to provide one thing the place a viewer or a subscriber will get entry to one thing they will’t get at residence,” whether or not that’s a ticket to a film that was in theaters just some months earlier, a boxing match, a live performance, or a standup particular. 

HBO began programming that content material actually aggressively within the late Nineteen Seventies and into the mid-Nineteen Eighties. That included making their very own authentic motion pictures as effectively. That’s kind of the factor that basically began to show HBO right into a viable enterprise by that time.

FG: It additionally couldn’t have occurred with out this massive technological leap ahead, which I assumed was actually fascinating and didn’t learn about earlier than we began engaged on this e book. Initially, for the primary couple years after they launched HBO, there was actually no method to distribute it. Solely with the arrival of satellite-distributed channels did that occur, and HBO was the primary cable channel that made the leap onto satellite tv for pc. With out that, it by no means would have been capable of attain subscribers throughout the nation. That occurred within the mid-Nineteen Seventies, when HBO was about to be put all the way down to demise as a result of it simply wasn’t going wherever.

At that time, Time Life made one final funding and mentioned, “You realize what? Okay. We’re going to hire some area on this new RCA satellite tv for pc that, in principle, may beam shifting photos to anyone across the nation that places up just a little satellite tv for pc dish.” They examined it with the “Thrilla in Manila” boxing match within the Philippines, and it ended up being this nice success. They may, actually, distribute it across the nation. 

As soon as they made that leap onto the satellite tv for pc, everybody else adopted. That was actually the arrival of all of those different cable channels that we’re all so accustomed to, like MTV, BET, and Comedy Central. All of them adopted HBO’s result in go onto satellite tv for pc.

I really thought that was an completely fascinating element of the e book. A theme that comes up on Decoder time and again is how your distribution impacts what you make. The content material is all the time inevitably and fully formed by its distribution methodology. What’s actually fascinating about that to me is that within the web age, we take into consideration distribution as being fairly direct, proper? There’s a creator, there’s a viewer, and there’s the YouTube algorithm that may form what you make as a result of that’s the distribution. On the finish of the day, there’s a fairly direct relationship there.

That’s not what you’re describing with HBO on satellite tv for pc; it’s not a DirecTV client satellite tv for pc system. They’re wholesaling out to different cable networks, who’re successfully their prospects, who then retail it out to their cable subscribers. They needed to invent this complete system and put up these big satellite tv for pc dishes. This can be a enterprise that didn’t exist, however HBO manages to create it. How did they get via that? That’s a enterprise mannequin innovation and a really critical technical innovation. It looks as if they misplaced the flexibility to try this afterward. I’m curious, the place did that tradition come from at HBO to start with?

FG: I believe they made a very smart move early on. They determined, “If we’re going to cost folks, say, $10 a month to get this channel of Hollywood motion pictures of their residence, we’re going to separate that fifty / 50 with the cable operator. For anybody that’s incentivized to exit and make investments $100,000 or no matter to purchase an enormous satellite tv for pc receiver after which wire it into folks’s properties, right here’s one thing else you may provide them apart from what you’re simply going to see on broadcast tv. Right here’s a channel of Hollywood motion pictures.” It was one thing else they may promote prospects to get them into the cable ecosystem when it was actually a brand new idea to pay for TV, and they’d get to maintain half the cash. 

That basically made HBO into one thing that these nascent cable operators wished to promote to their prospects. It additionally created this fascinating dynamic that performed out for the following a number of many years, the place HBO was faraway from the shopper. They have been a wholesaler, and so they by no means had a direct relationship with the purchasers. That was good and unhealthy in some ways and actually formed the community’s historical past all all through and as much as the day when the streaming period was born. We noticed that play out in a number of different fascinating methods.

JK: The nice of it’s, they didn’t actually know a lot about their subscribers, so HBO’s executives principally simply needed to wing it. They needed to determine, “Okay, right here’s what we predict is nice. We predict they need this George Carlin particular, we predict they wish to see Robin Williams, and we predict they need this film concerning the Exxon Valdez catastrophe.” By trusting on their very own core instincts, it actually helped affect HBO’s programming efforts all through the Nineteen Eighties.

I believe this can be a good time to deliver up Netflix. I don’t wish to begin speaking about HBO versus Netflix fairly but, however what you’re describing is a tradition of creativity, of unbound inventive, subjective decision-making. Netflix is a completely data-driven group. The HBO tradition got here up in a really completely different manner. With Netflix, you get three episodes, they have a look at the streaming numbers, after which they cancel your second season earlier than you even began. HBO is saying, “Right here’s a bunch of executives. We belief them to make cultural choices.”

FG: I believe after we received into the e book, even actually from the start, we realized that this could be a tremendous alternative not simply to distinction these two completely different firms as a New York-based firm versus a California-based firm and the cable and satellite tv for pc period versus the streaming period, but additionally to do precisely what you talked about. An organization like Netflix, from its very origin, was so direct-to-consumer and actually utilizing the web to determine the info and patterns. 

Even earlier than streaming occurred, after they have been simply mailing out the DVDs to you by mail, they have been taking a look at all the alternatives that you simply made via their web site. What did you wish to watch? What time of yr was it? All these patterns have been guiding them. It was such an unimaginable distinction to HBO, which by no means had any knowledge on prospects, may by no means depend on something, and needed to give you another manner of determining what it was that individuals would watch — and so they did. Over the course of a number of many years, they created this very instinctive manner of trusting artists and not likely worrying in any respect about knowledge and indicators within the market. I assumed this a part of the e book was a lot enjoyable, contrasting these two completely different strategies, these two completely different establishments, and the strengths and weaknesses of each fashions.

