HBO's Real-Life Game of Thrones: The Fight to Stay Rich, on Top and Score Bill Simmons

Warring clans (cable vs. broadband) battle over unfathomable riches (revenues of $5.4 billion last year) and golden idols (Emmys), with fire-breathing dragons circling overhead (oh, wait, that's just Nic Pizzolatto). Now, the network chiefs reveal the dramatic boardroom backstory on how "HB-Over" became HB-Over-the-Top.

This story first appeared in the June 26 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

It was two years ago, on May 30, 2013, that Richard Plepler stood onstage at a New York media conference and declared that he had no plans to upend the cable ecosystem with a broadband-only version of HBO. "For right now," the CEO said, "we have the right model for our business." The comment echoed one that his boss, Time Warner's Jeff Bewkes, had made on an earnings call a month earlier: "We don't think it makes sense."

Behind closed doors in Seattle, however, a growing team of engineers was hard at work on the very product being denied. The top-secret project would be HBO's answer to younger, scrappier and fast-growing Netflix, giving HBO access to a whopping 10 million more subscribers — the "cord-cutters" and "cord-nevers"— who had remained beyond the reach of even the most successful pay cable channel until now. But like so many secret projects, this one was enormously dangerous: After all, those HBO engineers were meddling with a decades-old, multibillion-dollar system of cable- and satellite-television distribution. If things went wrong — and especially if they went right — it could lay waste to the entire cable paradigm, a long-protected business model that still provides HBO with roughly 75 percent of its annual revenue.

Plepler dropped the bombshell — HBO indeed would be launching a broadband-only subscription service — at Time Warner's investor day in October 2014. Five months later, he was back onstage at Apple's Spring Forward event in San Francisco, filling in the details of HBO Now, an over-the-top service that for $14.99 a month (nearly double what Netflix charges) would allow viewers to watch Game of Thrones and other HBO programming without having to sign a contract with a cable provider. "This is the single boldest decision that anybody in the existing cable-satellite ecosystem of programmers has ever made," says BTIG media analyst Rich Greenfield. "There is no doubt that Richard's partners" — the cable companies — "didn't want him to do it. And he did it anyway."

Welcome to HBO's next chapter, the equal parts critical, aggressive and altogether risky bid to court the next generation of subscribers. But if Plepler has any concerns about rankling those deep-pocketed distributors, he's not letting on. "Nobody is doing us any favors selling HBO," he said the day he announced Now. In Plepler's estimation, so long as HBO continues to deliver a slate of must-have programming, distributors will need the network as much as (if not more than) the network needs them. And for all of the buzz surrounding rival Netflix — the rapid growth, the soaring stock price (a 52-week high of $692.79 on June 10) — HBO has never been stronger. Plepler, 56, and his Los Angeles-based programming chief Michael Lombardo, 59, recently delivered HBO's biggest subscriber uptick in 30 years, rounding out 2014 with 31.4 million domestic subscribers, according to SNL Kagan (well ahead of Showtime's 22.8 million and narrowing the gap with Netflix's 37.7 million). Revenue and operating income were up, too, clocking in at $5.4 billion and $1.8 billion, respectively, the latter dwarfing that of Netflix by a wide margin. It was enough to catch the eye of 21st Century Fox's Rupert Murdoch, who in 2014 made an unsolicited — and ultimately rebuffed — $80 billion play for Time Warner, centered in part on his desire for HBO, which reportedly was valued at more than $20 billion at the time. Not long after, Bewkes said he had no plans to spin off his crown jewel — despite continued urgings from some on Wall Street, who note that Netflix, with fewer global subscribers than HBO and a dependence on licensed content, is now valued at nearly $40 billion.

