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Making HBO Go

MCN Executive of the Year Richard Plepler keeps gaining Emmys, audiences and higher profits 11/20/2017 8:00 AM Eastern
HBO chairman and CEO Richard Plepler.

It’s not easy being HBO chairman and CEO Richard Plepler these days.

Aside from parent Time Warner’s pending $108.7 billion merger with AT&T — a deal he believes will get done despite some regulatory roadblocks — Plepler navigates changing viewer habits and rising competition from giants Netflix, Amazon and Hulu, all while deftly embracing new distribution partners without upsetting the premium programmer’s traditional pay TV partners.

While lesser executives may have thrown in the towel years ago — or started downing sedatives and Pepto-Bismol for breakfast — Plepler responded by creating one of the most popular over-the-top offerings in the industry, HBO Now, and doubling down on cutting edge and thoughtful programming with shows like Girls, Insecure and The Night Of, and leading the pioneering premium channel to what might be its best year ever.

In the third quarter, subscriber revenue at HBO was up 12%, a 13-year high for the channel. And its subscriber rolls are climbing — it reached 34 million domestic customers and another 100 million worldwide in Q3.

Plepler, the Multichannel News 2017 Executive of the Year, may be well-known for his easygoing, personable manner, but beneath that lies an intensely focused, competitive executive.

MCN Executive of the Year | He's GoT That: 'Game of Thrones' co-creators and showrunners David Benioff and D.B Weiss answer our questions about working with Richard Plepler

That focus and intensity was put to the test in 2015, shortly after Time Warner fought off a 2014 hostile takeover attempt from 21st Century Fox that was launched in part because of a perception that the parent company wasn’t taking advantage of HBO’s over-the-top potential.

HBO and Plepler responded by launching HBO Now at an Apple user conference in San Francisco. Later, Plepler was pummeled by questions as to whether HBO was taking the right approach to OTT — offering it to its distribution partners first to market to their broadband-only customers. Plepler saw huge opportunities in those 15 million to 25 million broadband-only customers, but he had to find a way to convince investors and distributors that such a service wouldn’t cannibalize the existing customer base.

Plepler said the problem kept him up nights, and he finally concluded that the traditional path to greater profitability — simply raising prices — wasn’t the way to go. He believed that raising penetration, for both the traditional HBO service and HBO Now, would lead to a classic win-win for both the network and its distributors.

“What we wanted to do is build a structure with our partners whereby penetration and scale became the motivating drivers,” Plepler said. “And by doing so the price would go down.”

It wasn’t an easy sell to operators, but one that resonated over time. And it helped solidify Plepler’s reputation as someone who was willing to go outside of tradition to get things done.

“Richard is an extraordinary leader and a great partner,” said Comcast Cable CEO Dave Watson. “His focus on creativity and innovation has enabled HBO to consistently produce incredible content year after year.”

Despite critics that may have scoffed at the strategy, Plepler was convinced that HBO was vastly underpenetrated.

“If you look at the simple fact that we understood how much room for growth there was in the traditional ecosystem and in the new ecosystem, it was a classic opportunity for both our partners and us to grow our business,” Plepler said. “Those are the structures we built, differently in different ways with different partners.”

Time Warner chairman and CEO Jeff Bewkes earned his chops running HBO before ascending to the corner office, so he knows the complexities of the job. “In a time of ever-expanding viewer choice, HBO defines world-class and so does Richard,” Bewkes said. “He and his team are unrivaled in their ability to meld ambitious, breathtaking original programming and Hollywood hits with industry-leading innovations like HBO Now — bringing HBO to its passionate and growing audience in new and exciting ways around the globe.”

But naming Plepler, a former communications chief, to head up the premium programmer was a departure. In the past, HBO honchos either came from the content side or, like Bewkes, the finance side of the house. Plepler was from neither: He joined HBO in 1992 as senior vice president of communications, rising to executive VP in charge of creative aspects before being tapped as co-president of the unit in 2007. He was named chairman and CEO of HBO in 2012, effective in January 2013.

Helping to Find Balance
Telsey Advisory Group media analyst Tom Eagan said the experiment has turned out to be vastly successful. “What he did is help the company find that balance between content and finance,” Eagan said. After former HBO chief Bill Nelson, a finance guy, decided to retire, the worry in the analyst community was whether HBO would focus enough on content, he added.