That piece of the puzzle, the place their prospects are the cable networks, creates loads of alternatives. HBO will get actually good at promoting to these networks, and people networks get actually good at promoting to the purchasers. However it additionally creates this blind spot, the place HBO doesn’t actually know its viewers. It additionally creates one other fairly main blind spot, which is that there have been simply loads of boobs on HBO at the start, as a result of they thought solely males have been going to purchase cable. 

It looks as if that has possibly diminished now, nevertheless it’s simply part of HBO’s tradition. I really wish to begin at the start and hint it again to that lack of knowledge, which created some enduring cultural alternatives for HBO and its artistic tradition, nevertheless it additionally created this beautiful large blind spot.

FG: Yeah, to start with, they have been attempting to determine the format and the combo. “What’s it we’re going to placed on the air along with Hollywood motion pictures?” One of many early executives was this man named Michael Fuchs, who was the pinnacle of programming within the early days and have become the CEO of HBO. He had this concept — and once more, this wasn’t actually primarily based on knowledge, it was simply his personal studying of the panorama — that the published networks have been very targeted on feminine viewers. His concept was, “Effectively, they’re ad-supported, and business sponsors wish to attain girls of their households. They wish to promote them family items. So for those who look throughout the entire panorama, it’s barely skewed in direction of feminine viewers.” 

As a result of the published networks have been so highly effective — this was throughout the period of ABC, CBS, NBC — they’d to determine, “Effectively, what can we do otherwise?” I imply, the entire concept of HBO was principally counter-programming towards the networks. One concept was, “Okay, in the event that they’re skewing the programming in direction of girls, then we’re going to concentrate on males and do issues that may entice male viewers.” 

That concept was very specific at the start. HBO’s authentic programming combine included issues like late-night documentaries that had tons of intercourse in them — Actual Intercourse was the franchise ultimately — and boxing, which the published networks have been rising cautious of due to the violence. And yeah, it concerned loads of feminine nudity. 

In these early days, there was a code phrase inside HBO for, basically, extra feminine nudity. These writers and producers of exhibits would get a script again and say, “Yeah, it’s an important script and we actually prefer it, however may it embrace just a little extra ‘cable edge’?” That was the code phrase. The thought was that they have been pandering to male viewers, and so they may embrace issues that you simply couldn’t see on broadcast tv, like nudity, unhealthy language, violence. HBO’s early authentic programming was simply plagued by that stuff. It seems that alone wasn’t actually sufficient to create nice programming.

The e book could be very a lot structured period by period of HBO, and each period of HBO has its set of signature exhibits. One period that I believe breaks away from this legacy of very male HBO is the Intercourse and the Metropolis period, when that was HBO’s dominant product. How did they make the flip from, “All proper, we’d like extra ‘cable edge’ to draw male heads of family to purchase this product,” to, “Truly, what we’re recognized for is Carrie Bradshaw”?

JK: Within the spirit of winging it, it was principally an accident. Within the mid-Nineties, Demi Moore was on the peak of her superstar, and she or he wished to provide a film about abortion. It was known as If These Partitions Might Speak, and it was going to be unflinchingly pro-choice and it was going to look at abortion via three completely different durations of American historical past: the Nineteen Fifties, the Nineteen Seventies, and the then-present day of the mid-Nineties. 

She had initially made the deal to do the TV film with TNT, and TNT received skittish simply as they have been about to start manufacturing. They have been like, “Ugh, our advertisers won’t like this pro-choice abortion film.” Once more, it was the mid-Nineties. It was the peak of the tradition wars at that time and abortion was a red-hot subject.

As soon as HBO heard this, they swooped in and so they mentioned, “We’ll make it.” They didn’t assume that their principally male viewers have been going to stampede to return and watch a film about abortion. They wished Demi Moore on their airwaves. And the forged additionally included Sissy Spacek and Cher, so this was similar to a win-win. “Why not? Let’s do it.” Then it aired and the scores got here within the subsequent day, and so they have been the very best scores HBO had ever seen for an authentic manufacturing. 

HBO executives have been floored. They have been like, “Wait, are there feminine viewers on the market who’re watching HBO and wish to watch a present or film concerning the feminine expertise? What’s on the market proper now?” What was on the market was Darren Star, a former high producer on Beverly Hills, 90210 and Melrose Place. He was purchasing a mission with Candace Bushnell, who was adapting her e book from a collection of columns that she wrote for the New York Observer, known as “Intercourse and the Metropolis.” Inside 10 weeks of If These Partitions Might Speak debuting, HBO made a deal to do Intercourse and the Metropolis.

That is one other theme that comes up on Decoder on a regular basis, which is that knowledge can solely inform you concerning the previous. The info that HBO had would’ve by no means instructed them that this stuff would achieve success sooner or later. How did that tradition change across the sudden inflow of knowledge, each from Nielsen scores and from the web? Did something occur inside HBO to make it extra expansive?

FG: Yeah, there was the problem of knowledge and the way it was going for use. I believe a method it modified HBO so much was really via a misunderstanding. In 2000, when the web was taking off, AOL got here in and purchased Time Warner. It was a famously disastrous merger of cultures, and on the time, it was the largest merger in American enterprise historical past. A part of what was driving that, weirdly, was AOL wanting extra info on prospects themselves.

Within the e book, we speak about the way it took a very long time for the merger to undergo regulatory points. When it was lastly consummated and the AOL managers have been displaying up, we inform the joke of the primary time they arrived at HBO’s gross sales and advertising and marketing places of work. They got here in and so they have been very excited. “We love HBO. It’s an unimaginable model. It has all these prospects that like it. So the very first thing we wish to know is for those who can simply give us all of your buyer knowledge?” 

