For most of us, television has always just been there.
For most of us, television has always just been there.
John Hendricks, the founder of Discovery Communications, had a different experience.
A descendent of the Hatfield clan which famously feuded with the McCoys, Hendricks was just 5 when his Uncle Ralph ran a wire from the family’s home in a West Virginia hollow to the top of a nearby Appalachian hill, connecting it to a free-standing antenna.
When the television flicked on, it was a magical moment, a rural enclave linked to the world outside.
“It was a variety show, and at that moment the distant world of New York City miraculously appeared in my living room. For days thereafter I sat in front of the TV set, mesmerized,” Hendricks would later write.
Was that the moment a media mogul was born?
Or was it when his father moved the family a year later to Huntsville, Ala., where a new industry was taking root building rockets to take men into space. Science, technology, the future was all around him.
“You were just in it,” Hendricks recalled.
Perhaps his inspiration came years later when he read a Washington Post story about a Supreme Court decision ruling allowing cable broadcasters to use satellites to distribute their own shows (they had previously been limited to re-transmitting free over-the-air content, as a guard against privatizing culturally significant events). That got him thinking cable operators would be looking for content.
“I remember thinking, ‘Oh good, someone will finally make the kind of programs I like to watch, history, science, documentaries, travel and the like,’ ” Hendricks said.
He had no idea that someone would be him..
How Hendricks’s notion evolved into what would become Silver Spring-based Discovery Communications, a cable programming colossus with a market value of roughly $28.21 billion, is one of the Washington area’s great success stories. But it is a tale that has never quite captured the local imagination like the bright rise and fast fall of America Online, nor has it engendered the homespun appeal of a family transforming a Columbia Heights root beer stand into the mammoth hospitality giant we now know as Marriott International.
Indeed, so few people know Discovery’s story that Hendricks finally decided to write a book about his life “A Curious Discovery: An Entrepreneur’s Story,” set to be released tomorrow.
“Through the years, people have come to me and said, ‘You’ve got to tell the story,’ because they kind of knew the company was built by someone outside the industry,” Hendricks said.
Hendricks said he wanted to explore the “why” of entrepreneurship, instead of the step-by-step “how’’ that is so often the focus of business books.
There’s another reason, too. After more than 30 years, Discovery is entering a new chapter. The Internet is changing the way people consume content.
“How do we cope with the next wave of technology?” Hendricks asked. “We know if consumers had a choice, they would rather watch a TV show without commercials, and advertising represents half of our revenue.”
It is as if in recounting the past, reminding himself and others how Discovery got where it is, Hendricks is girding himself for the present, for reinventing television once again.
Boil it down, what keeps him engaged after all these years is a curiosity about what’s to come.
“What keeps me interested is the puzzle,” Hendricks said. “Figuring out the puzzle.”
Figuring out why an entrepreneur becomes successful is no easy trick. In hindsight, a life lived can appear to be a straight line; in reality there are many forks in the road.
A history major, Hendricks’s first real job out of college was as a fundraiser. The University of Alabama sent him to Washington to coax some grant money out of the federal government, and he did the job well enough that the University of Maryland poached him to do the same for it. He soon saw a business opportunity, helping schools snag grants. He hung his shingle and started a newsletter to entice clients, the “Chemistry Funding Information System.”
His start-up was off and running. And that might have been the trajectory of his life had a friend not asked him to use his fundraising skills to help a theological professor distribute a video series called “The Children of Abraham.”
He didn’t find any takers.
In that failure, he saw an opportunity. A cable channel devoted to documentaries and nonfiction programming might fill the void.
“There’s such an advantage when you are coming from the outside. There’s such a naive confidence,” he said. “Anyone around television in those days was just so intimidated about the thought of coming up with this kind of content 24 hours a day, 365 days a year.”
Hendricks, though, was not intimidated. He once had a campus job in which he supplied professors with 16mm films to supplement classes. The office he worked in was filled with catalogues with nonfiction fare from the BBC and other distributors.
Even at that time, he remembers thinking: “Why can’t all this be on television?”
But how to crack into the industry? Hendricks decided to take a shot in the dark and call the one person on television he knew was interested in nonfiction programming: Walter Cronkite.
To his surprise, the legendary news anchor invited him up to New York for a chat. The meeting went so well that Cronkite made calls on the young company’s behalf and wrote a letter of support, which Hendricks showed anyone who might be interested to secure early funding.
The entree helped him present his business plan to the influential investment firm Allen & Co., which eventually signed on, and Hendricks began to get traction with cable operators. Discovery was suddenly a real thing.
It wasn’t as easy as it sounded. There were many more noes to every yes. In pushing ahead, Hendricks could draw on the experience of his father, a home builder, whose work could be sporadic, job to job. His father would never be more happy than when he could line up another deal; it meant jobs for the 10 to 12 regulars on his crew.
“What powers an entrepreneur through all the rejection is that you have personal passion and a belief system, that you can visualize success,” he said.
It wasn’t long before Hendricks found himself burning through his initial funding — fast. A promised follow-on investment had fallen through, and he and his wife had borrowed everything they could against their credit cards and mortgage. Bills mounted.