Unlike so many of the channels rushing toward an on-demand future — CBS announced its stand-alone service a day after Now — HBO is uniquely positioned for a brave new broadband world. For one thing, it has proved it knows how to make shows people will pay to watch, particularly now, as the network is enjoying a second renaissance that rivals the Sopranos era, with such hits as Game of Thrones, Veep and Silicon Valley. Even the network's nonfiction fare, led by six-part docuseries The Jinx, Scientology doc Going Clear and late-night Peabody winner Last Week Tonight With John Oliver, have tapped the cultural zeitgeist, making HBO the envy of Netflix — not the other way around. On June 21, HBO will add a pair of testosterone-fueled new editions — Dwayne Johnson's sports dramedy Ballers and the Jack Black-Tim Robbins political half-hour The Brink — along with a second installment of the drama juggernaut True Detective. And the network will ramp up from there, with plans for more of the addictive Robert Durst docuseries, a not-yet-announced 1970s porn drama from The Wire's David Simon and, if all goes as planned, a platform for ESPN cast-off Bill Simmons. While HBO executives are staying mum, multiple sources tell The Hollywood Reporter that the network is in talks for a major multipart deal with the biggest media personality in sports (more on that later).

"This is the most exciting inflection point in the history of our company," says Plepler as we sit down for dinner at The Peninsula hotel during one of his frequent trips west in late May; across the street, at The Beverly Hilton, his latest batch of shows, led by Silicon Valley and the miniseries Olive Kitteridge, was dominating the Critics' Choice TV Awards. "Our opportunities to reach new consumers have never been more expansive, and the array of talent that wants to work with us has never been greater."

•••

The new era at HBO began with the sudden (and messy) collapse of the previous one. In the wee hours of May 6, 2007, the network's longtime CEO, Chris Albrecht, was arrested and charged with assaulting his then girlfriend in the parking lot of a Las Vegas hotel. Three days later, the dynamic, combustible architect of HBO's golden age was forced to resign. "Everybody was saying, 'It's over,' " recalls WME co-CEO Ari Emanuel.

With no clear heir apparent, the programming reins were handed to Plepler, who had spent the bulk of his lengthy HBO tenure as the in-house PR guy, and Lombardo, who had come up through the network's business affairs division and had even less creative experience. But it wasn't until the two settled into their new positions — the former as co-president, the latter his head of programming — that they fully appreciated the mess they'd inherited. Somewhere between the iconic Tony Soprano and the forgettable John (From Cincinnati), the once high-flying network had lost its way. The development cupboards had been left relatively bare, and there was a feeling around Hollywood that doing business with HBO was tough. "There was a little bit of hubris," notes Plepler, "and hubris caused a little bit of complacency." Headlines like "From Hitmen to Hitless?" began appearing in the press, and rivals took their shots. "It was painful to read executives at competitive networks say 'HB-Over,' " says Lombardo, referencing a dig by Showtime's Matthew Blank in The New York Times.

The initial signs of turnaround wouldn't come until late 2008 with the debut of Albrecht holdover True Blood, on which Plepler and Lombardo made their first big bet. Very little about the quirky vampire show made sense for the old HBO, which had prioritized awards attention and New York Times praise over popularity. "True Blood wasn't built for [New York Times TV critic] Alessandra Stanley to wrap her arms around it," explains Lombardo, seated in his Santa Monica corner office in mid-May. Indeed, Stanley wrote that the show wasn't nearly as "inventive" as creator Alan Ball's earlier effort, Six Feet Under, calling Blood "a comic murder mystery that is a little too enthralled with its own exoticism." But it was fresh, and it grew — and grew. At its peak, Blood pulled in 13 million weekly viewers and played a key role in changing the network's — and its new leaders' — narrative. Adds Lombardo, "I don't think we've ever discussed it, but in my mind it was [representative of a] broadening and redefining of what we do in programming."

That show would pave the way for Game of Thrones, based on the best-selling fantasy tomes by George R.R. Martin, and a decidedly more populist era at HBO. Lombardo, more artsy intellect than genre fanboy, was not instantly sold on the show. "The fantasy genre was uncharted territory for HBO and not seen by most people in programming as a good fit for viewers over 14," recall showrunners D.B. Weiss and David Benioff in a jointly crafted email. If Thrones came off like a thinner version of The Lord of the Rings, Lombardo feared they'd be screwed. Internal doubts intensified when the BBC pulled out as a partner (allegedly fearful that British viewers would be turned off), leaving HBO to take on the reported $6 million-an-episode gamble by itself.

