It’s Not TV: HBO, The Company That Changed Television: The Skies, Junior Birdmen!

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12) Into The Skies, Junior Birdmen!

Keep on going and the chances are you will stumble on something,

perhaps when you are least expecting it.

I have never heard of anyone stumbling on something sitting down.

Charles F. Kettering

Home Box Office debuted to a handful of subscribers on a single cable system in Wilkes-Barre, Pennsylvania one November night in 1972, and then — …

And then not too much.

There’d been no media coverage at all of the HBO launch, not even from the local press. The one “celebrity” that was supposed to show — the Wilkes-Barre city manager — decided to pass on attending. Time Inc.’s president and chief executive officer, J. Richard Munro, was supposed to attend the opening ceremonies, but he got stuck in a traffic jam on the New York side of the George Washington Bridge and wound up phoning in his regrets from a White Tower burger palace.

The public response to the new service was about what you’d expect launched under such ill omens. By the end of 1973, the service’s first full year of operation, HBO had a whoppingly depressing total of just 8,000 subscribers spread thinly around 14 affiliated cable systems, all of them located in Pennsylvania. Worse, the pay-TV biz was getting more competitive — if still unpromising — by the day.

That same year, Warner Cable had decided to jump into the pay-TV fray with StarChannel; TheatreVisioN had launched with ex-MGM honcho Dore Schary at the helm; and Optical Systems’ Channel 100 was on the air (as for where these services are today, if you have to ask you’ve already answered your own question).

By the end of 1974, the HBO subscriber count had crawled up to 57,000 subs on 42 systems in Pennsylvania and New York including — finally — Sterling Communications (now, with Time Inc. as the sole owner, re-dubbed Manhattan Cable). By April of the following year, the service was inching up to its 100,000th subscriber and profitability, but only barely.

After almost three years, there was no way to say (despite black ink being faintly in sight) that the service had “caught on.” HBO was, essentially, a regional service, relaying its signals to its slowly expanding circle of affiliates by microwave, much as the broadcast networks carried their signals around the country. One of the reasons nobody else since DuMont had been able to start a fourth broadcast network was that nobody else was willing to shell out the $25 million a year the nets paid the phone company to relay their programming to their affiliates. Neither the time nor expense involved in creating such an infrastructure was acceptable to HBO parent Time Inc. If HBO was going to become the major business Time had hoped for, it was going to have to look for a more cost-efficient way of offering service to bigger numbers of potential customers.

The people at HBO looked around for options. They looked around and around and when they didn’t find what they needed, they looked…up!

Satellite transmission would solve a lot of their problems. HBO wasn’t looking at satellites the way they’d been looked at back in the 1960s, with low orbital paths and limited transmission windows. They were looking at a satellite (or bird in the parlance of the satellite biz) placed in geostationary orbit 22,300 miles above the earth (for comparison, consider that the space shuttle usually hangs out in an orbit just 150 miles out). In geostationary orbit, a satellite moves in the direction of the earth’s rotation at the same speed as the earth so that it holds a fixed position in the sky, day or night, every day. At an altitude of 22,300 miles, the satellite’s footprint — that is, the area capable of receiving signals sent earthwards by the bird — would cover all of North America. Such a satellite would give HBO the ability of transmitting its signal nationally without any bulky earth-bound system like the nets’ microwave relay towers, and at a fraction of the cost. It would be this simple: the day before satellite carriage, HBO would be jammed into a few markets in the Northeast. Flick the satellite switch (or whatever gets flicked), and HBO would instantly be available coast-to-coast.

But if going to the satellite seems like a logical Next Thing now, it looked a bit more iffy in those days. In 1975, when HBO made its decision to go for satellite carriage, not a single television programmer had trusted their programming to full-time satellite transmission. “What if the satellite conks out?” was the worry. “What if it falls down?” “What if it goes spinning off into space?” You know; Chicken Little stuff. And, the nets already had an established terrestrial system which had been working quite fine for decades, thank you. If it ain’t broke etc.

Besides such paranoias, satellite transmission had some very real earthly problems as well. In those days, the FCC dictated that satellite receiving dishes had to be nine meters in diameter. A dish that big requires a solid base; we’re talking pouring concrete. We’re talking an expensive installation procedure. And the dishes themselves weren’t cheap, either: $75,000. The question was, would cable systems be willing to lay out that kind of money? If they didn’t, that would leave HBO knocking on the door with no one home.

Gerald M. Levin had come into HBO in its earliest days as vice president in charge of programming. By 1975, he was HBO’s top exec. A workaholic always with an eye on the long-term, it was Levin’s call to delay much desired and long-awaited profitability by gambling $6.5 million for five years on a satellite hoping cable systems would choose to partake.

On September 30th, at 9:00 PM Eastern Time, HBO subscribers tuned in to watch live coverage of the classic “Thrilla in Manilla” heavyweight bout between Muhammad Ali and Joe Frazier. HBO subscribers in Pennsylvania were joined by 15,000 cable subscribers in Ft. Pierce, Vero Beach, and Jackson, Florida. HBO had gone national.

