NEW YORK — Black viewers are the darlings of the cable industry these days, and they’re being romanced with a fervor unlike anything they’ve ever witnessed.
Two numbers have galvanized media observers: Black families pony up $2.7 billion a year to buy cable subscriptions, and they spend 74 hours a week in front of their TV sets, more than any other group in the U.S.
The enormous buying power of blacks caused Viacom to lay out $3 billion to buy BET in November 2000. BET now is benefiting from the resources of Viacom-owned CBS News for its nightly half-hour newscast and soon will be stripping TV series produced by its Paramount sibling such as “Soul Food,” “The Parkers” and “Girlfriends.”
But after chalking up huge profits and having its own way for more than 20 years as the sole 24-hour cable network targeted to blacks, BET is facing a heavyweight challenge from Comcast Corp., Radio One and Bear Stearns, who have joined forces to spend $130 million to launch TV One, a proposed cable network also aimed at black viewers. TV One’s goal is to begin operations in January.
There’s even a third black-oriented channel scratching for subscribers called the Major Broadcasting Cable Network. MBC, based in Atlanta, has managed to sign up only 10.5 million customers since it opened for business three years ago, but it made a splash at the National Cable Show in Chicago earlier this month when it trotted out Michael Jackson to hype the channel.
Jackson’s brother Marlon is an investor in MBC, along with boxing champ Evander Holyfield and Major League Baseball slugger Cecil Fielder.
TV One and MBC have charged onto the scene at least in part because “BET has sold the black community short on quality programming,” says Terry Denson, VP of programming for Insight Communications, a top-10 multisystem cable operator.
Denson says the newcomers “have looked at BET and concluded that if a black viewer is not interested in the latest hip-hop video, he’ll be eager to shift over to something else.”
BET, which runs plenty music-related programming, is one of the youngest-skewing networks. “The door is wide open for us to go after the underserved audience of 25- to 54-year-old African Americans,” says Johnathan Rodgers, prexy-CEO of TV One.
But Debra Lee, president and chief operating officer of BET, says the network is broadening its audience, not only with newscasts and the Paramount-produced comedies but with a nightly standup-comedy show, primetime movies like Spike Lee’s “Malcolm X” and special events such as the June 24 “Third Annual BET Awards.”
BET may be scheduling some high-visibility programming, but the network has the reputation of being one of the most frugal cablers in the business.
Lee confirms Kagan World Media figures that put BET’s 2003 programming budget at a close-fisted $62 million. But with “The Parkers” joining the network’s schedule in September, and “Soul Food” and “Girlfriends” on tap for fall 2004, Lee says BET’s program expenditures could jump to as high as $80 million in 2004.
BET has to pinch pennies, Lee says, because it pockets a relatively low subscriber fee of 15¢ a month from cable operators. (The going rate for a general-entertainment net ranges from 30¢ to 90¢ a month.) Lee’s other complaint is that BET still gets insufficient respect on Madison Avenue, which routinely pays less for a 30-second spot on BET than it does on any other mainstream cable net.
To lure more cable systems to sign up for the network, MBC is trying to corner the market on black sports. Mitchell says MBC cablecast 70 live games last year, mostly on the weekends, and will do even more this year.
MBC’s deals with the Central Intercollegiate Athletic Assn., the Mid-Eastern Athletic Conference, the Southern Intercollegiate Athletic Conference and the Southwestern Athletic Conference give it access to football, basketball and baseball games of black colleges like Grambling, Howard, Morehouse and Tuskegee.
MBC’s primetime schedule is a mix of movies, public affairs, sports talk, musicvideos, travel shows and health information.
MBC’s negative cash flow will run about $8 million in 2003, Mitchell says, adding that the network’s business plan calls for profitability in 2005. But that goal depends on more black families forking over extra dollars each month for a digital cable box to allow them to get MBC.
TV One’s Rodgers is aware of the fact that a digital-only biz plan will delay the net’s move from red ink to black. “We’re going after analog clearances in the big cities because 50% of all African Americans live in the top 20 urban markets in the U.S.,” he says.
Analog coverage would put the network in front of 98% of a cable system’s viewers. TV One chairman Alfred Liggins asks suggests cable systems in cities like Memphis and New Orleans, which are 40% black, should “want to give African-American subscribers a choice for more than just BET.”
With TV One emphasizing general entertainment, however, Denson says it could be a driver of the digital tier into black households that have resisted coughing up the extra monthly fee.
Actor-producer Tim Reid (“Frank’s Place”), who owns a studio complex in Virginia called New Millennium, will run programming for TV One. Reid says Comcast engineered the link with Liggins when Reid tried to pitch Comcast on his own idea for a black-oriented cable network. Liggins’ Radio One, which operates 66 radio stations in 22 markets, will own 40% of TV One, matching Comcast’s 40%. Bear Stearns’ Constellation Ventures, run by Dennis Miller, a former top exec with Sony Pictures TV and Turner Broadcasting, will own most of the remaining equity.
Does the cable landscape have room for TV One and MBC? Mike Egan, a cable-TV consultant and principal in Renaissance Partners, says the two networks “may have found fertile ground because BET hasn’t made a great impact. BET hasn’t hit a programming homerun like ‘South Park’ that could put it on the map.
“If TV One and MBC create a niche and deliver the programming goods,” Egan says, “they’ll end up getting the carriage they need.”