Breakthrough for black network

BET challenger raising $100M from AOL, Radio One CEO

After four years of scrounging, startup black network New Urban Entertainment is in the final stages of negotiations to secure solid financial backing from the likes of AOL Time Warner and the CEO of black-owned radio group Radio One, enough cash to fund a challenge to Black Entertainment Television (BET).

According to industry executives, the new investors are close to putting $100 million into the company's NUE-TV channel, which has been on the air since last summer with ultra-thin distribution and even thinner programming. Those expected to come up with cash include AOL Time Warner; Radio One CEO Alfred Liggins, whose company has already put $2.5 million into NUE; Prudential Insurance's investment arm; and a fund controlled by investment banker Goldman Sachs & Co.

The backing would be enough to give NUE-TV the financial cushion to be taken seriously by programming suppliers and cable operators and to carry the operation for two or three years. It would not, however, be enough for the network to pay operators significant launch fees for quick and widespread distribution.

But carriage may come from AOL Time Warner. The executives said that COO Bob Pittman is particularly keen on investing in NUE—partly to earn political capital for backing a network serving minorities, partly because of the huge $2.9 billion valuation Viacom put on BET when buying that network last year.

Since AOL took over Time Warner Cable, the MSO is suddenly granting cable networks unusually wide rollout commitments, recently providing carriage to Oxygen and WE: Women's Entertainment.

Dennis Brownlee, chairman of NUE-TV parent Space Station TeleVision, would not comment on the negotiations, other than to acknowledge that the valuation of BET at 22 to 25 times cash flow hasn't hurt his effort.

He thinks BET will continue to skew toward teens, both black and white, and he wants to target older audiences with black-oriented programming. With its heavy schedule of rap videos, "audiences over 25 don't even register in viewing patterns of BET," he said. "There's an opportunity for another alternative."

NUE-TV is in a hurry. The company has burned through much of the $14 million it has raised since 1997 from the likes of sports agent David Falk, ex-AT&T Broadband and GlobalCenter President Leo Hindery, and music producer Quincy Jones. The network is running just six hours of programming, cycling it four times a day. A daily newscast has been shelved, and the company has laid off an undisclosed number of its 60 employees.

NUE-TV (pronounced "New TV") is carried primarily on digital cable to 500,000 cable subscribers in markets with a sizable black population, including part of AT&T's Atlanta operation and AOL Time Warner in Jackson, Miss., and Bakersfield, Calif.