Everybody was wanting round this convention room nervously like, “Buyer knowledge? What are these guys speaking about? You simply paid $100 billion. I hate to interrupt it to you, however we don’t have that info. It’s the cable operators who’ve that.” That was one of many basic misunderstandings: that in some way there could be this synergy — that you may use HBO’s information of what prospects wished with the web, and that was going to show into this unimaginable vortex of recent synergy on this new world of the web and leisure.

I’m sorry, “vortex of synergy” is definitely an important phrase. It’s completely correct to what occurs.

FG: The entire thing was simply such a multitude, and it clearly didn’t work out. That story has been instructed loads of instances, and we inform it via the HBO lens. It left this unimaginable hangover inside Time Warner. I believe that’s one factor that turned obvious in our e book, and it was actually fascinating to me. I had no concept beforehand. 

It was only a disastrous expertise for all of those tv executives inside Time Warner, at HBO, and for all these cable manufacturers that needed to take care of these AOL managers. They’d this well-known tradition conflict. Finally, the inventory worth craters and everybody will get tossed out. They are saying, “Okay, the AOL guys didn’t know what they have been doing. It was a complete mess, so we’re going to return to letting the TV folks run this firm.”

That was nice, besides it left them with this unimaginable distaste for the concept folks from the web knew what the hell they have been speaking about. The issue with, “Oh, the web is stuffed with phonies and doesn’t matter,” was that it was actually not an important lesson to be studying for an enormous media firm within the 2000s. 

With every passing yr, the web was turning into extra vital and the know-how was getting higher in streaming. Time Warner, I believe in some ways, received left behind due to that. We name it web PTSD within the e book. It was like that have with AOL was so unhealthy that they only rejected something within the coming years that mentioned, “Oh, possibly you ought to be investing in streaming know-how, knowledge acquisition, and in understanding what new modes of distribution are coming down the pipeline, as a result of in some unspecified time in the future it’ll occur.” That was a very fascinating dynamic to look at play out.

This brings us to Netflix and that PTSD hangover concerning the web the place the distribution was altering. Netflix was the traditional disruptor there, proper? They have been mailing DVDs to folks, after which they have been beginning their streaming service, which wasn’t excellent. It actually had no authentic exhibits and no motion pictures, however all people checked out it and mentioned, “Okay, that’s going to occur. That is going to get higher.” HBO checked out it and mentioned, “No, we’re good,” for fairly a while. However Netflix was cheaper and extra handy. That is only a very traditional disruption story. What occurred there?

FG: Effectively, even earlier than Netflix launched the streaming service in 2007, there was this unimaginable second in like 2005, the place there was a bunch of HBO enterprise improvement executives on the West Coast watching Netflix. That is the period the place Netflix was actually locked on this battle with Blockbuster. 

Many individuals have forgotten this specific period, however Blockbuster, along with ruling the house video market, noticed Netflix arising. At one level, they principally launched their very own Netflix rival service, the place you may go to Blockbuster and get DVDs despatched to you by way of mail. They priced that decrease than Netflix, and folks have been like, “Oh, is Netflix on the ropes?”

The HBO executives have been watching all of this. They thought, “You realize what? That little firm in California, they’re fairly good with prospects. They’ve a very good direct relationship with prospects. Why don’t we purchase them? They’ve the factor we don’t have. We’ve got this big wholesale distribution mannequin via the cable operators, but when we purchased Netflix, we’d have this direct relationship with the purchasers. We’d management one other window for motion pictures, and it could be an important mixture of companies.”

So in 2006, they put collectively this 35-page proposal, and so they went out to satisfy with their bosses in New York and mentioned, “Listed here are all the explanations we must always purchase Netflix.” They principally couldn’t even get via the presentation earlier than their bosses mentioned, “Are you kidding me? Netflix? What is that this factor? It’s price $1.5 billion? That’s loopy! It’s not price that. We’ve seen this with AOL. This factor goes away. Get out of right here. Simply throw that factor away.” It was actually this outstanding missed alternative. 

It’s enjoyable to think about the counterfactual historical past of what the streaming wars may need been like if Time Warner had acquired Netflix. Which once more, was price about $1.4 billion market cap on the time they wrote this proposal. AOL Time Warner had a fund that simply may have paid for that. In fact, if they’d acquired it, they most likely would have screwed it up. It wouldn’t have been nice. 

That’s type of the traditional innovator’s dilemma. They have been so wedded to this mannequin of the cable satellite tv for pc and so they have been making a lot cash. In reality, I believe Comcast at that time was 1 / 4 of their enterprise, billions of {dollars} of income yearly. They frightened, “If we even make just a little transfer in direction of going direct-to-consumer and reduce out the middlemen, reduce out the cable operators like Comcast, they’re going to be pissed. They may simply shut down their advertising and marketing of HBO. Our churn fee would go up instantly and we might begin to lose prospects. It’s not definitely worth the threat, so let’s not even entertain that concept.” 

So it’s, once more, a tremendous traditional innovator’s dilemma of this firm being wedded to the earlier know-how and never having the ability to reap the benefits of these alternatives that individuals inside the corporate sought. It was not stunning. They actually did see the chance early on.

Many times, it actually simply comes again to how a lot energy your distributors have over you within the WarnerMedia story. HBO can’t actually do HBO Go as a result of Comcast goes to get mad. In a while, Jason Kilar goes to attempt to go direct-to-consumer on HBO Max, and all of the film theaters and Hollywood get mad. That’s his distribution, the cash that everybody has raced to simply accept. HBO is all the time in the course of that. When it’s making exhibits, how is it attracting all of this expertise time and again, even because it’s all the time at conflict with its distribution or all the time attempting to maneuver on to the following type of distribution?

JK: When you’re a high producer or a high author in Hollywood, you’re not paying a lot consideration to the distribution challenges. You’re taking note of the executives who you’ve recognized for years. HBO has all the time actually prided itself on cultivating an important author or an important producer and having them come again many times. 