The service ended the year with under 300,000 subs in 16 states. Within two years, HBO hit the million sub mark and was showing its first profit. Growth doubled the year after, and again the year after that. By 1980, HBO had affiliates in every state.

Despite the paranoia of broadcast nets about satellite transmission, HBO’s faith in “going on the bird” was well-founded; since the service’s 1975 satellite debut, no operating television satellite has ever failed on the job.

But to some degree, HBO’s inspired choice turned out to be a double-edged sword. The company’s move to satellite demonstrated how unbelievably easy it was to become a national television programmer. All you had to do was come up with a couple of million bucks for satellite time and you were in the national TV business.

It was a lesson it didn’t take many people long to learn. HBO had left a road map for its competitors.

*****

Ted Turner was the first student of the HBO model, and an A+ student he turned out to be. Turner didn’t even wait to see if HBO’s satellite move worked. As soon as he heard about HBO’s sky-high plans, he started getting some ideas of his own. Turner considered the HBO model of programmer + satellite + cable = Big Bucks, and didn’t see any reason he couldn’t do the same thing.

Turner had made himself a pile of money in the billboard business and had sunk some of it into an INTV station in Atlanta: WTCG. WTCG was no different than any other indie. It carried some local ball games, some syndicated off-net series, and a batch of old movies. Turner took some more of his money, licensed himself some satellite space, and turned WTCG into superstation WTBS (standing, naturally enough, for Turner Broadcasting System — Turner would later drop the “W” as the channel became more nationally targeted), launching the December after HBO went on the bird (all “superstation” meant was that here was a regular local broadcast signal available to cable systems around the country).

HBO, WTBS and cable made a tremendously profitable combination punch. Cable systems started springing up where you didn’t really need cable for reception purposes because now cable had something special to offer. It was as Chuck Dolan had predicted: people wanted cable to get the special programming. They wanted special programming, so they got cable.

And, it had gotten easier for new cable ops to get into the business. In 1976, the FCC relented on satellite dish size. Instead of nine meters, the FCC could live with a cable system using a 4.5 meter dish, which saved the operator about $60,000.

Turner’s superstation soon had company. Televangelist Pat Robertson also owned a broadcast station, and, when he put that up on the satellite in 1977, it became the basis for CBN (Christian Broadcast Network which later evolved into The Family Channel). WGN-TV out of Chicago became another cable superstation the following year, and WOR out of New York (now WWOR in Secaucus, New Jersey) the year after that.

HBO also started getting competitive heat on the pay-TV side. In 1978, two other pay-TV services — Spotlight and Viacom’s Showtime service — went national via satellite relay. The following year, Warner Communications put StarChannel (later re-tuned as The Movie Channel) on the satellite.

That same year, 1979, another kind of cable programming joined the crowd: CORG. CORG may sound like the mutant offspring in a monster movie (“Be afraid! Be very afraid of The CORG!”), and a mutant of sorts it may be. CORG is Cable-Originated programming, and it refers to program services created specifically for cable (there’s a difference between this and a service like HBO or Showtime, but we’ll explain that in more detail later).

The Cable Satellite Public Affairs Network (C-SPAN) was the first cable-only channel offered to systems. C-SPAN is actually a non-commercial co-operative effort by cable operators to bring coverage of the goings-on in the U.S. House of Representatives into cable homes.

C-SPAN was supported by the cable industry, but all CORG channels to follow were commercial enterprises (as opposed to subscription-only services like HBO). With the exception of C-SPAN, CORG channels are no different than superstations except that there is no broadcast base to them. Superstation WTBS, for example, was a regular INTV station broadcast nationally as was WGN, WOR, and other superstations. CORG channels only exist on cable.

Backed by Getty Oil, ESPN was the first of these commercial CORG services to hit the satellite in September of 1979. Warner’s Nickelodeon service went up the same year as did Ted Turner’s second cable channel — also a CORG channel — the Cable News Network (CNN). Black Entertainment Television (BET) and The USA Network weren’t far behind, launching in 1980.

There was more to come after 1980 and not just in the way of new channels. The cable explosion of the late 1970s and early 1980s had an enormous effect on nearly every aspect of the entertainment business. Cable channels went on the air in a rush to be a part of the boom times, although more than a few didn’t quite know what they were doing.

But before we get into all that great dramatic stuff, let’s take some time to look at the set-up that made all this happen.

*****

The area in which a cable company operates is called a franchise. Franchises are awarded to cable companies by offices of the municipal government.

Each cable company puts together the package of programming it thinks will perform most profitably within the franchise area, so line-ups and pricing can vary enormously from system to system. Cable programming generally falls into two categories:

 

Basic — These are the channels that come automatically with a cable subscription. Most basic channels carry advertising. Superstations like WOR and WGN, as well as CORG channels like The USA Network and TNT, are typical basic cable services. Cable companies may offer their channels in tiers, beginning with a minimum number of channels at a low price, then adding groups of channels for additional charges.

 

Premium or Pay-TV — These are services not included in the basic package which need to be specifically requested by the subscriber and require the subscriber to pay an extra fee. HBO and Showtime are examples of premium services. Typically, cable subs must have some sort of basic package before they can add on premium services.

