HBO is an American premium television network that is the flagship property of Home Box Office, Inc., a subsidiary of Warner Bros. Discovery. The network primarily broadcasts theatrically released motion pictures and original television programs as well as made-for-cable movies, documentaries, occasional stand-up comedy and concert specials, and periodic interstitial programs (consisting of short films and making-of documentaries). HBO does not accept traditional advertising, although programming promotions are typically aired between shows; it also presents content without editing for profanity, violence, sexual depictions, nudity, drug use or other subjectively objectionable material, which—besides being able to depict mature subject matter usually not allowed to air on advertiser-supported television networks—has allowed the network to give program creators full creative autonomy over their projects.
The oldest and longest continuously operating subscription television service in the United States, Home Box Office pioneered modern pay television when it launched as a microwave-transmitted regional service (initially debuting in northeastern Pennsylvania, before gradually broadening its coverage area to encompass much of the northern Mid-Atlantic and southern New England regions) on November 8, 1972, and was a leader in the development and growth of the cable television industry as the first television service to be directly transmitted and distributed to individual cable systems; the first television channel in the world to begin transmitting its signal via communications satellite; the first pay television network to operate a standalone companion service (Take 2, now defunct; followed later by Cinemax and the now-defunct Festival); the first cable-originated network to win Emmy, Golden Globe and Peabody Awards; and one of the first two American pay television services (alongside Cinemax) to offer multiplexed channels complementary to the parent service.
HBO has since expanded to include seven multiplex channels in the United States; and, through its namesake parent subsidiary, twelve active and three defunct international services (either owned by Warner Bros. Discovery directly or through programming and brand licensing agreements with domestic media companies) across four continents, and various television, film and home entertainment ventures. This article details the history of HBO, tracing back to its founding by Sterling Communications (founded in 1950 as Sterling Movies U.S.A; then controlled by Time Inc.) in July 1971, and its operational history from the channel's November 1972 launch to its current ownership by Warner Bros. Discovery, Inc.
Background, development and preparation to air (pre-1972) HBO's origins trace to December 1, 1965, when Charles Dolan—a former marketer and distributor of sports and industrial films for television syndication, who had already done pioneering work in the commercial use of cables—was granted a franchise permit by the New York City Council to build a cable television system encompassing the Lower Manhattan section of New York City (traversing southward from 79th Street on the Upper East Side to 86th Street on the Upper West Side). Dolan was one of three applicants to be awarded cable franchise permits by the City of New York on that date, joined by TelePrompTer Corporation (which was assigned most of Upper Manhattan) and CATV Enterprises Inc. (which was assigned to a portion of the city's Upper West Side, extending north of the Harlem River, and The Bronx's Riverdale neighborhood). Dolan had been directly involved in telecasting since he launched his maiden television venture, Teleguide, in June 1962; transmitted via closed-circuit television, the Teleguide service distributed a schedule of tourist information, news, interview segments and feature interstitials to hotels, and by 1964, apartment buildings and office buildings in the New York metropolitan area.
Through Dolan's company, Sterling Information Services (operated by Teleguide parent Sterling Movies U.S.A., it renamed Sterling Communications in 1967), Manhattan Cable TV Services began limited cable service in September 1966. Manhattan Cable (renamed Sterling Manhattan Cable Television in January 1971) was the first urban underground cable television system to operate in the United States. Rather than string up cable on telephone poles or use microwave antennas to receive the signals, Sterling had laid new cable lines beneath the streets of and into buildings throughout Manhattan, and repurposed Teleguide's existing cable infrastructure for use by the new operation. Sterling's use of underground cables complied with a longstanding New York City Council ordinance—originally implemented to prevent broad-scale telephone and telegraph outages, after a severe blizzard affecting the Northeastern United States in March 1888 had caused widespread damage to above-ground utility lines in the area—requiring all electrical and telecommunication wiring to be laid underground to limit weather-related service disruptions, and was also necessitated because the multitude of tall buildings on Manhattan Island subjected television signals to reception impairments.
