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At HBO, chasing down the win-win-win-win


In 2007, just as Tony Soprano faded to black, HBO fell into a deep slump. Forgettable shows like “John From Cincinnati” and “Tell Me You Love Me” did poorly, each lasting only a season. Its content cupboard was bare, and rival TV executives openly referred to the cable network as “HB-Over.”

That seems like ages ago.

“Anybody who was writing our epitaph was obviously doing so erroneously,” Richard Plepler, the chief executive of HBO, said last week, sitting in his corner office on the Avenue of the Americas overlooking Bryant Park.

Plepler, 56, was on his couch, his legs propped up on a coffee table strewn with newspaper clippings. He would never admit that the network is taking a victory lap, but it certainly looks like one.

“Interesting, isn’t it,” he said, “that at a time that’s been called the most competitive moment in our industry’s history, we have, in my opinion, the best array of content in our history.”

That morning, the comedian John Oliver made headlines after landing an interview with Edward Snowden that aired on his HBO show the night before. That evening, Plepler was at Gotham Hall celebrating the new season of “Veep,” mixing with Julia Louis-Dreyfus and Katie Couric. The next day, he would launch HBO Now, the network’s stand-alone streaming service he introduced last month on stage at an Apple event. Around that time, HBO aired the acclaimed six-part documentary, “The Jinx,” that led to the arrest of the real estate scion Robert Durst. And the new season of the most watched show in HBO’s history, “Game of Thrones,” premiered Sunday, a few weeks after the network gave a party for it in San Francisco, an event so lavish that Andrew Jarecki, director of “The Jinx”, said it looked like “a coronation.”

That is the same Andrew Jarecki who canceled interviews with the press after the finale of “The Jinx.” Because he is expected to be called as a witness at Durst’s trial, Jarecki has been asked by law enforcement officials not to comment on the case or the evidence presented in the series. So why was he on the phone?

“What’s happening at HBO right now is extraordinary, and I want to endorse the choices that they are making and the risks that they take,” Jarecki said.

Taking those risks is necessary. Competitors like Netflix and Amazon are pouring money into original programming, creating critically acclaimed and popular shows of their own. And within HBO’s parent company, Time Warner, which last year rejected an $80 billion takeover bid from Rupert Murdoch’s 21st Century Fox, the network’s profits – $1.8 billion last year – are now taking on an outsize importance. Time Warner has spun off numerous businesses in recent years, making growth at HBO critical.

Indeed, the Time Warner chief executive, Jeffrey Bewkes, said that HBO’s success is vital to Time Warner’s business and that HBO Now – a stand-alone service for $15 a month that doesn’t require a traditional TV subscription – will create a blueprint not only for the future of the network but also for the entire industry.

“We are building a foundation for the transformation of television networks, so that they will be available on demand and on mobile devices with a seamless interface for search,” he said. “This is leading the way for everybody.”

With the new service, Time Warner and HBO have to tread carefully so as not to jeopardize their core businesses. Both HBO and the other networks owned by Time Warner, including TNT and TBS, receive billions of dollars from cable and satellite companies for their programming. Bewkes and Plepler argue that the new service is complementary to their existing business, appealing to those who refuse to pay for cable or satellite TV. Yet some cable and satellite executives complain that HBO Now has the potential to undercut their offerings. For some smaller cable operators, the cost of HBO Now is cheaper than the rate they charge for HBO packages.

“What we’re saying to our partners, old and new, is, ’Join us, use us in going to get all those people in the consumer base who want HBO,’” Plepler said. “Why is that not a win-win-win-win for everybody? Nobody’s been able to give me a good answer to why it isn’t.”

A day after Plepler announced HBO Now, CBS unveiled its own streaming service, and one for Showtime, which CBS owns, is also in the works. CBS chief executive Les Moonves said the timing of his network’s announcement was a coincidence, but he did not have what Apple offered to Plepler months later: An invitation to introduce HBO Now on the same stage where Apple unveiled its new watch.

“I admired the theatricality of it,” Moonves said. “It made the announcement more important. It was show business. It got the attention they both wanted. I mean that positively. I was jealous.”

To the people at Apple, its first partner on HBO Now, the invitation was a no-brainer. “I think they have the best content on the planet,” said Eddy Cue, the senior Apple executive in charge of brokering deals with media companies.

And at a time when many media companies want to be known as technology businesses (tech companies command higher valuations from investors), Plepler remains focused on talent and content. Technology? The tech backbone for HBO Now was farmed out to the media-technology arm of Major League Baseball. Shortly after that, the company’s chief technology officer, Otto Berkes, who had been working on HBO Now, resigned from the company.

But Plepler has been forced to turn toward the West Coast because that is where the competition is. Netflix, which has its origins in Silicon Valley, has pushed aggressively into content. It is expected to spend more than $450 million on original programming this year, from $243 million in 2014, according to the MoffettNathanson research firm. HBO will spend about $1 billion this year on programming and sports, the research firm said.

“The goal is to become HBO faster than HBO can become us,” said Ted Sarandos, Netflix’s chief content officer, two years ago.

Some in Hollywood have complained that the network has overdeveloped in recent years, meaning it has bought rights to programs that it has not ended up creating. Meanwhile, streaming outlets like Netflix and Amazon are wooing talent with big paychecks and promises to get their shows distributed more quickly and in a format viewers can binge watch.

Jarecki, whose past projects have debuted with theatrical releases, explained why he chose HBO. “As a filmmaker, if your history is to see your work on the big screen in a movie theater where it won’t be subject to distractions and interference and where it will be shown in the highest quality with the best sound, then the closest thing to that in the home is HBO,” he said.

But in a world where people increasingly watch TV on their laptops and smartphones, Jarecki sounds almost quaint. HBO Now is targeting those viewers who pay for Internet access but not TV subscriptions.

“It’s no secret that millennials disproportionately will make up cord-nevers and cord-cutters,” Plepler said, referring to those who have never subscribed to cable and those getting rid of it. “That’s just a large and growing audience that didn’t have an opportunity to get HBO, and that’s a shame.”

But before too long, Plepler is back to talking about his shows like “Game of Thrones,” “True Detective” or the network having “more half-hour comedies across a range of genres – from ’Girls’ to ’Silicon Valley’ to ’Veep’ – than we’ve ever had in our history,” he said.

“The content remains the secret sauce,” he continued. “It goes right back to its essence: Where does the talent want to paint?”

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