Cashing in on a BET
The consolidation of TV networks continued at its brisk pace last week with the news that Viacom would be absorbing BET and its related cable-programming holdings for $2.9 billion. Both sides to the deal say that Bob Johnson and his management team will remain in place to run the operation under the Viacom flag. But don't count on that arrangement lasting too long. BET fits nicely into Viacom's MTV Networks, and we suspect that that's where it will eventually land. And with $1.4 billion worth of Viacom stock, Johnson should eventually land on the Viacom board, which could use an added dose of diversity.
Johnson has been fairly criticized over the past few years for programming BET on the cheap. Yes, the network could have been better. But it was always as good as it had to be, given the lack of competition. "Good as it had to be" is not a particularly high standard, but it prevails at a lot of businesses we know-media or otherwise. If not for Toyota, we might all be driving Pintos today.
Johnson's Viacom deal may be his smartest move yet. For the first time, serious competitors
emerged, enticed by BET's famously high operating margins. In response to that challenge, BET boosted its programming budget. But once a member of the Viacom family, it will have sufficient resources, promotional might and cable-operator leverage to fend off anybody. BET's African-American franchise, built over 20 years, is safe.
We suspect that Johnson is not done making his mark on American business. But this is a good time to congratulate him on his extraordinary success. As many an Internet entrepreneur has learned over the past six months, creating billions of dollars of wealth isn't so easy. It takes vision, intelligence, perseverance and salesmanship. Johnson has them all.