But in early 2010, Plepler and Lombardo, having scored with vampires, announced their next play indeed would be dragons: Game of Thrones was ordered for a 10-episode first season. Again, The New York Times pounced. "If you are not averse to the Dungeons & Dragons aesthetic, the series might be worth the effort. If you are nearly anyone else, you will hunger for HBO to get back to the business of languages for which we already have a dictionary," critic Ginia Bellafante wrote when the series premiered in April 2011, asking at one point, "What is Game of Thrones doing on HBO?" Half a decade later, Thrones not only has become the biggest show in HBO's history, delivering a weekly audience of 19.1 million viewers, but also a calling card for the network, with the vast majority of critics lavishing it with praise. (Awards remain elusive, a sore spot for HBO executives for whom Emmys still are key.)

Eager to replicate Thrones' success, HBO has loaded up on other period and "otherworld" epics, including adaptations of the futuristic sci-fi film Westworld (from J.J. Abrams and Jonathan Nolan) and the U.K. genre conspiracy thriller Utopia (David Fincher and Gone Girl's Gillian Flynn). The noisier, the better, suggests HBO's drama chief Michael Ellenberg, who says of the crowded landscape, "Your biggest fear is that you put something out there and no one gives a shit." But mounting that next batch of would-be blockbusters won't come easy. Already, Westworld has blown its initial plan to launch later this year. "The pilot is a really powerful starting point," says Lombardo, "but when you're doing a series, you go, 'OK, so what's the next episode? What's bringing you in?' You can't just be a spectacle every week." Looking ahead, the network's 32-person programming team wants to layer in some more contemporary dramas, too, with insiders talking up plans to have The Wire's Simon tackle a political drama. And though True Detective's Nic Pizzolatto has proved a handful, even for a network that has a long history of handfuls, Lombardo is hopeful the first-time creator will want to take on another installment of his runaway hit, which became the network's most-watched freshman series ever when it aired in 2014.

Though vampires and dragons are unlikely to infiltrate HBO's half-hours, those, too, are being reconceived for a broader audience. Once synonymous with Entourage and Sex and the City, the network's comedy brand had shrunk in scope in recent years with narrower series like Looking and Girls. Then came Mike Judge's 2014 sendup Silicon Valley, the network's most watched comedy since Entourage, which has given executives at the network confidence that it can do smart and mass appeal in one package. "We have a lot of indie-feeling shows with Togetherness, Girls and Getting On; and I love them, and we've had great success with them, but you want to make sure you don't have too much of one thing," explains HBO comedy chief Casey Bloys. The next two, Ballers and The Brink, expressly are designed to draw a larger audience.

One thing is certain: Nobody is questioning the choice of Plepler and Lombardo any longer, least of all Bewkes, who praises their leadership and their dynamic slate. "Think about the range: Game of Thrones, John Oliver, Silicon Valley, Girls and then culture-changing miniseries and movies," says the Time Warner chief. "It's the biggest magnet for talent in the TV landscape."

Over time, both executives have gotten more comfortable in their positions — particularly Lombardo, who hadn't anticipated how hands-on he'd want to be, so much so that his role became redundant with that of Sue Naegle, whom he'd hired as his entertainment president back in 2008. (Naegle segued into a producer role in 2013.) Though Plepler, the more gregarious of the two, has had to scale back his creative involvement since he was elevated to CEO, he still talks to Lombardo multiple times daily, reads every script before it's ordered and remains in close touch with the network's key talent. In fact, it was Plepler who took the pitch from Jinx filmmaker Andrew Jarecki at his Greenwich, Conn., home.

Those who work closely with Plepler and Lombardo suggest they've found a symbiotic groove that's rare in creative partnerships, particularly those separated by 3,000 miles. "I feel deeply understood by them," says Girls creator Lena Dunham, who adds, "They're both just incredibly thoughtful people whom you would love to introduce to your grandma."

•••

The biggest risk that HBO faces creatively is one of its own making. With more than 100 projects said to be in development, HBO is in constant danger of becoming a victim of its own success — so clogged with talent that the next Lena Dunham or David Chase will go elsewhere.

