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 to fund a challenge to Black Entertainment Television.
Industry executives say 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 ante up 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 give NUE-TV enough financial cushion to be taken seriously by programming suppliers and cable operators and 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, widespread distribution.
But that could 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 granting Oxygen and WE: Women's Entertainment, carriage.
Dennis Brownlee, chiarman of NUE-TV parent Space Station TeleVision, would not comment on the negoations, other than to acknowledge that the valuation of BET at 22-25 times cash flow hasn't hurt his efforts in securing cash.
Brownlee thinks that Viacom will continue skew toward teens - both black and white. He wants to tarket 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," Browlee said. "There's an opportunity for another alternative."
NUE-TV is in a hurry. The company has pretty much burned through the $14 million is 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 programmer, repeated in a wheel four times a day. But a daily newscast has been shelved and the company has laid off an undisclosed number of its 60 employees.
- John Higgins