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“Something That Would Destroy HBO”: Inside the House of Plepler, Creatives See an “Insurance Policy” That Will Protect Them from Becoming Netflix

Within HBO, many view the reaction to new overlord John Stankey’s occasionally ham-fisted comments as overblown. “They need this to work,” says one producer, referring to AT&T, “and they can’t do that by blowing it up.”
Image may contain Richard Plepler Reese Witherspoon Human Person Nicole Kidman Bar Counter and Pub
Reese Witherspoon, HBO C.E.O. Richard Plepler, and Nicole Kidman at HBO's Official 2017 Emmy After Party at The Plaza on September 17, 2017 in Los Angeles.By Jeff Kravitz/FilmMagic.

In summer 2016, Richard Plepler flew to Dallas to attend a business dinner with a relatively new contact of his named John Stankey. The two men could not have appeared more dissimilar. Plepler, the urbane C.E.O. of HBO, was a natural creature of Manhattan and Beverly Hills, who had helped turn the premium cable network into perhaps the most pre-eminent cultural product in American life. Stankey, on the other hand, was a career AT&T executive who had once overseen the business solutions and operations departments. He had since segued into media, however, and been placed in charge of the telecommunications giant’s freshly acquired satellite-television service, DirecTV. Stankey approached the new space steadfastly. He had invited Plepler from New York to his country club in order to discuss the details regarding an unprecedented agreement they were hammering out: AT&T and HBO, then owned by Time Warner, were on the verge of striking a first-of-its-kind deal in which the network would be included in DirecTV’s new streaming bundle, DirecTV Now.

Before the two men placed their dinner orders, Plepler started in with a soliloquy about the various glowing attributes of HBO—the channel’s strength as a boutique hitmaker and creative haven whose emphasis on quality above quantity had bestowed upon the world shows from The Sopranos to Game of Thrones, and created the current era of Peak TV. But Plepler didn’t get very far before Stankey stopped him in his tracks. He already knew what made HBO so special, he told his guest. “I said to myself, this is one smart fucking guy,” Plepler recalled recently when he relayed the anecdote to employees. “I knew from there that we were going to be off to a great start.”

Two years later, as a result of the never-ending AT&T-Time Warner combination, Stankey has gone from being Plepler’s suitor to becoming his boss. (On Thursday, despite the deal’s closure, the Department of Justice announced it would appeal a federal verdict that approved the sale.) Subsequently, the media world has become endlessly fascinated by how a professional manager, and leading executive of a mass-scale behemoth, will oversee Plepler’s boutique cultural gem. It’s a crucial moment for HBO, after all, as the network continues to withstand pressure from Amazon and Netflix, among others, which poured a combined $10.5 billion into the space last year. (HBO's budget is around $2.5 billion.) Whereas HBO once essentially had first right of refusal in the business, Netflix, with its 130 million paid subscribers around the world, has proved willing to spend hundreds of millions for the exclusive right to work with top-notch creators from Shonda Rhimes to Ryan Murphy. “The goal is to become HBO faster than HBO can become us,” Netflix’s chief content officer, Ted Sarandos, once famously said. For many, the daylight between the two is increasingly becoming imperceptible. This week, Netflix broke HBO’s 17-year streak of racking up the most Emmy nominations. At the same time, it has essentially become the big-box store of streaming TV, while HBO remains bespoke.

That explains the wave of hysteria that followed a recent article in The New York Times disclosing comments Stankey made during a June 19 town hall at HBO headquarters, where he was interviewed onstage by Plepler. “It’s going to be a tough year,” Stankey said at one point. “It’s going to be a lot of work to alter and change direction a little bit.” Stankey never mentioned Netflix by name, but he seemed to insinuate that HBO could learn a thing or two from its top competitor. HBO, he suggested, had to think beyond owning Sunday night. He discussed it effectively as a mobile widget. “We need hours a day,” Stankey said at another juncture. “It’s not hours a week, and it’s not hours a month. We need hours a day. You are competing with devices that sit in people’s hands that capture their attention every 15 minutes.” He also said: “We’ve got to think about how, over time, we start to build [HBO] so that it’s broad enough to make that happen.”

Outside HBO, the negative reactions were legion, evincing nightmare visions of a bloated and watered-down offering—an HBO that might begin to look more like Netflix than, well, HBO. “AT&T’s Troubling Plan to Change HBO,” a headline from The Atlantic warned. “This sounds bad all around,” tweeted Emily Nussbaum, The New Yorker’s TV critic. “‘Engagement’ is apparently the new ‘content.’ . . . HBO isn’t perfect, but it’s not just pouring out fungible hours and clicks.”

Within HBO, however, there's a different view of the dynamic: people recognize that AT&T needs HBO just as much as the other way around. “No one seems that concerned,” one producer told me. “Something that would destroy HBO, it would have to be a Netflix-like approach. If that were to happen, all the top creative executives would leave and where would AT&T be? They need this to work, and they can’t do that by blowing it up. That’s the insurance policy.” Insiders said that HBO employees were encouraged by another point Stankey drove home during the town hall, highlighted in a subsequent report by Recode’s Peter Kafka that muted the alarm surrounding the session. “You will have a lot of autonomy,” Stankey told the group. “You’ll be asked to do more of what you already do very well . . . We need more. And in order for you to do more, you’re going to have to have the latitude, the freedom, and the resources to be able to go about doing what you all do very well.”

Indeed, there was already a feeling that HBO could be doing more. In recent years, investment was limited as Time Warner slimmed down for a sale. “Whoever got it, the hope was that there would be more investment,” the producer said. Jason Hirschhorn, a veteran digital-media executive, suggested on Twitter, “HBO needs to scale quality. Plepler could put $2-3 billion more to work and succeed.” Two people familiar with HBO’s budget told me it wouldn’t even take that much. By their own back-of-the-envelope math (independent of one another), $500 million to $1 billion would go a long way. (Warner Media has not yet indicated how much the budget will actually increase.) And in terms of increasing the content available to HBO subscribers, there are options being explored that don’t involve creating expensive new programming, such as licensing non-HBO shows, according to someone familiar with the matter. (HBO has done this in certain international markets, but not in the U.S.) Still, the most pressing thing for HBO is to create its next generation of breakouts, especially as the leader of the current generation is on the verge of retirement. “The Game of Thrones cliff is approaching,” another HBO insider noted, “and getting the next series of sustainable hits is a challenge.”

People who work closely with Plepler and Stankey say they’re on the same page about all of this. Certain exchanges from the town hall could come across as awkward or contentious, at least on paper. (Stankey: “We’ve got to make money at the end of the day, right?” Plepler: “We do that.” Stankey: “Yes, you do. Just not enough.”) And some people who watched via video stream thought there were at least a few moments that looked tense. But people who were in the room said it was all in good fun, playing out with laughter and applause.

In any case, the two executives now need to build on that “great start” they apparently got off to over dinner in Dallas. They’ve been seeing each regularly, including in Sun Valley last week during Allen & Co.’s annual mogul retreat, and for a tête-a-tête at the Lambs Club—a popular media haunt near HBO’s Sixth Avenue headquarters—around the time the AT&T-Time Warner deal was closing last month. It's also worth noting that Stankey will be spending a lot of time in New York going forward. (AT&T is based in Dallas.) Of course, it’s important to keep in mind that it’s still early days. “They are playing the long game,” Hirschhorn wrote last week. “HBO knows how to run their business. Give them a minute.”