The familiar refrain, "HBO buys too much," came up at an early May retreat, during which WME TV head Rick Rosen was invited to speak candidly about the industry's landscape and HBO's place in it. Sandwiched between praise, Rosen is said to have told executives huddled at the Beverly Wilshire hotel that this bottleneck is the chief criticism of the network. It's an issue that even one of HBO's most beloved writers, Simon, has raised as well. "There's always something that's not getting made or not getting made fast enough, and that can be frustrating," he says. Simon's next HBO project is the miniseries Show Me a Hero, about a public housing development in Yonkers, N.Y.

Fortunately for Lombardo, getting a project in the door at HBO is, for most writers and producers, worth the risk of getting trapped in development hell. Notes one agent: "Worst-case scenario, you get some heat for your client. Best-case scenario, you get a show on HBO." But competitors, including Netflix and Amazon, are preying on those turned off by the lengthy queue at HBO, aggressively touting their willingness to move quickly and slap shows on the air. That swiftness is said to have been the key to Netflix, rather than HBO, landing Kyle Chandler's Bloodline and the upcoming mind-bender The OA from Brit Marling.

While HBO's Ellenberg balks at the critique — "If the show is great, we'll make it," he says — Lombardo acknowledges that he and his team could and should improve. "We've got to get better at saying no," he says, noting that they've "over-rotated" in an attempt to fill the development pipeline. But the reasons for the overload run deeper. Among them is the increasingly frenzied pace of dealmaking, driven by agents who, emboldened by the explosion of buyers, have become much more aggressive about packaging projects with top talent and demanding bigger orders. "I literally get calls [from agents] once a day: 'OK, we're coming in and this is gonna go fast,' " says Lombardo, who worries the current climate threatens to kill TV's golden age. "It feels like the movie business 20 years ago, when people were paying crazy sums of money for scripts and packages, and it ended up resulting in decades of bad movies."

There's also an influx of top-tier film talent migrating to TV, which Lombardo acknowledges he finds seductive, even if he shouldn't. While there are plenty of exceptions, including Girls' Dunham and True Detective's Pizzolatto, HBO long has been accused of favoring established names (many of them with a shelf of awards) over up-and-comers. In 2012, Homeland showrunner Alex Gansa told THR, "I had been developing at HBO [with limited success] for a couple of years, and I knew the mountain that you had to climb there, the people that you were competing against and, frankly, the star-f—ing that goes on."

And though HBO executives are loath to admit it, they've been forced to do some amount of defensive buying, too — to prevent a "pass" from turning into another network's breakthrough, as Mad Men did for AMC, Transparent for Amazon and Orange Is the New Black for Netflix. (HBO famously passed on all three.) But for all the upstart competitors with their signature shows, conversations with two dozen top producers and their representatives reveal that HBO remains the most desirable place to be — because it has the audience, the budgets, the promotional muscle and, perhaps most important, the most experience turning good ideas into great TV. "Anyone who tells you they want to be somewhere else is lying, or they couldn't get on the air at HBO," gripes one top rep, who requested anonymity for fear of offending other buyers. WME's Emanuel has no such worries. "They're the creme de la creme, and when you do get on, it's a big statement that you're the best," he says, adding: "So, yes, people are complaining, [but] you want to know why? It's not easy to look in the mirror and say, 'I didn't match up.' "

In what perhaps is the strongest endorsement of HBO's culture, the network's roster is heavy on producers, including Martin Scorsese, Mark Wahlberg and Terence Winter, who keep coming back. "They're never driven by cowardice in the sense that, 'Oh, people may not like that or they might not understand it,' " says Winter, who's prepping his third series for HBO, a '70s-set rock 'n' roll drama with producers Scorsese and Mick Jagger. "There's certainly never a note that's born of the kind of discomfort or fear you get from a network." To that end, Simon, who by his own calculation has produced 114 hours of programming for the network, has found the quickest way to get a note off the table at HBO is to suggest it feels more like a broadcast note. "They bristle," he says. "Nothing could be more damning, which speaks well to the culture there."

The money at HBO can be considerably bigger, too, a draw even for those who like to believe they're in it for the art. Reps say the initial profit points that HBO doles out are relatively meaningless, but Lombardo and team have a strong track record of adjusting deals over time to richly reward their talent. Top HBO producers, like The Sopranos' David Chase and Sex and the City's Darren Star, can expect to make in the mid-eight figures over the course of a series run. (Netflix, by contrast, frontloads its deals, which can mean more money up front but no opportunity for an HBO-size home run.) "HBO is the most fair place in town, by a mile," says one top dealmaker. "And if you have a hit show there, you make more money there than anywhere else on cable."

