BET's Lee Searches for Viacom Synergies

It was one year ago this month that Black Entertainment Television announced plans to merge with Viacom Inc. As one of the last remaining independent cable networks, BET was sold — after more than 20 years — for $3 billion. Layoffs were the most immediate change at BET following the merger: 50 employees were cut in March. An additional 15 percent of staffers were let go in July, after the network formed an alliance with Viacom-owned CBS News, which now produces much of BET's news fare. Aside from that, the merger hasn't altered the network's programming lineup. But BET president and chief operating officer Debra Lee says changes are on the horizon, including a new series that the network will co-produce with Viacom sister Showtime Networks Inc. Lee sat down recently with
Multichannel News National Editor Steve Donohue to
talk about other changes at BET. An edited transcript follows.

MCN: What's been the biggest change at BET since the merger?

We're now part of a bigger company, which has been terrific, because after doing it ourselves for 21 years, now we have someone to bounce ideas off of and say, 'How do you do it?' It's more of a familial feeling about what we do.

We didn't actually close the deal until January. Since then, there has been a lot of meet-and-greet, and going around to different division heads saying: 'You know, now we're a part of the family. What kind of things can we do together?'

MCN: On the programming side, the most immediate change was the addition of CBS News programming.

CBS News was one of the first divisions to call and say, 'Welcome to the family.' They were actually very aggressive. And so they came down, and we just brainstormed about hour-long magazine shows, what they had in the vaults that we could use, and we put together a team — and out of that came the idea for them to help us with BET News
and BET Tonight.

That's been the biggest deal that we've announced. But we've had other conversations with other divisions, and we're hoping some other things come out of them.

MCN: Will that relationship evolve to a point where you'll do more cross-promotion on CBS News programming, and perhaps have BET talent appearing on CBS News shows?

Yes. We've actually pitched some ideas to them. We had a Mariah Carey interview right after it was announced she was having emotional problems on our BET Walk of Fame with Patti LaBelle. We tried to get Patti on the morning show.

And we're going to be using some of their talent on BET News. And we're really hoping that it's a two-way street, so that they can help us with news footage and having reporters in Afghanistan. We had Randall Pinkston from CBS [reporting from Afghanistan] — so now we can get him on the air. But we're also hoping that it allows CBS to just be more sensitive to the community that we serve in their day-to-day programming. So I think it's a benefit for both of us.

MCN: When will we see a Viacom influence on your entertainment programming?

It depends on what you mean by influence. Part of our deal was that we would have autonomy to make decisions about BET programming. So what we're looking at now is just whether there's programming that other divisions have that may be a benefit, or things we can do together, like the CBS deal.

We're in talks with Nickelodeon and TNN [The National Network] about sitcoms. We've talked to Showtime about some of their original movies. We've talked to Paramount [Pictures Corp.] about things we can do, so I think it'll just be an ongoing thing. It's not going to be next September — you won't see a lot of changes, but I think it's going to be an ongoing process.

MCN: Can you elaborate on what you're talking about with TNN, Nickelodeon and Showtime?

Whether it makes sense for us to buy programming together and share windows, whether it makes sense for them to co-produce some programs for us. We're looking at our teen programming and wondering if we want to change that around and work with Nickelodeon more on that. It's a variety of different things.

MCN: BET is doing very well this year in the ratings, while many other basic-cable networks are flat or down compared with last year. What's behind that?

The original programming that we started distributing in September with our new season is just really working well. People love Comic View
— it's been getting over a 1.0 [Nielsen Media Research] rating every night. That's a 10-year-old program, but we took it to New Orleans this year, and I think people are responding well to the format. We do a lot of other new primetime shows.

We also, for the first time ever, did a checkerboard approach to programming as opposed to every night, the same time, the same show, which is the way cable sort of grew up. We found out last year that specials really work well, we have a tune-in Tuesday night where we do specials and biographies and Walk of Fame
— our music-awards show.

We moved our music programming to New York last year, to our Harlem studio. That's working well. We're getting better guests, better audiences and better hosts.

And I think with everything that's going on in the world, people are watching more TV, so that's helped us some. Our news [ratings] have really increased quite a bit, and I think that's because we've been having information on the terrorist attacks, the war stories. You hate to point to tragedies and say it's helped ratings, but sometimes it does.

Movies are also working well for us, specials, the music-video programming. As someone who's been here for 15 years, it's nice to see it finally jelling. The downside is, it's been a tough advertising market.

MCN: What kind of an impact is the soft ad market having on BET?

We're fighting for advertising dollars just like everyone else. We're still up and we're doing well, but it's a tough market. In a normal market, with that kind of ratings increase you would see a huge increase in our advertising. Now people are saying, 'We don't know who we're buying and it's nice that you have great ratings, but…'

MCN: Is there still no parity in the ad market for BET?

There's still not. It's getting closer, and our ad sales team is doing a lot. Viacom's been helpful on that front. When [Viacom president] Mel [Karmazin] and [CEO] Sumner [Redstone] bought the company, I remember they said in the analyst call that first day that there's no reason in the world why an MTV [Music Television] spot should be more than a BET spot. Mel's been on some ad-sales calls with our folks and is really pushing that point, so I think the disparity is narrowing.

MCN: Are Viacom or MTV Networks selling ads for BET?

We sell primarily on our own. But there's Viacom Plus, a group of sales people that sell the whole Viacom family of networks.

MCN: Have there been any media buys for BET through Viacom Plus?

The Procter and Gamble [Co.] buy (a $300 million cross-platform media deal struck with Viacom in May) — we've got a piece of that, so they have been somewhat successful. But it's such a different sell. We have so many demographics, where MTV just has one in terms of age groups.

MCN: BET has said in the past that it's not economically feasible to produce an original drama series for the African-American market.