As it happened, cable pioneer John Malone was trying to build his own cable system and he knew he needed content to give people a reason to subscribe to something they once got over the air for free. Discovery, with its focus on nonfiction fare, seemed to be a good addition for the channel lineup. So Malone bet on the relative unknown, much like he would back another D.C. veteran, Robert Johnson, who would found Black Entertainment Television.
“They saw the opportunity. They understood the dynamic of the times,” Malone said.
The early days of cable were not unlike today’s Internet gold rush. Everyone seemed to have an idea for a new channel. Business people lined up across the country to bid on community cable franchises, some more interested in flipping for a quick profit than building a business to last.
The frenzy left plenty of horror stories of people receiving poor service, a reputation it took the industry years to repair.
Plenty of channels flamed out, too, but Discovery benefited from becoming part of nearly every cable provider’s basic service. Over time, the company added other channels, such as TLC, Animal Planet, the Science Channel and many more. There have been hits and misses; Oprah Winfrey’s OWN channel has been slow to develop and Discovery parted ways with the New York Times on a joint venture.
For Hendricks, the why of his entrepreneurship was not just limited to putting nonfiction on TV. His company piloted an early on-demand video service, Your Choice TV, that drew raves from customers but little enthusiasm from entrenched broadcasting interests. The experiment would lead to an investment in TiVo.
He also sought to invent solutions for markets that had not yet developed. Hendricks himself holds patents for a pre-Kindle portable e-reader (with an associated book buying and delivery system) and a design for a remote control for navigating cable’s coming onslaught of channels.
“It was just a moment in time when we knew the world was going from analog to digital,” Hendricks said. “What does that mean? ... For me, it was a puzzle, a time to get obsessed again.”
Not all his ideas were hits. Discovery’s experiment with retail stores in shopping malls drew plenty of people who liked to browse but not enough shoppers ready to open their wallets. He also floated a proposal for a Discovery theme park, with a replica of the Great Pyramid of Giza; it never got off the ground.
As his empire expanded Hendricks realized he need an experienced manager to run things; operations were not necessarily his forte. Many say one of his best moves was to hire David Zaslav, a former executive at NBC Universal, to handle the day-to-day.
“John is the idea guy,” said Malone, who serves on Discovery’s board. “He has always been the creative spirit of that company.”
These days, Hendricks said he spends much of his time as executive chairman focused on long-term strategy. How will long-form nonfiction television survive in a YouTube world, where subscription cable competes with free?
One idea: He envisions developing a premium service that delivers Discovery’s rich library of shows on demand. The trick is creating a service that also “respects the people who brought us to the dance, which are the cable operators and the satellite providers.”
“We grew up with cable technology and that was all the rage. Now that has shifted. We could give up and sell, but that’s not what we are trying to do,” Hendricks said.
Discovery, he added, is luckier than some other media firms. There are still huge markets around the world building out multi-channel television networks, hungry for Discovery content. That buys the company time to find a solution.
Malone, the cable titan, said it is important to recognize the generational shift. Younger audiences like their shows paced faster, not exactly his cup of tea. “The cuts are too fast. Programs don’t go into enough detail for me. But s---, I’m old. The company has to evolve to satisfy a broad cross section.”
Discovery has one important virtue going for it: “There will always be room for storytellers,” Malone said.
Discovery made Hendricks a wealthy man; just since 2007, when data became available, he’s accumulated equity totaling $366.1 million, with another $11 million in salary and cash bonuses, according to an analysis by the executive compensation data provider Equilar.
More and more, he sounds like a runner on the beginning of a victory lap.
“Few people know we are more valuable than Marriott or General Dynamics in stock value,” Hendricks said. “They would be surprised.”
Cable is not Hendricks’s only passion. He bought a spread in Colorado on the Utah border that he now runs as a resort and business retreat. Gateway Canyon guests receive an iPad upon arrival with information about the resort and its surroundings, the software developed by a small company he invested in to build apps.
He’s thinking Athena Apps might now sell the software engine to other resorts and cruise lines that want to offer guests a similar experience.
He invested in women’s professional soccer and helped spearhead a campaign to fund a multi-field soccerplex in Germantown (a product of his daughter Elizabeth’s interest in the sport growing up, and a belief that women would benefit from the competitive grit of sports, of learning to overcome adversity).
Some neighbors were leery of the project at first.
“It absolutely would not have been built if John Hendricks had not stuck his neck out,” said Maryland Comptroller Peter Franchot, who got to know Hendricks as a state lawmaker.
Before the kickoff of a recent Washington Spirit match, soccerplex administrators named the complex’s stadium after Hendricks’s wife, Maureen. She had no idea.
The unexpected honor was payback for Maureen keeping a secret from John about his gift on Discovery’s 30th anniversary — a 1968 customized muscle car dubbed the “Apollo” Camaro, a sleek, white thing of beauty with a hand-built front spoiler and special rocket logo on the gas cap and steering wheel.
Hendricks is a aficionado of fast cars; he once owned a white Camaro as a teen. He keeps a collection of vintage autos at Gateway Canyon. Cars are also a passion of his son, Andrew, who races and had a hand in customizing his Apollo update.
Malone said board members chipped in for the gift, a recognition of his past and present.
“We always believed in John,” Malone said. “There was a light in his eye and an enthusiasm that you just knew this would work.”