Use Mike White for example. He had a present on HBO that was a cult traditional 10 years in the past. They canceled it as a result of it wasn’t watched, however they all the time checked in with him. “What are you engaged on? What are you eager about?” By the point COVID-19 hit, HBO was like, “Okay, productions in every single place are fully ruined. We’d like a present that may be performed fast, low-cost, and ideally over Zoom in order that we will get it on the air in 4 or 5 months.”

They went to Mike White saying, “Do you’ve a Zoom present?” Mike White mentioned, “Let me give it some thought.” Then he was similar to, “I’m not doing a Zoom present as a result of that sounds so miserable. What’s additionally miserable is sitting at residence watching CNN all day, with horrible headlines concerning the pandemic. Perhaps I can give you an concept for a present the place there may very well be a COVID-19 bubble.” That’s when he all of the sudden thought, “Let’s do a present at a lodge in Hawaii.” 

The explanation HBO went to Mike White is as a result of they knew he’s a fast author, he may work low-cost, and he would give you one thing. Swiftly, out of nowhere, HBO has The White Lotus. It was due to the executives’ relationship with the expertise, and vice versa, the expertise relationship with the executives. Mike White instructed us for the e book that he had had conferences with Netflix through the years, and he was similar to, “What is that this? That is simply manner too bizarre. I would like my common HBO folks.” One of many producers we quote within the e book mentioned that’s the reason why HBO “all the time has been a reduce above.”

That relationship and that dynamic is traditional Hollywood. It’s completely relationships-based. Nobody ever says no to something, and the door is all the time open for the following factor. It’s bizarre as a result of HBO is famously in New York, after which they transfer. Within the early, pre-internet days, these location variations appeared to form the tradition greater than you’ll assume.

JK: Yeah, HBO has a New York presence, way more so than some other rival studio or community, however HBO’s programming workforce is positioned in Los Angeles. The New York operation, the place that was finest deployed, didn’t have to concentrate to the Hollywood trades. All the highest executives are in New York, notably Richard Plepler, who had grown up as this actual East Coast man, labored within the US Senate for just a few years. Earlier than he got here to HBO, he additionally labored on publications like The Atlantic as a PR individual. He wished to domesticate relationships with the New York press corps and the Washington press corps.

That elevated HBO all through the Nineties, all through the 2000s and the 2010s. Felix and I used to joke about this. Any time we went to an HBO premiere get together 5 – 6 years in the past, I’d see no fewer than 25 reporters and editors from The New York Occasions, 23 or 24 of whom didn’t cowl tv and didn’t cowl tradition. They have been simply there as a result of they have been invited, as a result of possibly there can be a time when Maureen Dowd needs to dedicate a Sunday column to a brand new HBO authentic collection or a brand new HBO authentic film. It was kind of this bicoastal component that HBO needed to it, the place you had this superb programming workforce in LA, and also you had these unimaginable communications officers and advertising and marketing folks in New York that basically helped deliver HBO to a different stage.

The core of that — and that is actually what I consider because the Plepler period — is that HBO is a hits enterprise. There’s no model there, actually. It simply stands for, “There’s going to be one other unimaginable present that may final for nonetheless many seasons. When that’s over, we’ll simply roll you into the following factor.” However there’s no method or system to make that subsequent factor. They’re simply taking these photographs. I’ve watched Richard Plepler maintain court docket in New York Metropolis earlier than. It appears like he positioned himself because the ringleader of this fantastical military of creatives that will simply do that time and again. Was there a system, or was it pure chaos and so they simply received fortunate time and again?

FG: I believe with the system that they got here up with, you actually have to return to essentially the most pivotal change in HBO’s historical past, which befell within the mid-‘90s. HBO stood for Residence Field Workplace, and the unique concept was like, “Something that you would need to purchase a ticket for in the actual world, we’ll present you at residence.” So initially it was sporting occasions like boxing, Hollywood motion pictures, music live shows, and comedy performances. They didn’t make a lot traditional TV within the early days as a result of they have been considering, “Effectively, the TV networks give it away totally free. That’s not our factor. We’re supplying you with one thing in your own home that you would need to purchase in any other case.”

Within the mid-’90s, they lastly determined, “Okay, we’ve taken this about so far as it may well go. We actually need folks coming again week after week. We have to begin doing episodic tv in a very critical manner.” Once they did that and made that call, they needed to assume, “Okay. Effectively, how can we do episodic tv or serialized exhibits which might be completely different from what’s on broadcast networks?” 

I believe essentially the most pivotal resolution they made of their historical past was the method HBO got here up with. Earlier than, they’d give them issues like feminine nudity, unhealthy language, and violence that you simply couldn’t see on TV, however that wasn’t sufficient to make these exhibits actually, actually nice. What they got here up with over time was, “Effectively, we will’t provide these seasoned TV present writers and creators as a lot cash as broadcast tv, however we will provide them a stage of artistic freedom that they may by no means have on broadcast tv.”

Their pitch within the early days was like, “Okay, deliver your present to HBO. You’re not going to have a bunch of business sponsors wanting over your shoulders. You’re not going to have a ton of community executives telling you to make all of the characters extra likable and make the subtext extra apparent. All the foundations that you simply’ve all the time butted your head up towards in broadcast tv, you may toss these out and do no matter you need on HBO’s air.” 

Those that had spent their careers making exhibits on broadcast tv, like Darren Star, whom John talked about earlier, have been so sick of the foundations of broadcast tv and these fights with the community executives like, “Can we do an episode about teenage being pregnant? Effectively, can we do one about abortion?” “No, it’s too controversial.” The attraction of coming over to HBO and making a present the place you didn’t have all of these restrictions was extremely interesting.