That still holds true, if we did it ourselves. Things that we're looking at, now that we're part of Viacom, as I said, is can we do a joint production with CBS, Showtime or Paramount where it makes more sense. And we have had those discussions with Showtime, in particular, on one series, but we haven't announced anything.

MCN: How can you know that it's not feasible if you don't try it?

Because we know what we're bringing in, in ad revenue. And is that enough to pay $1 million per episode? We're just not in that league.

MCN: What is BET talking to Showtime about? Is it something that could run on both BET and Showtime?

If we did a joint production, we would share the windows. It might be on Showtime first and then on BET, or some families of networks have actually started doing it in the same week.

MCN: Is that what you're looking to do?

We haven't gotten that far yet.

MCN: Both Major Broadcasting Corp. Network and New Urban Entertainment Television [NUE-TV] are struggling. How has this new competition affected BET?

We haven't heard anything about it from the advertisers or affiliates. So from our perspective, it's pretty much nonexistent. You've got to have a critical mass of subscribers before you can start getting ad revenue, and none of them have reached that level.

MCN: What ever happened to BET II, the family and public-affairs channel that BET announced plans for in 1999?

The industry just didn't embrace it. And at the time, [former AT&T Broadband CEO] Leo Hindery and some other folks were saying, 'We need another black channel.' We were saying, 'Well, if that's the case, we'll be glad to do it.'

The theory was they wanted more family programming, and so we put together a 24-hour programming schedule and sent it to the major cable operators, and there just wasn't a lot of interest.

MCN: Is that something you're still considering, or has that idea been transformed into your four digital networks?

It's pretty much been replaced by that, because even with BET Jazz, we're finding there's not a lot of analog distribution out there, so everything is digital. And to do digital, you can't invest that kind of dollars into programming.

To do a 24-hour, black-oriented family programming network, you'd have to buy sitcoms and dramas or produce it, and the digital world just doesn't support that yet. So it's easier to do more music-related channels, where the cost of programming is less.

MCN: Can you give us a distribution update on those digital networks?

They're going to launch Jan. 21, and we've gotten a good response. We've announced four: Jazz, Gospel, BET Hip Hop, and BET Classics. So we're in the midst right now of negotiating with the major affiliates to carry the networks. I couldn't give the exact numbers right now, but the response has been great.

MCN: Are they being packaged in the MTV Networks digital suite? Is MTVN helping with affiliate sales?

No. There have been a few corporate deals where an affiliate wants to say, 'I want MTV networks, I want the BET networks, I want Showtime, so let's talk about all of them.' And so if that's the case, we're involved in it. But on a day-to-day, basis we're out there selling [our networks].

MCN: I've heard that a lot of your affiliate deals are up for renewal next year.

It's 2003. And we're already starting to talk with our operators about that. Some of them are saying it's too early, we don't want to talk right now — we've got other things to worry about. But next year will be our big push on that.

MCN: Have you been able to consolidate any BET positions and let Viacom handle any specific aspects of your business?
Lee: Not totally. On the administrative, [human-resources] side, it's close cooperation, but they haven't taken over any aspect. If there are vendor deals that make more sense for us or things that help us run our business, we're able to take advantage of that. But they haven't taken over anything.

As Mel said, and as Sumner told us, you know, 'We let our division heads run their divisions.' And the fact that we're not part of MTV Networks — we're a separate group of services, just like Showtime — allows us to cooperate, but not really turn over anything entirely.

MCN: Will there be additional layoffs at BET?

We're not looking at any right now.

MCN: With whom do you work the most at Viacom? Who have you been in contact with the most?

Recently, because I've been doing executive contracts, it's been Bill Roskin, who's the senior VP of HR. So I deal with him more on a day-to-day basis. And in terms of corporate issues, Mel Karmazin.

MCN: Are you concerned about retaining talent? Have you been working on signing long-term contracts with your executives?

Yep. And I'm happy to report that they're all signed up. We never had contracts before, so there were a lot of questions — a lot of issues we had never addressed before. So it was an interesting process. I'm glad it's over. But everyone signed up and I think people are excited about the new direction of Viacom. Shifting gears and realizing your future's not only BET, but also Viacom, is different for people.

MCN: Why are you signing contracts?

It's just Viacom's corporate policy. They want senior people signed up with contracts.

MCN: What's the term for most of them?

Three years mostly.

MCN: Why is yours for five years?

Because I'm more senior than they are [laughs]. It's all seniority. Some are two years, if they're a little less senior.

MCN: Who have you signed to contracts?

All of our senior executive team: Byron Marchant, our chief lawyer and guru; Curtis Gadson [senior VP of programming]; Kelli Richardson [senior VP of marketing and communications]; Nina Henderson Moore [senior VP of news, public affairs and program acquisitions]. We have about seven or eight.

MCN: VP level and above?

I did personally senior VPs and EVPs. Now we're on the VP level. That process is just starting.

MCN: Will you go below the VP level?

I don't think we will this year, just because it's been so much — because we're doing it all at one time, which most companies don't do. That was a big cultural change.

MCN: Before you launched, there was a debate about whether the site should target the African-American market or the broader urban market. You settled on the African-American market. Is that something you think about as well on the network side —about expanding to the urban market?

We think about it every now and then. And [BET] Jazz is that. Jazz is not a black-oriented network. Of course, a lot of the great jazz musicians are African-Americans, but Jazz is probably the broadest network that we have.

And we worried about putting BET on Jazz — the brand — would signal that it was targeted to African-Americans. And I think we've gone beyond that, but it's a conversation we have a lot.

Sometimes our brand is more successful than we think it is, or than we want it to be. We don't want it to be exclusionary, but we want it to signify that what we focus on and what we concentrate on is the African-American community.