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Development and launch In 1965, Charles Dolan—who had already done pioneering work in the commercial use of cables and had developed Teleguide, a closed-circuit tourist information television system distributed to hotels in the New York metropolitan area—was awarded the franchise rights to build a cable television system in the Lower Manhattan section of New York City.[19] The new system, which Dolan named "Sterling Information Services" (later to be known as Sterling Manhattan Cable, before eventually becoming Time Warner Cable, which merged into Charter Communications in May 2016), became the first urban underground cable television system in the United States.[20][21] Rather than stringing cable on telephone poles or using microwave antennas to receive the signals, Sterling laid cable beneath the streets in compliance with a longstanding New York City Council ordinance—originally implemented to prevent broad-scale telephone and telegraph outages, after a severe blizzard affecting the Northeastern United States in March 1888 had caused widespread damage to above-ground utility lines in the area—required that all electrical and telecommunication wiring be laid underground to limit service disruptions during bad weather, and because reception of television signals was impaired by the multitude of tall buildings on Manhattan Island.[22] Despite having the financial backing of Time-Life, Inc. (then the book publishing unit of Time Inc.), which was just entering into cable system ownership as Dolan's company launched, Sterling Manhattan consistently lost money throughout its first six years of operation through a combination of the expenses it incurred with running cable wiring underground and into buildings throughout Manhattan (costing as much as $300,000 per mile), and the company's difficulties in expanding its limited subscriber base (by 1967, subscribership for the Sterling system totaled around 400 customers). As a stipulation for allowing it to continue lending money for the venture, in 1969, Dolan agreed
In the summer of 1971, while on a family vacation en route to France aboard the Queen Elizabeth 2, Dolan began conceiving ideas to help make Sterling Manhattan profitable. He came up with a proposal for a cable-originated television channel, which he called "The Green Channel", a subscription service that would offer unedited theatrical movies licensed from the major Hollywood film studios and live sporting events, all presented without interruptions by advertising. Under the proposal, the service's start-up costs would be offset by having Sterling enter into carriage agreements with other cable television providers, and draw revenue from fees charged to cable subscribers who added the channel onto their existing service (which then consisted exclusively of local and imported broadcast stations). Dolan later presented his idea to management at Time-Life, who, despite the potential benefit it might have for the company's existing cable television assets, were initially hesitant to consider the idea. In the early 1970s, the cable television industry was not very profitable, and was under constant scrutiny from FCC regulators and the major broadcast television networks (CBS, NBC and ABC), who saw cable as a threat to their viability. Undeterred, Dolan managed to persuade Time-Life to assist him in backing the project. On November 2, 1971, Time Inc.'s board of directors approved the "Green Channel" proposal, agreeing to give Dolan a $150,000 development grant for the project.[22][23] To gauge potential consumer interest in a subscription television service, Time-Life sent out a direct-mail research brochure to residents in six U.S. cities. An overwhelming majority of those surveyed (approximately 99%) opposed the idea of paying for an additional channel, with only 1.2% favoring the concept and expressing interest in being a paid subscriber. In a second survey conducted by an independent consultant, 4% of respondents polled said they were "almost certain" to subscribe to such a service. Time-Life later conducted a test in Allentown, Pennsylvania; in that survery, salesmen presented the pay cable channel concept to residents by offering

them free service for the first month and a refundable installation fee; half of all residents interviewed for the second survey had expressed interest in purchasing the conceptual service with the incentives.[22][23] During the planning stages, film distributors initially expressed reluctance to license their movies to Home Box Office unless they were provided a count of its potential audience reach and subscription pricing estimates to establish a similar licensing payment structure to what they used to exhibit films theatrically. Along with those statistics, cable operators also wanted to know what movies would be shown on HBO to avoid potential liability on advertisers and FCC indecency laws as the channel would air films without editing for objectionable content. HBO executives ultimately agreed to pay a flat licensing fee to the movie studios to acquire film rights, and allowed cable operators to the ability to market HBO directly to their customers.