Dolan curried the financial backing of Time-Life, Inc. (then the book publishing unit of Time Inc.), resulting in Manhattan Cable becoming one of the company's first cable system properties. Despite the investments from Time-Life's share of Sterling (initially 20% at the beginning of operations), Sterling Manhattan consistently lost money throughout its first six years of operation; the company incurred much of its debt from underground wiring expenses (costing as much as $300,000 per mile), and its difficulties attracting new subscribers to generate income (Manhattan Cable managed to receive only around 400 customers by 1967). On August 27, 1969, in an ownership consolidation of the cable assets, Sterling Communications acquired the 49% share in Sterling Manhattan held by Time-Life, in exchange for stock and other assets worth $1.84 million. (Time-Life's interest in Sterling Communications concurrently increased from 25% to 44.5%.)
Desperate to keep the company afloat, Dolan began conceiving ideas to help make Sterling Manhattan profitable. In the summer of 1971, while on a family vacation en route to France aboard the Queen Elizabeth 2, he began developing a proposal for a cable-originated television channel. The concept, codenamed "The Green Channel", was for a subscription service that would offer unedited theatrical movies licensed from the major Hollywood film studios and live sporting events, all presented without interruptions by advertising and sold for a flat monthly fee to prospective subscribers. Dolan wanted to offset the service's start-up costs by having Sterling enter into carriage agreements with other cable television providers to transmit and sell the service to their customers, and draw revenue from fees charged to subscribers who added the channel onto their existing cable service (which then consisted exclusively of local and imported broadcast stations).
In the early 1970s, the cable television industry was not very profitable, and was under constant scrutiny from FCC regulators and the major broadcast television networks (CBS, NBC and ABC), who saw cable as a threat to their viability, even though it was originally conceived to provide improved reception of commercial and non-commercial television stations in communities and rural areas that tended to experience spotty to poor signal reception farther away from their city-grade contours. Attempts to launch pay television services had been done on an experimental basis in the United States dating to 1951 (among them, Phonevision in New York City, Chicago and Hartford; SubscriberVision in New York City; Telemeter in Palm Springs, California; and Telemovies in Bartlesville, Oklahoma) with little to no success, muzzled by campaigns backed by movie theater chains and commercial broadcasters to assuage television viewers to the supposed threat of pay television to the movie industry and free-to-air television access, limited user interest, and FCC restrictions on the types of programming that could be offered to subscription services. As Dolan presented his idea of to management at Time-Life, they were initially hesitant to consider the "Green Channel" proposal, but eventually agreed to assist him in backing the project.
After the Federal Communications Commission ruled that local governments could not restrict the operation of subscription television services in cable franchise terms, in July 1971, Sterling Communications—now consisting of Sterling Manhattan; its Long Island-based sister system, Sterling Nassau Cable Television; production firm Allegro Films; and direct-to-cable programming firm Television Presentations Inc.—informed the FCC that it planned to operate a cable-originated pay television service. Because Sterling's New York City Council franchise grant specifically required FCC approval for that purpose, Time/Sterling filed an FCC request to authorize pay television operations. Sterling indicated that a subscription television operation would also help Sterling Manhattan fund its fledgling local origination channel, which had incurred $1 million in start-up debt on top of annual company operating losses of $250,000. On September 10, 1971, the FCC gave preemptive authorization to Time-Life and Sterling Manhattan Cable to begin a pay television operation. On November 2, 1971, Time Inc.'s board of directors approved the "Green Channel" proposal, agreeing to give Dolan a $150,000 development grant for the project.
To gauge potential consumer interest, Time-Life sent out a direct mail research brochure to residents in six U.S. cities. An overwhelming majority of those surveyed (approximately 99%) opposed the idea of paying for a subscription television service, with only 1.2% favoring the concept and expressing interest in being a paying subscriber. In a second survey conducted by an independent consultant, 4% of respondents polled said they were "almost certain" to subscribe to such a service. A subsequent test conducted by Time-Life to respondents in Allentown, Pennsylvania had salesmen present the pay channel concept to residents by offering them free service for the first month and a refundable installation fee; half of all interviewed residents had expressed interest in purchasing the conceptual service with the offered incentives.
During the planning stages, film distributors initially expressed reluctance to license their movies to the Sterling project unless they were provided a count of its potential audience reach and subscription pricing estimates to establish a licensing payment structure similar to their compensation from films shown in theaters. Since the channel would air films without edits for objectionable content, cable operators also wanted to know what movies would be shown on the service to avoid potential advertiser objections and FCC fines for indecency. Sterling executives ultimately agreed to pay a flat licensing fee to the movie studios to acquire film rights. Sterling also allowed cable operators the ability to market the service directly to their customers.