 

As for how all that programming gets from the programmer to the subscriber, it goes like this:

From the studio where the programmer’s signal originates, the signal is sent to a satellite transmission dish, or “uplink.” Some programmers own their own uplinks while others send their signal by cable or microwave to leased uplink facilities. Originally, HBO leased access to an uplink, but eventually built their own state-of-the-art uplink facility — formally called the HBO Communications Center — out in an industrial park area in Hauppauge, Long Island.

(Because other companies’ uplinks were also built in the area, techs working at the uplink center referred to the area as “Satellite City.”

Though broadcast operations at the center are largely automated, a just-in-case staff is on hand 24 hours a day, although they have little to do. Satellite City, being in an industrial park, isn’t close to anything. Staff bring their own lunch — or dinner, depending on the shift — and there’s a kitchen and a recreation area. Out of necessity, the place is largely self-contained.

As comfortable as the company tries to make it, more than once I had Hauppaugers interview with me for an awful job taking subscriber complaints because they were stuck working third shift at the center and were willing to take any kind of job to get out. Night shift staff at the center sat all night in windowless rooms watching TV, monitoring every HBO signal, went home in the morning to sleep, then woke up late in the day to return to work. The not-really-a-joke was that unless a slot opened during the daytime shifts, a third shift staffer at the center could spend his/her whole career on the job without ever seeing the sun.)

From the uplink, the signal is transmitted to a particular satellite where the programmer has leased specific “transponders.” Transponders are gizmos that take in the uplinked transmission, amplify it, then re-transmit it toward earth where it is taken in by satellite receiving dishes called “downlinks.” Any downlink within the satellite’s footprint can receive that satellite signal. The dish part of the receiver is called the reflector, which gathers in the signal and funnels it towards the focal point sub reflector which is that little thing you see sticking out of the middle of a satellite dish. This is where the signal is concentrated before it’s sent on to the cable system.

A cable system may be pulling in programming from a variety of sources. Besides satellite signals, it may also be receiving microwave and over-the-air transmissions. There may even be some original productions coming out of the system’s own studios. The place where all these signals are gathered together is the cable system’s headend. The system operator takes all these services and feeds them into a combiner which puts particular signals on particular channels and amplifies the signal for transmission over the cable system from this local origination point.

The main cable leading out of the cable company’s headend is the trunk. A series of amplifiers are in place along the trunk to keep the signal strong. This collection of amplifiers is referred to as a cascade. Branching off the trunk are feeder cables which take cable service into neighborhoods. Amplifier cascades are in place along the feeders as well to keep the signal strong.

In most places feeders are carried along the telephone or utility poles that run along streets, passing by every potential cable subscriber in the area that the system serves. This is where the cable industry gets the term “homes passed,” meaning the number of homes, whether they subscribe or not, that have cable available to them. Currently, somewhere around 95% of U.S. homes are passed by cable (there will never be 100%; some areas are too thinly populated to make cabling them worthwhile). Penetration refers to the percentage of homes that actually subscribe to cable (according to the National Cable Television Association — NCTA — as of 2010, almost 62% of American homes subscribed to cable service).

Taps are located along the feeder. When a household wants to subscribe, the company orders a truck roll, a technician visits the house and runs a drop from the tap to the house. Unless the household has a compatible cable-ready TV set, the drop usually runs into a converter, which is that piece of hardware the cable company leaves sitting on top of your TV.

The cable operator usually refers to this whole mass of cable and headend and everything else as the “plant.”

Originally, most plants used copper wire cable. Eventually, copper wire was replaced with fiber optic cable which not only provides a cleaner signal over greater distances, but also offers greater channel capacity than copper wire.

Prices vary widely from operator to operator and with different configurations of channels. At the core, however, is what the operator pays for channels. Each channel charges cable ops a per-subscriber fee. Depending on the drawing power of a particular channel, fees can run from under a quarter per sub to several dollars.

When my family first subscribed to cable, it looked like this: a big, clunky converter box sat on our TV and was hooked by wire to an even clunkier control box with a dozen buttons — one for each channel — and a knob which gave the channel buttons access to another row of channels. Back then, a typical cable system offered a dozen channels or so, and we were paying — if I remember correctly — somewhere around $15 a month for service.

Now, you have a sleek little converter, a remote with more functions than you can remember at any one time, and the average cable system — remember, this is just the average — offering over 100 channels of programming. My current cable bill, for one of my company’s high-end packages but which doesn’t include any premium services, is well over $100 per month.

That’s a hell of a technological and economic evolution over the space of 40 years.

But technology only provided HBO with a vehicle. As our marketing people used to say when I was working there, “You have to get them (prospective customers) in the tent; but once you get them in the tent, you have to have something to show them.”

– Bill Mesce

Next week: Title Fights

Click here to read every article in this series!

Preface

Introduction 

Towards Felix The Cat

Baby Steps

In The Beginning Was The Word: Radio

The Numbers Racket

Wasteland 

Greener Grass

Walson’s Mountain

The Green Channel 

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