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A Rival for BET

A new channel is taking on BET, for 20-plus years the only major network targeting African-Africans, and it's coming well-armed. Launching Jan. 1, TV One boasts a healthy $130 million in startup funds, backing by media-industry heavyweights Radio One and Comcast, and former Discovery Networks U.S. chief Johnathan Rodgers at its head.

Executives from BET and TV One insist the market is big enough for both. Says Rodgers, "I am always disgusted by the concept that BET and us should be competitors."

If women have several dedicated channels—notably, Lifetime, Oxygen and WE: Women's Entertainment—surely black viewers deserve more than one, Rodgers likes to point out. Black viewers make up 12% of U.S. TV homes, according to Nielsen Media Research, watch more TV than non-blacks, and are heavy users of cable and pay TV. BET skews young, its 26.8 median age in prime one of the youngest on cable. There are still many older viewers, TV One says, clamoring for an alternative.

Now TV One needs to sell that pitch to operators.

BET counts 75 million subs on mostly analog distribution. To date, no other African-American network has been able to rival that mass. Major Broadcasting Cable Network (MBC), which launched in 1999 and focuses on news, sports and family fare, counts about 11 million digital subscribers. Defunct entertainment channel NUE-TV never amassed more than 1 million digital subs.

Some operators are skeptical of TV One's potential. Many MSOs are preoccupied with launching Hispanic cable networks, notes Samara Cummings, MBC's head of distribution. She recalls a recent conversation with one major MSO executive, who asked why carrying BET wasn't enough.

Cummings was baffled. "I said, 'Is MTV enough for all non–African-Americans?'"

Among cable nets, BET ranks as middling, averaging a 0.6 rating and about 550,000 viewers in prime time in August.

TV One is seeking a mix of carriage, analog in major markets and digital in secondary areas.

It's getting a head start, thanks to Comcast, the country's largest operator with more than 20 million subscribers. Distribution on Comcast systems could spur DBS competitors DirecTV and EchoStar Communications to add the channel to their lowest-price tier. That pressure could spill over to MSOs in other areas.

Some basic carriage is crucial. It is hard to generate much in subscriber revenue off thin digital carriage. And many advertisers want to see a network in 30 million or 40 million homes before they'll commit serious dollars. That's one reason, industry executives note, many digital networks have trouble producing anything more than cheap, non-scripted originals.

So far, TV One has a corporate-level agreement with Comcast and is negotiating at the system level. It has yet to sign any other affiliates, but, according to Radio One Chairman and TV One Chairman Alfred Liggins, talks are progressing well.

"We haven't had anyone say, 'We don't need it,'" says Liggins, whose radio company has stations in 66 markets and 12.5 million listeners. "I have never had a meeting where they didn't feel the market was underserved."

Says DirecTV head of acquisitions Michael Thornton, "The market can absolutely sustain two networks if the second entry is a quality entry."

TV One executives insist they will deliver quality. Rodgers says his network will be a place where African-Americans can see themselves. For example, he sees TV One making shows like TLC's Baby Stories and Date Patrol that focus on African-Americans. "Black people, we have babies, get makeovers, go on dates, but we never chronicle that. This will be a chance."

TV One could play well with advertisers looking for a cheaper way to reach African-American adults, says media buyer Kris Magel, manager of national broadcast for Optimedia International. "For adult-oriented clients, BET becomes less of an option because of its 18-34 skew. There is a lot of product on broadcast networks, but it is very expensive."

But programming an African American channel comes with its challenges.

"The cost of entry [in this niche] is very high," explains BET President and COO Debra Lee. "There isn't a lot of African-American programming sitting on the shelf to buy, and it is expensive to make your own."

This is a dilemma that BET knows first-hand. Very few black dramas last long enough to go into syndication. Most, like CBS's acclaimed but short-lived City of Angels, burn out too soon. And the competition from other cable nets and station groups for sitcoms is fierce.

This fall, BET is adding three high-profile off-net shows from sister company Paramount to its regular schedule: sitcoms Girlfriends and The Parkers and Showtime drama Soul Food (which Rodgers admits he would love to have for TV One). The additions should help boost BET's prime time ratings.

Original programming can be even more difficult. Specials and awards shows like the BET Awards rate well and can be sold to advertisers at a premium. But putting on a scripted sitcom or drama—which can run up to $1 million an episode—is a much riskier play, with more money on the table and no guarantees of advertiser support.

To start, TV One's prime time plans call for one hour of sitcoms, one hour of original reality or variety shows, and one hour-long drama. Emmy-winning producer Tim Reid, with his New Millennium Studios, has signed on as senior executive supervising producer to make original movies and series, which are likely to include American Legacy, stories of influential African-Americans, and After the Glory, a look at American sports stars after they leave the limelight.

On the lighter side, lifestyle expert Barbara Smith's syndicated show B. Smith With Style will run in a second window on TV One. The net is also mining Radio One's pool of personalities to star in shows. Movie nights, awards shows and specials are on tap, but pricey original scripted fare is not, at least for now.

TV One's launch comes at a critical juncture for BET. The Viacom net is renegotiating most of its carriage deals, which expired this year. Lee says talks are progressing well, with BET looking to raise its subscriber fees, which run 14-16 per subscriber, by a few pennies. "Operators have asked us to improve our programming," she says, "and we have."

As for TV One, she says the channel should not impact BET's negotiations. "It will take a long time before they are situated to be a real competitor."