“The two [content and finance] have really supported each other,” Eagan said. “Having popular and in-demand content has allowed them to ask for higher affiliate rates from the operators and ultimately allowed them to roll out HBO Now.”

While HBO Now has exceeded expectations — it has grown to about 2 million customers — HBO itself, via linear channels, multiplexes, the HBO Go online add-on service and HBO On Demand, continues to keep the competition at bay.

Netflix, once dismissed by cable operators as an upstart, passed HBO in terms of U.S. subscribers in 2013 and has managed to increase its lead over the years, finishing with 52 million U.S. customers at the end of the third quarter. Moreover, and perhaps most importantly, Netflix commands global scale with 109 million subscribers around the world; outside the U.S., HBO licenses its content with distribution partners.

In the meantime, Amazon Video has continued to beef up its offerings and Hulu, owned by 21st Century Fox, The Walt Disney Co. and NBCUniversal, launched a live TV service earlier this year.

HBO and Plepler have managed to thrive through a mixture of luck, pluck and good old-fashioned business acumen. HBO invented the premium original programming genre 20 years ago with The Sopranos and, on Plepler’s watch, the awards have piled up. Since 2007, Plepler has continued the winning streak, green-lighting iconic series such as Girls, True Blood, Boardwalk Empire, The Newsroom, Game of Thrones and Veep. Along the way, the company has amassed a warehouse full of Emmy Awards — Game of Thrones has 38 statues, the most for a scripted series in Emmy history — a testament to HBO’s commitment to quality and its brand.

To Plepler, the brand is becoming more important than ever as new over-the-top services emerge and choices proliferate. In the past five years, the number of primetime original series available to consumers has grown from 288 in 2012 to 455 in 2016. As more programming choices bombard viewers, being able to associate a particular brand with high quality can be invaluable.

“What you know when you trust a brand is if it delivers on its implicit promise — and our implicit promise is the creation of excellence — is that when you go there, you are going to find a range of things that delight you, entertain you and are engaging in this very, very busy life where you are pulled in a hundred different directions,” he said.

Plepler throws cold water on the notion that viewers increasingly don’t recognize brands, and instead seek individual shows. Most OTT services don’t usually identify a particular show’s network of origin.

“I would rather look at it like this: It is absolutely true that things will be disaggregated and then people will find different programming in different ways,” Plepler said. “And for some people, that will be adequate and satisfactory. It is also true, as we’re seeing, that if you deliver a brand-value proposition for a fair price, and you give people a surfeit of quality and entertainment, to wit: four Hollywood studios; 3,000 hours of library content; the ability to watch their program on whatever device they want whenever they want it and you are constantly true to the promise that you are making to the consumer, there is an enormous amount of growth in our ecosystem. We’re seeing it. We’re living it right now.”

That brand quality and recognition will also lead to deeper penetration rates for the network, Plepler said, adding that while it will never be in 100% of U.S. homes, HBO will “absolutely” get above 50% penetration domestically.

“So let’s define success correctly and say that for HBO, it’s continuing to grow our subscriber base and our penetration above 50% in the country where we’re now somewhere in the mid-30s,” Plepler said. “And we continue to deliver on that brand promise in that clutter, there are at least we think another 20-25 million homes who will be more than excited to come to the harbor of quality that is HBO.”

Critical to that thesis is that a high level of quality is maintained. HBO has consistently offered high quality — it won 29 Emmy Awards in 2017, the most of any network for the 16th consecutive year. In an era when subscription VOD services such as Netflix are spending $7 billion annually on original programming — HBO’s content budget is in the $2 billion range — and others such as Amazon and Hulu continue to open their wallets to finance new shows, could that track record be in danger? Plepler says no.

Plepler argues that throwing money at programming isn’t the solution — it’s attracting the right talent. “Talent wants to be in an environment where they know that from the development end, the marketing end, the promotion end, the experience that talent has at HBO, we believe, is an extraordinary one,” he said.

The number of producers, directors and writers who have continuously worked with the network over the years — especially after they have had big successes — seems to back that up. The list is a long one, with some, like The Wire creator David Simon, nearing the 20-year mark with the network.