When Darren began Intercourse and the Metropolis, he didn’t assume it was going to be any type of business success. He was principally considering of it as an impartial movie mission, nevertheless it ended up being extremely highly effective. From the time that they determined they have been going to take off the guardrails and that was going to be their gross sales pitch and their method for these Hollywood creators, they’d this unimaginable run. I imply, it was Intercourse and the Metropolis, Oz, The Sopranos, Six Ft Underneath, The Wire. When you have a look at all of these exhibits, what do all of them have in widespread? All of them had these actually seasoned veteran creators who had come from that broadcast tv world, who spent many years studying these guidelines after which came visiting to HBO to interrupt them. 

In some methods, I believe that also is absolutely the HBO methodology. “We’ll provide the artistic license, we’ll provide the artistic freedom, we’ll provide the cash to make your mission, and we’ll go away you alone.” That’s extremely highly effective, weirdly.

We’ve got been speaking about Netflix because the competitor, and I believe that makes loads of sense. Individuals perceive it. There may be this different interval, although. I don’t know if you wish to say it’s the place Peak TV started, however the place HBO’s opponents have been different cable networks that have been principally making the identical pitch. So you find yourself with Mad Males or Breaking Unhealthy on AMC, and you find yourself with Billions having an unimaginable run over on Showtime. How does HBO really feel about these opponents, and have they got the identical type of challenges as HBO? It looks as if the Showtimes and the AMCs formed HBO way more than Netflix, and now we’re within the Netflix versus HBO period.

JK: I imply, I believe you may really hint the origins of Peak TV to 2010. That’s while you already see the physique rely of those climbing scripted grownup tv collection rising and rising every year. However 2010 is when Netflix was nonetheless simply licensing different folks’s content material, however all people was displaying a willingness to license them. Disney was giving them ABC’s Misplaced. Mad Males was starting to point out up on Netflix. And Netflix actually desired the pooh-bah, the highest recreation on the town. They wished HBO’s content material. 

They knew asking for The Sopranos or Intercourse and the Metropolis would most likely be a tough ask, in order that they went decrease. Netflix’s Ted Sarandos, then the chief content material officer, mentioned, “What about Mr. Present? What about Six Ft Underneath? What about Deadwood?” He made an enormous provide, like a ton of cash, which was not solely purported to get HBO sweating, but additionally get Alan Ball’s brokers — Alan is the creator of Six Ft Underneath — into matches saying, “It’s important to make this deal,” however HBO refused. 

HBO noticed Netflix as a rival even then, in order that they wouldn’t give them their content material to placed on their nascent streaming service. They didn’t need that HBO emblem on it. And that’s proper across the time when Netflix was like, “Oh, so if HBO’s not going to promote us these items, when are the opposite conventional Hollywood studios going to smart up and notice they shouldn’t be promoting us their stuff? That’s not going to be good, as a result of then we’re going to don’t have anything. We’re going to need to exit and begin making our personal stuff.” 

It was just a few weeks later that they’d the deal to make Home of Playing cards, which surprised Hollywood. So simultaneous to that, sure, you’ve FX, you’ve Showtime, you’ve AMC. You’ve got different networks which might be doing the HBO factor: gritty antiheroes, subversive TV. 

It was a troublesome transition for HBO. For 15 years, they realized they have been the one recreation on the town. Then impulsively, if it’s HBO versus any person else, they’re not going to decide on HBO. They’re going to decide on FX or AMC. It was a troublesome transition, however look the place we’re 10 years later. 

Simply in the previous few weeks, AMC has principally conceded that they’ve to chop again their authentic programming ambitions. They’re shedding lots of people. Very not too long ago, Showtime, at 47 years outdated, is now not Showtime. It’s now Paramount Plus with Showtime. That may be a diminishment of a fabled model that’s beautiful. When you’ve that within the context of HBO at the moment broadcasting The Final of Us, an enormous hit, on the heels of The White Lotus, an enormous hit, on the heels of Home of the Dragon, an enormous hit, it’s actually beautiful to see what has develop into of HBO’s rivals of only a decade in the past. They’re beginning to disappear.

All proper, let me make the counterargument to what I nearly all the time say. I can’t consider I’m going to say this. Perhaps all of the mergers have been good? Is that the lesson right here? I don’t know if I consider that. I really feel like I’ve to say it simply to make the center of the podcast actually thrilling. These different rivals didn’t get swept up. They weren’t the crown jewels of those gigantic media mergers that principally killed the host after which needed to transfer on. They tried to be impartial companies. 

I’m taking a look at HBO versus Showtime versus FX versus no matter, and so they have the identical enterprise mannequin. Netflix comes in order that the sport is mounted. You’re type of enjoying on the identical board. Netflix is available in with a bunch of VC cash, a completely completely different enterprise mannequin, and no cable techniques to make blissful. They flip the board, every little thing will get radically costlier as a result of Netflix will simply shovel cash at folks, and solely HBO emerges from that — I’d not say victorious, however intact.

FG: I believe for all of the loopy tradition conflict that occurred when AT&T acquired Time Warner and all of the bludgeoning that went on inside that firm, the one factor that did come out of that, that they wanted to do for a very long time, was that they broke down all these obstacles between the completely different manufacturers inside Time Warner. They received all of the programming in a single place, and so they did create a streaming service, that for all its glitches within the early days and for all its issues, has an infinite library and the size that may compete with Netflix and Disney — not less than in the USA. Abroad, I believe, is one other matter.

