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NUE: Layoffs Don't Signal the End

Trying to stay afloat while seeking additional funding, New Urban
Entertainment laid off about one-half of its 50 employees. But executives
insisted that the channel wasn't close to going out of business.

A network spokesman confirmed several layoffs at the company but would not
give a specific head count. Sources close to the situation, however, said many
of the layoffs were in the company's production department.

The spokesman called the layoffs part of a 'strategic restructuring' that's
not uncommon for many upstart entertainment outfits. He said the network's
corporate and executive staff remained intact, including president Robert
Townsend and NUE-TV founder Dennis Brownlee.

The company was not in danger of folding, he emphasized. This could suggest
that the network is near to getting the cash it needs.

Sources close to the situation said AOL Time Warner Inc., which already has a
NUE-TV carriage deal, might be interested in buying a minority stake. That could
provide the company with much-needed funds and access to AOL Time Warner's vast
programming and movie library.

One of the network's current shareholders might look to kick in additional
funds to help NUE-TV reach its financial goals, sources added.

The urban-targeted network, which launched last summer, is seeking as much as
$100 million to remain on its projected business course. It plans to offer news,
public-affairs, movies and family oriented acquired and original entertainment
programming to minority viewers.

NUE's shareholders include music mogul Quincy Jones, veteran cable executive
Leo J. Hindery Jr., Hubbard Broadcasting Inc., SFX Entertainment Inc., Radio One
Inc. and Prudential Insurance Co. of America.

The network has reached significant distribution deals with AT&T
Broadband, Time Warner Cable and Cox Communications Inc. that could put it
before 13.5 million subscribers later this year.

But this past January, NUE-TV halted development of its original news and
special-feature programming. At the time, it called the move a 'hiatus.'

Townsend said in January that the network was in the midst of talks with
several potential investors interested in offering targeted programming to
minority audiences, but he did not name names.

The apparent value of urban-targeted shows got a boost in November when
Viacom Inc. agreed to pay $3 billion for Black Entertainment Television. Even
with Viacom's backing of BET, some industry observers believe minority viewers
-- particularly African-American viewers -- represent a lucrative, underserved

But the clock is ticking. Although a network spokesman said there was no
specific timetable in which a deal has to be made, industry observers believe
NUE-TV must move quickly if it is to compete with other start-up networks for
valuable analog and digital space.

NUE-TV is already fighting for space with Atlanta-based Major Broadcasting
Cable Network and BET. Two weeks ago, BET announced plans for a digital suite
consisting mostly of music-oriented services: BET on Jazz: The Jazz Channel, BET
International, BET Gospel, BET Classic Soul and BET Hip-Hop.

Other networks in the mix include Black Music Television Inc., The Word
Network and Urban Broadcasting Co.'s UBC-TV.