BET Is About To Get a Real RivalComcast, Radio One starting new cable net 1/19/2003 07:00:00 PM Eastern
Cable offers three women's channels, multiple Spanish-language networks and even a smattering of HGTV-type channels. Yet Viacom-owned BET has long been the main cable offering for African-Americans.
Not for long.
Comcast Corp., the country's largest MSO, and minority-owned radio programmer Radio One plan to launch their own cable channel for black adults in mid 2003.
"African-Americans are underserved in this space," said Alfred Liggins, CEO of radio group Radio One Inc. "They are the single largest minority group, and there's only one service for them."
The new, unnamed channel will be a mix of entertainment, news and sports-related programs for black adults 25 to 54 years old.
Liggins, who will be chairman of the new channel, says female viewers around 34 years old will be the demographic "sweet spot."
BET, which was founded in 1980 by Robert Johnson and sold to Viacom for $3 billion in 2000, draw a younger, 18- to 34-year-old audience and reaches about 75 million homes.
By aiming older, the new channel is hoping to flank BET, rather than directly compete. "The reality is," said Liggins, "the marketplace can support more than one good idea."
Merrill Lynch analyst Marc Nabi agrees. "Radio One's slightly different target will allow these two networks to coexist in a win-win situation of an underserved market."
Radio One, which owns 66 radio stations in 22 urban markets, hopes to use its radio group to drive the new channel. "Imagine if Lifetime had a network of female-oriented networks to cross-promote and sell," Liggins suggested.
Advertisers will likely welcome the new entry, said Starcom Entertainment's Associate Director Kathryn Thomas. "We've been hoping for this. Someone else is recognizing the importance of the audience and going to give the single other African-American–targeted outlet a run for its money."
The president and COO of that other network, BET's Debra Lee, seemed to shrug off the new entry last week. "The idea of launching another cable-channel option targeting African-Americans—or somehow competing with BET, for that matter—is not new," she said.
That's true. Several other cable ventures for African-Americans—most recently, NUE TV—have faltered.
For its part, BET is hoping to cozy up to the same thirtysomething women with its recent acquisitions of Showtime's drama Soul Food
and comedies The Parkers
and Girlfriends, which have aired on UPN. All three shows will be on BET by 2004.
Radio One and Comcast each expect to own up to 40% of the network. Over the next four years, Radio One will contribute around $70 million in cash and contribute radio-advertising time in exchange for additional equity. Comcast and other, unnamed partners will invest about $60 million. Typically, new cable networks need about $100 million in startup finances.
Comcast CEO Brian Roberts predicts that the network could be profitable within four years, sooner than other startups, which he said tend to break even at 20 million to 25 million subscribers.
Comcast counts about 21 million subscribers and operates in 21 of the top 25 markets, home to half the African-American population. At the end of 2002, Comcast counted about 32% digital penetration, or 6.7 million digital homes. However, it's not yet clear how many of Comcast's digital homes will receive the new channel.
As for programming, Liggins wouldn't reveal specific plans, but he did say some Radio One personalities, such as Steve Harvey, could appear on the new channel. Harvey just signed on with The WB to host a new variety show, but Liggins said that won't keep him from appearing on Radio One's cable network.
Soon, the companies will pick a management team to guide those decisions. One possible candidate could be former Discovery Networks U.S. President Johnathon Rodgers, who expressed a desire to work on a minority service when he left Discovery last year.
Liggins said Rodgers is "a good friend and we've discussed many things with him."