When you didn’t develop into a part of an enormous platform, then I believe you actually are not noted. In all probability one of the best instance of that now could be AMC Networks, which for some time there with Mad Males, The Strolling Useless, and Breaking Unhealthy, actually had this second the place it was like, “Oh, they’re on the identical footing as HBO, FX, and these different channels within the cable world.” However they by no means made the transition to an enormous streaming service. So like John mentioned, now they’re withering on the vine. 

For all of the negatives that we may undergo that occurred with HBO underneath AT&T, the optimistic is that there’s a massive large streaming service known as HBO Max, and you may get the complete library of HBO’s historical past now kind of streaming in your house.

JK: Can I push again on each of you?

Sure. I can’t consider we’re going into the AT&T deal on a optimistic be aware. Please push again.

JK: By the pores and skin of their enamel, HBO continues to be going and doing what HBO did. By the pores and skin of their enamel. If HBO had not been on the roll that it has been on for the final three or 4 years, by way of programming… Each community often goes into some kind of swoon. HBO did it round eight, 9, 10 years in the past. Across the time FX and AMC have been working sizzling, HBO ran just a little chilly, particularly when it got here to dramas. Now HBO has been working sizzling left and proper. Had they not, it could’ve been so much simpler for AT&T to say, “Simply give us extra Recreation of Thrones or give us a Sopranos collection.” They may very well be mining HBO for IP the best way so many different media firms are doing. They may have mucked with HBO’s enterprise.

It’s as a result of HBO’s programming workforce has delivered such excellent outcomes that I believe that they’ve been left alone. David Zaslav is just not resistant to this both. If HBO was in a hunch and he hadn’t given a five-year deal to Casey Bloys — HBO’s chief content material officer at the moment, and for the final seven years — HBO’s programming, the shock hits that simply preserve coming across the nook, won’t exist. It truly is the unique programming executives at HBO. They’re the people who find themselves holding this going and in the event that they disappear, HBO’s in a world of hassle.

It’s arduous to measure a factor which you can’t take away. If not for the strain and the sense of existential dread like, “If we don’t hit one other residence run, this complete factor comes crashing down,” do you assume they might carry out at that stage? You’ll be able to by no means actually inform, proper?

FG: It’s arduous to say, however it’s fascinating that all through HBO’s total historical past, the one fixed has all the time been some risk of looming catastrophe hanging over their heads. I imply, it truly is. Within the Nineteen Eighties, the very first thing was the Hollywood studios all teaming up and saying, “Why are we letting this intermediary creator take all this worth out of our ecosystem? We’ll simply create our personal HBO service. We’ll name it Premiere, we’ll all feed it our motion pictures, and HBO will die.” Fortunately for HBO, the Division of Justice intervened and mentioned there have been antitrust points, in order that they shot it down.

Are you able to think about such a factor occurring in 2023?

FG: Then the VCR got here alongside and folks have been like, “Why would you go to HBO to look at a house film? Now you may simply go to the Blockbuster video and get one thing.” That was an enormous risk that individuals thought was going to kill HBO. The Time Warner-AOL deal, which we already talked about, folks thought was going to kill it. The appearance of streaming was going to kill it. AT&T was going to kill it. The most recent is the price of Wall Road dropping their religion in streaming companies goes to kill it. The entire time, the specter of demise has been hanging over it. I believe possibly that’s a part of the important thing to success, it’s a must to be frightened that you simply’re going to die.

I really feel like you may reframe this whole e book as an ‘80s film a couple of hockey workforce that has to save lots of their native hockey constructing. 

So I lined AT&T from the tech perspective. I’m a tech reporter. This was silly on its face. Solely the folks inside AT&T thought they have been making resolution. I believe even Time Warner’s administration was like, “I can’t consider we hoodwinked AT&T into shopping for this firm.” 

If you boiled the pitch all the best way all the way down to the underside — and after I learn the arguments they made in the antitrust case filed by the Trump administration — it was simply, “We promote loads of mid-range Android telephones. We’re going to preload them with a CNN icon and a few Recreation of Thrones clips, and that may preserve folks from switching to Verizon.” 

It’s like, “Your concept is rubbish.” To begin with, your prospects with cash purchase iPhones, and Apple is just not going to allow you to do that. The individuals who purchase Android telephones additionally hate this shit and they’re going to simply delete it. There was no different rationale that I may inform. It was, “We’re going to merge the pipes and the content material, and that may preserve you from going to our competitor.”

FG: I believe the one different rationale — which looking back was nearly as dumb — was this concept that their inventory worth was going to get a pleasant bump out of it. I believe they checked out Netflix and thought, “Wow, look. Wall Road loves streaming. Wall Road loves knowledge. We’re going to purchase this factor, throw it up there, and it’ll juice our inventory worth.” That clearly didn’t occur, and I believe that contributed to the belief after a few years that, “Whoops, we actually purchased this factor on the very, very peak of the market and overpaid for it. Now now we have to get it off our books in some way.”

In order that they offloaded it to Zaslav and it turned Warner Bros. Discovery. Proper after AT&T purchased it and was attempting to combine it, there was this well-known city corridor assembly between AT&T CEO John Stanke and HBO CEO Richard Plepler, which was leaked instantly. Plepler seemed like he simply wished to run off the stage, as a result of he was like, “It’s important to improve the amount of HBO.” He was overtly threatening the artistic tradition. 

Why didn’t which have any ripple results? AT&T confirmed up, and it was like, “All proper. We’re going to do mini Recreation of Thrones on Android telephones,” and it simply by no means occurred. HBO simply rejected the host. How did that occur? You’ll anticipate AT&T to kill this factor so much quicker than it was ever really capable of do.

JK: When Felix and I first got down to write this e book, it was spring of 2019. At that time, AT&T had been the stewards of HBO and Time Warner for eight or 9 months. We thought they have been going to kill it, and that was one of many explanation why we got down to write this e book, however a few issues occurred. AT&T mucked with Richard Plepler’s purview so much by way of enterprise affairs and by way of know-how, however the one factor they might not contact was programming. 