Simon’s first project with HBO was in 2000 with The Corner, a miniseries based on his book The Corner: A Year in the Life of an Inner-City Neighborhood, with Ed Burns. Simon’s next project for HBO was the critically acclaimed series The Wire, which concluded its five-season run in 2008, followed by miniseries Generation Kill, the highly praised Treme (which ended after its fourth season in 2013) and 2015 miniseries Show Me a Hero. This year, he introduced The Deuce, his take, with frequent collaborator writer George Pelecanos, on the Times Square sex trade of the 1970s.

Game of Thrones writers David Benioff and D.B. Weiss are wrapping up their final year on the George R.R. Martin saga (which has at least five prequels in the works for the network), as well as other projects.

“When talent comes here, they want to come back,” Plepler said. “It’s infectious because talent hears from talent, writers hear from writers, actors hear from actors. They want to be here.”

Benioff and Weiss said they picked HBO for the GoT saga because it was the home of their favorite shows — The Sopranos, Deadwood and The Wire. But it also had a reputation for attracting top-notch talent and providing budgets for cinematic quality productions.

“So once we realized the story of Game of Thrones could only be told in the multiseason format of a television program, HBO felt like the best choice by far,” they said via email from on location in Northern Ireland. “For both of us, this has been the best experience of our working lives.”

They said Plepler has played a big role in shaping that experience. “In a business full of smiling windsocks, he is not a windsock,” Benioff and Weiss said. “He doesn’t focus-test his decisions, he doesn’t crowd-source his decisions. Richard’s decisions come from Richard, and he stands by them.”

Eagan added that keeping content producers happy is simply good business.

“It makes the business affairs side of the equation easier too,” Eagan said. “If you have an existing contract with someone, maybe it’s for three titles, it’s easier to extend that contract for another five titles. It’s easier to extend those same producer deals if you’ve already done work with them. It’s not as easy to start from scratch with a new one.”

Those kinds of intangibles are not only important to talent, they are what drive HBO’s and Plepler’s overall philosophy of picking projects that satisfy business and creative needs.

“That does not mean that more is better; it only means that better is better,” Plepler said.

He credited the corporate culture at HBO. Meanwhile, there has been an avalanche of accusations of assault and misconduct throughout the industry following the expose of sexual assault and rape allegedly committed by former The Weinstein Co. chief Harvey Weinstein. Amazon Studios president Roy Price, House of Cards producer and star Kevin Spacey and comedian Louis C.K. have all been accused of various sexual harassment offenses, among others.

HBO canceled a planned comedy special with Louis C.K., removed him from the lineup of the Nov. 18 Night of Too Many Stars, a special to raise funds for autism, and has taken down his prior comedy series Lucky Louie and standup specials from its on-demand lineup and HBO Go. The network also dropped plans to turn political pundit Mark Halperin’s book on the 2016 presidential election into a movie, after allegations that he sexually harassed five women while working for ABC News several years ago. Plepler called the myriad allegations “repugnant” and “unconscionable,” and added that corporate cultures that turn a “blind eye” to the problems are telling employees that providing a safe environment isn’t a core value.

“There is no ambiguity in this company about what our core values are on diversity, on manners, on how we treat one another,” Plepler said. “I think these issues transcend even the issue of sexual harassment. Just go to our core values as a company and how we interrelate as colleagues.”

For Plepler, it comes down to simple manners, and the way a company conducts itself in interactions inside and outside the organization.

Collegial, but Competitive
“Don’t ever mistake manners inside an institution with an absence of fierce competitiveness,” Plepler said. “I think sometimes people think that manners can be tantamount to softness or somehow an enterprise isn’t as fierce. I think the opposite is true. I think manners enable you to have inter-relationships with your colleagues of mutual respect and it frees and liberates people to speak their mind. And people feel proud of being part of an institution and can operate without fear or favor, say what they want.”

There have been a few misses for HBO — John From Cincinnati, a 2007 allegory written by Deadwood creator David Milch that fell short with viewers and critics; Lucky, a 2012 horse-racing drama from Milch starring Dustin Hoffman, canceled after animal rights activists protested the death of several horses on the set; and 2016 rock ‘n’ roll saga Vinyl. But the successes far outnumber the miscues. Game of Thrones, which debuted in 2010 with an average viewership of 9.3 million, finished its seventh season by growing that mark to 33 million, a record for an HBO original series.