•••

The revolution that could turn HBO into a broadband behemoth began with a hunch Plepler had a year and a half ago. Shortly after moving into the CEO suite in early 2013, he became so convinced that the public had the wrong idea about HBO — that it somehow was staid and mature, that its offerings were no different from those of Netflix — he hired a political pollster, Doug Schoen, to look into it.

Schoen returned months later with a bank of research that confirmed Plepler's fears — and defined the new opportunity. There were two sets of "persuadables," Schoen found, that were within reach. One was the roughly 10.5 million cable homes that didn't currently pay for HBO but conceivably would if there were a cheaper way to get it. Armed with Schoen's data, Plepler has been having conversations with his cable and satellite partners about offering HBO as something other than just a costly "add-on" atop an already pricey basic cable bundle. The other opportunity: those 10 million broadband-only homes, which Schoen felt confident could be lured if they had a better handle on what they were paying for. "We hadn't done a particularly good job of explaining the value proposition of HBO," says Plepler, as he rattles off the network's lesser known assets, including 2,800 hours of library programming, 30-plus annual documentaries and first-run films from four Hollywood studios. He harps on the latter, noting that 40 percent of his existing subscriber base watches only movies on HBO. Later this year, the network will mount a massive marketing campaign designed to sell the scope and scale of HBO — and not just its latest series.

But the company's next phase will need to be as much about how HBO is programmed as how it is marketed. With the advent of HBO Now, it has an opportunity not only to attract a new generation of viewers but also to bring in substantial revenue that could be poured right back into programming. (HBO executives say only that they're "pleased" with Now's launch but decline to release subscriber metrics.) Lombardo finds himself dreaming about a day soon when he can dole out more series orders.

Already, his team has given consideration to the Now subset — the average Now subscriber is 35; HBO linear's is 43 — as it plots new programming. "We've become more aware of needing to service an audience that may not be interested in watching an Emmy Award-winning miniseries," says Lombardo, who in recent weeks has handed out orders for an animated Duplass brothers comedy about gender-questioning pigeons and aging bedbugs and a reefer comedy from the pair behind Vimeo's hit High Maintenance. Adding a daily Vice newscast, which is expected to focus on news and politics, is another step at trying to satiate the appetite of the on-demand demographic.

Lombardo won't rule out other talk shows, too, particularly if the right personality comes along. Though he's tight-lipped about names on his wish list, he acknowledges the soon-to-be available Jon Stewart would hold appeal. "Trust me," he says, "I've already had a very polite conversation." Considerably more likely is Simmons, whom the network is said to have made a big play for after his unceremonious booting from the more corporate ESPN. Such a move would be straight out of the HBO playbook, which famously provided a creative reprieve for former ABC flameout Bill Maher many years earlier. Though Simmons is said to have several suitors, insiders say con­versations at HBO have focused on a TV show — something Simmons is believed to want — along with heavy digital extensions that make the prolific personality tailor-made for the HBO Now era.

HBO executives have been showing an increased willingness to experiment with its business model, too, adding programs from outside studios (Warner Bros.' The Leftovers and Westworld). And for the first time, they also are discussing the possibility of shopping never-aired HBO properties elsewhere and are considering expanding the Now library to include acquired programming in previously untapped genres like children shows. With HBO Now, they are eager to shake up the format as well, both in terms of length (expect shortform series) and structure (playing with points of view). When High Maintenance's husband-and-wife creators, Katja Blichfeld and Ben Sinclair, came in to discuss their next show, they told Lombardo they weren't interested in the traditional half-hour format. His response: "Fine. You want to do 15 minutes? 10? Doesn't matter."

And perhaps it really doesn't. With HBO envisioning a future untethered from the old cable paradigm, a 10-minute stoner comedy could well become a breakout hit. All it needs are enough people willing to shell out $14.99 to watch it.

June 17th, 1 p.m.: Updated to reflect that David Simon is now working on a political drama, which is not Borgen, for the network.