AT&T was fearful of being often known as the place that killed HBO. So type of miraculously, they left the programming division alone. Regardless of Randall Stevenson publicly speaking about mini Recreation of Thrones, they by no means acted on it. After which, to cite Frank Wealthy, a high producer at HBO, “after which they have been gone.” 

I believe there was loads of concern inside HBO’s places of work, particularly in these months main as much as the announcement that they have been spinning off the corporate and going to merge it with Discovery, in Could 2021. There was loads of concern within the month or two or three main as much as that. Jason Kilar was beginning to say issues that have been just a little bizarre. It all of the sudden appeared like AT&T wished to get in there and get underneath the hood, nevertheless it was a really quick interval that they owned the place. So yeah, HBO rejected the host, however the parasite simply didn’t go after HBO’s bread and butter, which is its programming.

It’s humorous to think about AT&T as each the host and the parasite on this metaphor. It’s completely apt, by the best way.

FG: I imply, HBO was fortunate that AT&T had so many different issues to take care of. To begin with, the regulatory points, getting focused by Trump, and getting caught up on this complete antitrust swimsuit delayed the acquisition for a pair years. Then there was the arrival of 5G, and AT&T feeling like they needed to construct out a brand new community and put tons of cash into it. There was the problem of their dividend and persevering with to maintain that dividend up, and traders being like, “You’d higher not be losing my dividend on that little Hollywood journey over there.” There was the pandemic. There have been so many issues happening. 

I nearly really feel like HBO simply fortunately ran out the clock as a result of the AT&T bosses have been simply fixated on one catastrophe after one other. There was additionally the DirecTV acquisition that preceded the Time Warner acquisition, which was simply colossal mess over there. I believe they have been type of protected by all the opposite carnage happening.

I all the time say on the present {that a} workable antitrust coverage in America is to simply make it unlawful for AT&T to purchase something. You then’ll most likely be positive. It’ll simply work itself out. 

AT&T did do one factor that we must always speak about actually briefly. They went via a succession of heads of WarnerMedia in several buildings, and so they lastly settled on Kilar. He made the large sweeping resolution to close down the flicks going to theaters throughout the pandemic and put all of them on HBO Max, which actually kickstarted the service in an actual manner. Then everybody hated him, they offered it to Discovery, and he received axed. It appears like he performed this pivotal short-term function, the place he did the arduous factor that everybody hated and he received knifed, however that was the factor that wanted to occur.

JK: Yeah, it gave them a pleasant pop after they received off to a really gradual begin. HBO Max was born proper within the stomach of the beast of the pandemic, in Could of 2020. By the tip of that yr, Kilar had been in cost for just a few months when he determined to launch all these motion pictures on HBO Max. It gave it a pleasant pop, nevertheless it’s humorous. I imply, what’s the legacy of Kilar at this level, past giving it that preliminary pop? 

Discovery has are available and principally undone every little thing that he did, saying, “We love the theater and we love the theatrical window,” and never prizing authentic tasks which might be solely for HBO Max. So unquestionably, one of many explanation why Euphoria has greater than 20 million viewers, in accordance with HBO’s estimates, is as a result of Jason Kilar helped supercharge the service. However I’m undecided how long-lasting this legacy is, as a result of once more, every little thing that he got down to do is being undone. Felix, your ideas?

FG: Effectively, I additionally assume that it was type of a Hail Mary cross that needed to be performed. Have a look at the launch of HBO Max and examine it to the launch of Disney Plus. When Disney Plus launched they’d The Mandalorian, a brand new Star Wars franchise that you simply needed to go see. Individuals have been passing round Child Yoda photos on the web, and also you have been like, “What’s happening? I’ve to go take a look at this Disney Plus factor. They’ve a child Yoda!” When HBO Max launched, it was crickets. It was like, “What?” They’d an origami present, with children making origami.

One of many first instances I opened it, their advice algorithm was like, “Do you wish to watch Head of the Class,” the ‘80s TV present? That was a shock. I used to be like, “I type of do, however this isn’t what I used to be anticipating.”

FG: A part of it was the pandemic. They have been purported to have a Associates reunion, and possibly they have been going to have a J.J. Abrams factor. However it’s like, how do you launch an HBO Max streaming service with out your Recreation of Thrones sequel or prequel at launch time? They type of screwed up that complete factor. 

Yeah, it was partly due to the regulatory problem and partly due to the pandemic, so there have been different issues. However they have been simply so determined for one thing to offer life to that service that I believe Kilar made the proper name ultimately, which was Challenge Popcorn. It was like, “Effectively, the film theaters are nonetheless half open. Persons are nonetheless frightened about seeing motion pictures within the theater. Let’s simply take the entire Warner Bros. slate for a yr and throw it on the service.” 

I believe looking back, that was a sensible transfer. However it was a sensible transfer following a collection of dumb strikes, that they have been even in that place the place they needed to do it.

I imply, that’s very beneficiant. It was a collection of catastrophically silly strikes. Let’s wrap up with Discovery. HBO is a storied model and will get handed from proprietor to proprietor. It’s now within the palms of Warner Bros. Discovery. David Zaslav looks as if a cost-cutter. He looks as if he has a imaginative and prescient, which is greater than may be mentioned for many of HBO’s earlier house owners. That imaginative and prescient goes to take it in some new course. What is that this new firm? How ought to we give it some thought?

JK: I imply, it’s an organization saddled with loads of debt, that’s merging an infinite library of nonfiction, nature documentaries, and actually trashy actuality exhibits with the large Warner Bros. library. They’re saying, “It’s completely complementary. After we give you our massive streaming service, they’ve the fiction and now we have the non-fiction. This factor can’t lose.” 

