New video ventures: Henry McGee's paving the way for HBO's next multimedia step

Black Enterprise, May, 1996 by TOnia Shakespeare

Grab a box of popcorn, have a seat and enjoy the show, says Henry McGee. What others see as box office flops, McGee, president of HBO Home Video, envisions as video hits.

Employing strategic tactics in negotiation and finance, this visionary has the unenviable task of doubling HBO Home Video sales in the fast-growing "sell-thru" or consumer market. Going up against such industry heavy-weights as Disney and MCA, McGee hopes to accomplish this feat within a year.

According to New York-based Veronis, Suhler and Associates, an investment banking firm for the communications industry, the number of videotape purchases increased from 65 million in 1987 to 336.5 million in 1994. Consumers spent almost $5 billion on videotape purchases in 1995. However, sales have now stabilized and are not projected to increase this year. Despite this fact, coupled with the threat of pay-per-view and interactive television, the 43-year-old McGee remains undaunted.

To his credit, he recently negotiated film rights for the 1996 video release of the movie; White Man's Burden, starring Harry Belafonte. This May, he's overseeing the distribution of the HBO movie, Tuskegee Airmen.

Early on, McGee chose a career with HBO Home Video, a subsidiary of Time Warner, because, he says, "the company was growing tremendously and encouraged its employees to take on new challenges." This is from a man who, 20 years ago, was a reporter for Newsweek. In 1977 McGee left Newsweek to attend the Harvard School of Business. With his newly acquired M.B.A., McGee received job offers from Time magazine and the then fledgling cable network HBO. He accepted the job as manager of film acquisition for HBO in 1979-turning down a coveted slot in Time's publisher's management training program.

"Knowing the market is key to determining whether a movie can make a successful transfer to video, " states McGee. When he snapped up the video rights to Matty Rich's 1991 film, Straight Out of Brooklyn, it had grossed $3 million at the box office. After HBO implemented new marketing strategies (new trailers and posters), video sales exceeded box office revenues by 30%.

Seizing another new business opportunity, McGee negotiated a deal with the Samuel Goldwyn Co. for Martin Lawrence's concert comedy flick, You So Crazy. Sam Goldwyn bought the theatrical rights from HBO, in a deal that McGee negotiated. Then HBO distributed it on video. With box office sales of $10 million, the movie soon went on to become Goldwyn's highest grossing film in 1994.

McGee's success is also recognized by filmmakers like Warrington Hudlin, whose 1994 HBO original series, Cosmic Slop, is now an HBO home video release. "He understands the commercial potential of African American programming--a potential that exists in the niche market as well as the mainstream market," says Hudlin. "As a result, he was supportive of the project and his support encouraged HBO to make programming investment."

Playing hardball, McGee plans to strengthen his company's standing with a sales and distribution agreement with sister company Warner Home Video. Previously, Warner handled only HBO Home Video sales in the sell-thru market. They did not delve into the rental market, which deals with sales to video rental outlets like Blockbuster. According to analysts, Time Warner currently has a 14.8% share of the $15 billion videotape sales and rental market. Market leader Disney has a 23.4% share, followed by MCA with 16.6%.

McGee can now gain access to a much larger sales staff. "Time Warner has extensive resources and my plan is to make sure we're tapping into as many distribution channels as necessary," he says. Keeping pace with the new technologies of cyberspace, he launched HBO Home Video online (http://www.hbohomevideo.com). He expects the Web site to be widely used by video users, as well as by retailers and distributors.

Given his savvy marketing maneuvers, it certainly appears that McGee has all the bases covered. Perhaps doubling his sales figures won't be so impossible.