[23] Original HBO logo, used from 1972 to 1975. In a later meeting of Dolan and the executive staff he hired to work on the project, they discussed changing the name of the new service. The team ultimately settled on calling it "Home Box Office", which was meant to convey to potential customers that the service would be their "ticket" to movies and events. The moniker was intended as a placeholder name in order to meet deadlines to publish research brochures about the new service; management intended to come up with a permanent name as development continued, however, the "Home Box Office" name would ultimately be kept around to serve that purpose.[22] A New York City Council provision restricting pay television franchises prevented HBO from being launched over the Sterling Manhattan system; Dolan then sought a city that had two competing cable systems to serve as its inaugural distributor. Originally, he settled on debuting Home Box Office on a Teleservice (now Service Electric) cable television system in Allentown. However, management found out that Allentown and surrounding areas fell within the 75-mile (121 km) blackout radius designated by the Philadelphia 76ers to protect ticket sales; since HBO agreed to carry NBA games, this rule would have resulted in any games involving the team not being shown in the area over the channel. Time-Life subsequently agreed to an offer by Teleservice president John Walson to launch the channel on its system in Wilkes-Barre (located in northeastern Pennsylvania, outside of the 76ers' DMA).[22][23] Home Box Office launched at 7:30 p.m. Eastern Time on November 8, 1972.[24][25] The first program and event telecast aired on the channel, an NHL hockey game between the New York Rangers and the Vancouver Canucks from Madison Square Garden, was transmitted over channel 21—its original assigned channel on the Teleservice system—that evening to 325 Teleservice subscribers in Wilkes-Barre. (A plaque commemorating the launch event is located at Public Square in downtown Wilkes-Barre.) Home Box Office aired its first movie presentation immediately after the sports event: the 1971 film Sometimes a Great Notion, starring Paul Newman and Henry Fonda.[25][26][23] HBO's launch came with very little fanfare in the press; other than print advertisements in the Wilkes-Barre Times Leader that promoted the launch, the channel's debut was not covered by any local or national media outlets. The city administrator of Wilkes-Barre declined an offer to attend the launch ceremony, while Time Inc. president and chief executive officer J. Richard Munro was unable to attend as he became stranded in traffic while trying to exit Manhattan by way of the George Washington Bridge as he was attempting to commute to Wilkes-Barre. Further complicating preparations for the inaugural telecast, strong winds toppled a microwave reception dish atop the roof of the local Teleservice office that was being used to relay the feed to the microwave towers. Teleservice representatives sent a technician to repair the antenna in time for the channel's launch.[27] Although its base had grown from what it had when HBO was being conceived, Sterling Manhattan Cable continued to lose money because the company had only a small subscriber base of 20,000 customers within Manhattan. In late 1972, Dolan's media partner, Time-Life, Inc., gained majority control of Sterling through its acquisition of an additional 60% equity interest from Dolan, increasing Time-Life's stake in the company to 66.5%. Four months after the channel launched, in February 1973, Home Box Office aired its first non-sports entertainment special, the Pennsylvania Polka Festival,[28] a three-hour-long music event broadcast from the Allentown Fairgrounds in Allentown, Pennsylvania.[29] To reach a regional audience, Home Box Office would use a network of microwave relay towers to distribute its programming to cable systems throughout its service area.[26][30][31] Amid policy differences with Time-Life management, Dolan resigned from Sterling Manhattan and HBO in March 1973. Shortly afterward, Time-Life purchased an additional 20% stake in the two companies, expanding its controlling interest from 66.5% to 86.5%, and decided to reorganize the Sterling Manhattan operation.[32][33] Time-Life dropped the "Sterling" name and the company was renamed "Manhattan Cable Television" under Time-Life's control in March 1973.[19] Gerald Levin—an entertainment industry attorney who had been with Home Box Office since it began operations as its director of finance, and later as its vice president and director of programming—replaced Dolan as the company's president and chief executive officer.[34] In September 1973, Time-Life, Inc. completed its acquisition of Sterling's remaining interest in Home Box Office. At the time, the service's future looked dim: HBO only had 8,000 subscribers across 14 cable systems at that time, all of them located in Pennsylvania,[27] and it was suffering from a significant churn rate from subscribers who cancelled their service after finding its program scheduling repetitive. HBO would eventually increase its fortunes within two years: by April 1975, the service had around 100,000 subscribers in Pennsylvania and New York state, and had begun to turn a limited profit.[27] National expansion, innovation and rise to prominence (1975–1993) The RCA Satcom domestic communication satellite launched on December 13, 1975, spurred the cable television industry to unprecedented heights – with the assistance of HBO. Time-Life executives recognized the problems in trying to expand Home Box Office's distribution

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