The jury’s very a lot out on that. It’s a firm saddled with loads of debt that reduce loads of jobs final yr. There was loads of anxiousness within the HBO hallways within the final two or three months of final yr, like, “Uh-oh, is that this actually going to impression us?”

For the reason that starting of January, the Warner Bros. Discovery inventory has gone up. It went down so much final yr, nevertheless it went up so much this yr. It’s now up one thing like 30 to 40 p.c. There may be very a lot this narrative that they’re placing out of, “We’ve turned the web page. We did all of the gnarly troublesome work final yr. Now, Casey Bloys and Channing Dungey, the pinnacle of Warner Bros. Tv Studios, go do what you want to do. Go on the market and create nice tales.” 

So there’s just a little bit extra optimism inside HBO proper now, nevertheless it’s loads of debt. This firm has $50 billion in debt. Once more, one thing’s received to offer. We’ll see what occurs, however they’re attempting to place out a extra optimistic story. Now it’s chapter two within the WBD future.

As an organization, this complete factor continues to be type of hooked on declining cable revenues. All of these Discovery channels are cable channels. All of them have to maneuver to streaming. Do they know that they need to make this massive disruptive shift, or is it nonetheless, “We’re attempting to string the needle whereas we construct the brand new factor”?

FG: I believe they’re taking a much less radical streaming-first strategy, in some methods, than their predecessors, than Kilar. A part of it’s that for therefore lengthy, Wall Road, within the residence leisure area, was all about development at any price. “Netflix, we simply need you to get extra prospects and take extra market share. Don’t fear about your income.” That period type of got here to a crashing halt final yr and Netflix’s inventory went plummeting. 

The brand new mantra from Wall Road is, “We would like income. We don’t care as a lot about gaining market share for the sake of gaining market share.” I believe that’s troublesome, notably with Warner Bros. Discovery, as a result of the US market is sort of saturated by way of streaming companies. I imply, you might decide up some prospects right here or there, relying on when you’ve got a success present, however the massive problem now could be abroad. That’s the place you may decide up loads of prospects. That’s the place the expansion goes to return from. However Netflix has such an enormous head begin abroad. They’ve spent the previous decade investing in places of work around the globe, cultivating native programming communities, constructing infrastructure, and constructing that model meaning one thing in Asia and Central America.

Warner Bros. Discovery is absolutely far behind in that world, and it’s going to price some huge cash to launch these efforts to attempt to construct that model up for his or her streaming service abroad. How do you try this within the quick time period when you’ve $50 billion in debt and your share worth continues to be not wherever near the place it was a yr in the past? 

They are saying they’ve moved via this gnarly section, however the actuality of it’s that they’re going to have to determine methods to optimize the revenues domestically with a view to make these investments abroad. That’s going to most likely imply licensing extra of their content material to different streaming companies; it’s going to imply being just a little bit extra ruthless about how they spend money on programming and completely different genres. So I don’t assume they’re in any manner out of the woods.

All proper. Let me finish with a big-think Decoder query. If we have been having this dialog about some other model that was this storied, we’d have talked concerning the founder like 5,000 instances by now. If we have been speaking about Netflix, we’d have talked about Reed Hastings 1 million instances by now. If we have been speaking about Meta, we’d have talked about Zuckerberg 1,000 instances by now. On and on it goes. 

We’ve got not likely talked about that many characters inside HBO. There are some heads of programming, there are some individuals who have led it, and there are loads of ancillary characters. HBO is a model that’s primarily a tradition. It’s this tradition that persists, and it’s very artistic. There are loads of characters in your e book, and there are some essential tales about accountability for these characters’ actions within the e book. Individuals ought to go learn it. 

Taking one step again, the key to HBO is that this tradition that persists no matter all these modifications. The place does that come from and the way does it persist so successfully?

JK: It’s type of a tremendous factor, and also you’re proper. We’ve talked about Richard Plepler and Casey Bloys in passing. I don’t even know if we’ve talked about anyone else. However what’s humorous… Take into account HBO’s present crop of programming executives. These are of us who’ve been there 15 to twenty years — all the highest executives. Meaning they’ve solely been at HBO since, let’s say, 2004. Meaning they weren’t there when The Sopranos, Intercourse and the Metropolis, The Wire, Six Ft Underneath, or Oz received programmed. 

The factor that kind of separates HBO from a Netflix, an Amazon, an AMC, or no matter community you need, is that every one these executives who’ve been there, although they weren’t there at the start, have been all educated by the individuals who have been. When you isolate what HBO’s programming division has seemed like during the last 4 many years, there has principally been two generations. There was the mid-Nineteen Eighties to mid-2000s group and the mid-2000s group to the current day. 

When you’ve that stage of continuity, and thru repetition and seeing one style of present after the following, you begin to study what the HBO playbook is. When you find yourself a producer or a author and also you get inside that HBO fold, for this reason it’s very troublesome to go away. Sure, HBO offers you a ton of cash and loads of artistic freedom, that was the promise to these Darren Stars within the mid-Nineties. However there may be additionally an editorial course. It’s like a very good journal editor. They’re not going to gum up the works, they’re not going to destroy your copy, however they are going to give that good suggestion or two that may simply unlock the world for you. That is what so many writers have mentioned. 

So sure, HBO doesn’t have a Reed Hastings, a Jeff Bezos, or a Steve Jobs, however they’ve saved that tradition as a result of there actually have simply been a pair generations of those programming executives.

All proper, that’s place to finish it. I’ve to go take into consideration the way to develop into a more practical journal editor now. John, Felix, this was nice. Hope to have you ever again quickly.

FG: Thanks a lot for having us.