NEW YORK • Can an elite, free- spending TV network based in Manhattan (HBO) find a comfortable home at a Dallas telecommunications company (AT&T) led by an executive who is also the Boy Scouts of America president?
On Oct 22, HBO's parent company, Time Warner, agreed to be taken over by AT&T in a US$85 billion (S$118 billion) deal that startled the media world. Mr Richard Plepler, the head of HBO, met his potential new boss, AT&T chief executive Randall Stephenson, for the first time on Oct 24 and they spent 30 minutes chatting at HBO's headquarters overlooking Bryant Park.
Still, Mr Plepler said he was comfortable with this shotgun marriage and for one big reason. "Randall made very clear to everybody that what they are buying, they look at with enormous respect and admiration and the last thing they have any interest in doing is messing with a winning game," he said last Thursday.
Will it be that simple?
HBO, which also has operations in Los Angeles, is a creature of its coastal milieu and creates shows such as Game Of Thrones and Westworld, the kind of envelope- pushing entertainment that appeals to viewers with a tolerance for amoral protagonists and graphic violence. It is also home to liberal late-night host Bill Maher and British comedian John Oliver, who delights in skewering powerful corporate interests on his show, Last Week Tonight.
The premium cable channel is an unabashed big spender, too, throwing lavish parties and dinners at places such as the Museum of Modern Art in New York City or the Hotel du Cap in Cannes, and flying actors, directors and writers across the country. AT&T, though, would have US$175 billion or more in debt on its balance sheet if the proposed merger was completed.
For its part, AT&T has contended it would stay out of the way.
"I know they're different cultures and we'll be protective of the cultures, to ensure we don't destroy the business," Mr Stephenson said at a conference conducted by The Wall Street Journal last week. "We'll have the experts who know how to run these businesses, running these businesses."
If the deal is not blocked by regulators, AT&T will acquire not just HBO, but also CNN and entities such as TBS, TNT and Warner Bros, which earn billions in revenue. But HBO is the crown jewel of Time Warner's media properties, having won more Emmys than any other network for 15 consecutive years.
There are examples of peaceful transitions when a non-media company acquires a content company - such as Comcast's ownership of NBC Universal, which has gone smoothly - but others have created headaches.
When Columbia Pictures was owned by Coca-Cola in the 1980s, it had hits such as Ghostbusters (1984) and Tootsie (1982), but the studio was banned from showing non-Coke soft drinks and executives chafed under Coke's expectations of profit margin, according to Hit & Run, a 1996 book about the movie industry by entertainment reporters Nancy Griffin and Kim Masters.
As a subscription service that does not rely on ratings for revenue, HBO depends on generating excitement, striving to place its shows at the centre of the cultural mainstream. It willingly approves big budgets to ensure high production quality and attract top talent, a practice that has allowed it to forge strong relationships with prominent actors, writers and directors.
While many television networks now shoot in Canada because it is cheaper, for instance, HBO does not. The reason? Most actors prefer to avoid making the trip.
HBO is also willing to take risks. Mr Michael London, a producer of Confirmation, an HBO original movie that recreated the Anita Hill and Clarence Thomas hearings, said this year that the film-makers "knew it would be difficult and challenging to tell the story within a corporate environment with legal threats and telephone calls. HBO is fearless".
If AT&T gets someone complaining on the telephone, will there be bigger problems?
"HBO has succeeded on its terms, but AT&T plays a much larger game," said Mr Bill Miller, a prominent lobbyist based in Austin, Texas. "HBO plays to their hometown, but AT&T plays to a national audience where half of them aren't progressive and that puts them in a bit of a bind potentially. As soon as people feel unhappy or victimised, they'll hear a lot about it."
But for now, it is time for the honeymoon - with Mr Stephenson, the telecom executive and Boy Scouts president, and Mr Plepler, the consummate media executive - developing a relationship in real time.
At the conference in California last week, Mr Stephenson said he would visit the Warner Bros studio later that day.
Then, making light of their distinct sartorial preferences, he quipped: "I'm going to unbutton my shirt like Richard's over there."
NYTIMES
