This article was written by Phin Upham
HBO is the current leader in paid TV networks, with content consumed all over the world. Its hit show Game of Thrones is just the tip of a media empire built by just one company. Founded in 1972, HBO was originally a subsidiary of Time Inc. When Time merged with Warner Communications, it formed Time Warner and held onto HBO.
When the channel first started, it initially used microwave broadcasts to send its signal to viewers. Within three years, the network was broadcasting its first boxing match over satellite. The match was “The Thrilla in Manilla,” between Joe Frasier and Mohammed Ali.
HBO was crude during its first years. A lot of its programming lacked the fine polish we see today, and the gritty programming it has become known for didn’t (and still doesn’t) air during the days.
HBO found a lot of early success with niche programming. Shows like its On Location comedy series helped introduce the world to the likes of Robin Williams and Paul Reubens. By 1982, that dedication to prime content paid off. The company had almost half of all paid tv subscribers also paying for HBO.
HBO has managed to stay successful in the face of mounting competition because of the way it acquires and produces content. When it purchased 125 films from Warner Bros., the company ended up paying roughly $.15 per subscriber for such classics as Raging Bull. It also priced itself competitively to compete with rival network Showtime, a competition still felt today. With the added pressure of Netflix, HBO looks like it will need to overhaul itself yet again to stay afloat in the face of changes to content distribution.
About the Author: Phin Upham is an investor at a family office/hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media & Technology group. You may contact Phin on his Phin Upham website