Radio One, Comcast plan cable network

Black-oriented format `very likely to succeed'

January 14, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

A venture announced yesterday between Lanham-based Radio One Inc. and Comcast Corp. to launch a cable network targeting black viewers will benefit both companies, industry experts said.

Comcast, the nation's largest cable provider, will be able to tap into Radio One's expertise in marketing to African-Americans.

Radio One, the nation's largest radio company directed to black listeners, gains a partner that has proved it can run successful cable stations, such as E! Entertainment Television and the Golf Channel, along with potential access to 21.4 million Comcast subscribers.

"I think the [cable network] is very likely to succeed," said Tim Wallace, an analyst with Banc of America Securities. "Radio One understands how to run in a very competitive market, and they know their audience. Comcast is getting what will be a very high-growth cable network targeting an audience that is under-served."

The yet-to-be-named station is expected to begin broadcasting at midyear and will feature news, opinion and sports-related programming targeting viewers 25 to 54 years old, the companies said in announcing the venture.

It will join at least two other networks serving a black audience, Washington-based Black Entertainment Television and Atlanta-based Major Broadcasting Cable Network. BET is considered the only viable one.

"For a very long time Radio One has believed that African-Americans are tremendously under-served in the television space," Radio One President and Chief Executive Officer Alfred C. Liggins III said.

"African-Americans are this country's single largest minority group and have had only one dedicated television channel serving their interest for more than 20 years. There are more African-Americans than Hispanics in the U.S., yet there are five credible Hispanic networks and over 20 digital start-ups serving Hispanics."

According to the 2002 Census, 36.4 million blacks or people of mixed race in the United States consider themselves black. The census reported 35.3 million Hispanics.

Under the deal, Radio One will make a $70 million cash investment over four years, and Comcast and at least three unnamed financial partners will invest an additional $60 million. The companies will each own 38.5 percent of the company. Scott Royster, Radio One chief financial officer, said the majority of its investment would be made in the first two years.

The network will operate separately from Radio One and Comcast and will have 50 to 75 employees. Liggins will be chairman of the network, and an independent management team will handle day-to-day operations.

Comcast Chief Executive Officer Brian Roberts said the companies had similar visions and noted that the two operate cable and radio stations in many of the same cities.

"The demographic overlap was spectacular as we laid the two companies side-by-side and looked at the ability to promote this new cable station," Roberts said.

Comcast controls 21 of the top 25 markets, where half of the nation's blacks live.

The network is starting while BET, which founder Robert L. Johnson sold to Viacom Inc. in 2001, is being criticized for focusing on profits rather than high-quality programming that goes beyond rap videos. Most recently, BET cut public affairs shows BET Tonight with Ed Gordon and Lead Story.

Liggins emphasized yesterday that he isn't starting the network to compete with BET and that its programming could complement that of the Washington network.

"We make a fairly good living off of rap and hip-hop ourselves," said Liggins, whose company operates 66 radio stations in 22 urban markets. "We just see this as a unique business opportunity and a right way to enter this market."

BET President and Chief Operating Officer Debra Lee said in a statement that the network would "continue to evolve our lineup to build on our current ratings success, and to continue further our distribution."

Industry experts said there is room, and a need, for both stations.

"The whole problem that has existed for too long is that there has been only one cable network targeting African-Americans," said Jim Winston, executive director of the National Association of Black Owned Broadcasters. "They just don't have enough distribution. If you look at BET, it has primarily been a channel that is skewed toward younger audiences.

"Even though they've made attempts to serve other audiences, it's not realistic on a single channel."

Liggins said he has been looking into starting a cable network for four years but couldn't find the right partner. Founded by Catherine L. Hughes in 1980 with one 1,000-watt station, the company has doubled in size since 1999 and, after purchasing more than 40 stations, was looking to diversify.

Analysts said the network will be the first aimed at blacks that has the backing of a major cable operator, bolstering its chances of succeeding.

"If it launches immediately on all Comcast systems, that already makes it bigger than a regular cable start-up network," said David Joyce, a senior equity analyst specializing in cable and media companies for Miami-based Guzman & Co.

Liggins said he'll also be able to market the network on his company's radio stations. He expects the 24-hour network to break even by the third or fourth year. "When we go to the advertisers, we can do a promotion that allows them to buy a radio and TV ad," he said. "We can cross-promote."

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