More recently, HBO came under fire for Confederate, an alternative history piece that would be the next offering from Benioff and Weiss. It would depict an America where the Confederacy successfully seceded and slavery continues in modern times.

The announcement of the series created a huge backlash, with several critics calling it wish-fulfillment for white supremacists. Plepler defended the concept, and conceded HBO could have done a better job announcing it to the public with more context.

But he added the series — to be written by African-American writers Nichelle Tramble Spellman and Malcom Spellman, in addition to Weiss and Benioff — is an important one and one that holds a mirror to what former CIA and NSA director Michael Hayden has called the “thin veneer of civilization.”

Plepler said not a single word of Confederate would be written in the next year and a half, because Benioff and Weiss are still working on Game of Thrones. “We’re not going to be trivializing slavery; we’re not going to be creating an overwrought version of the antebellum period,” Plepler said. “It’s much more complicated.”

HBO has been a champion for diversity both in its corporate culture and through its programming, and was honored by the Walter Kaitz Foundation earlier this year. In his acceptance speech, Plepler urged the industry to break the culture of fear and exclusion that is enveloping the country, vowing to continue to present diverse voices and to allow more people across the nation to see other races, cultures and ideas.

HBO has been at the forefront of presenting different views and cultures in its programing and continues to take up the mantle with programming such as Insecure and documentaries such as Baltimore Rising.

As Game of Thrones nears the end of its run, a familiar chorus of questions is erupting from the press and critics: What’s next? It’s a pressure that Plepler is used to, dating back to his first Television Critics Association event in 2007, just as its groundbreaking original series The Sopranos was ending its run. How would HBO ever replicate The Sopranos? His answer was simple: It wouldn’t. “The Sopranos is, you know, a once-in-a-generation show,” he said. “What there will be is the next great shows. And who knows what the next great cultural phenomenon will be. But we are going to focus on working with the best creative talent that we can find.”

Later that year, HBO signed on with director Alan Ball for his new series, a vampire drama called True Blood, presaging a flood of vampire-centric entertainment that followed like Twilight and Vampire Diaries.

“But the answer was we didn’t presage that,” Plepler said. “We bet on Alan Ball, which was a very, very good bet. And then in came [Girls creator] Lena Dunham and in came [Veep creator] Armando Iannucci and in came [Silicon Valley creator] Mike Judge and in came these two guys who had never done a television show in their life, David Benioff and Dan Weiss, pitching George R.R. Martin’s oeuvre A Song of Ice and Fire.”

Plepler said he’s even more excited about the upcoming season with new episodes of prior hits like Westworld, True Detective, Big Little Lies and The Night Of, as well as the Game of Thrones prequels — he said he has read two of the five, and they are “very dynamic” — as well as a new crop of shows. That list includes Succession, a series by U.K. comedy writer Jesse Armstrong about a Canadian media magnate who on his 80th birthday decides to renege on plans to hand over the business to his second eldest son.

“Think of Dynasty for smart people,” Plepler said.

He added that Lovecraft, a horror genre piece with racial overtones set in the 1950s from Get Out writer and director Jordan Peele and Misha Green, “is one of the most arresting scripts that I’ve read in the last 10 years.”

And he also has high hopes for a new Watchman series, loosely based on the movie, from Lost and The Leftovers creator Damon Lindelof; Paterno, a biography of the late Penn State football coach starring Al Pacino; and a remake of Ray Bradbury’s Fahrenheit 451, “which I think is quite timely.”

Plepler is optimistic for HBO and the industry. He is most encouraged by the fact that after all these years — HBO debuted in 1972 — artists, writers, actors, directors and just people with ideas continue to flock to the premium channel.

Netflix’s emergence has also inspired and invigorated what is already a highly motivated company. “There is not one scintilla of complacency inside our buildings,” Plepler said. “Feeling like underdogs is not an unreasonable feeling, even as well as we’re doing. … We want to have the insurgent spirit that got us here in the first place, and we don’t want to let up.”

For Plepler, that means HBO won’t stop taking risks and won’t slow down as it winds through the ever-twisting competitive landscape. “Let’s put our foot on the accelerator,” Plepler said, delivering content to audiences that they can’t get anywhere else. “I’ve been here 25 years and I have watched different iterations of our growth and of our evolution,” he continued. “I’m more excited for the future of this company than I’ve ever been because I see the line at the door and I see the opportunity for growth.”

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