New black cable TV channel has a big ally

Radio One is helped by partner Comcast having 22 million viewers

January 19, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Music wizard Quincy Jones tried it. So did boxer Evander Holyfield and singer Marlon Jackson.

All found that running a successful cable channel aimed at black viewers takes a lot more than a high-profile name.

New Urban Entertainment Television, in which Jones was an investor, folded after nearly two years on the air. Holyfield and Jackson have expanded the MBC Network into 46 states but it still has a hard time persuading cable companies to carry it.

"The bottom line is, starting a network is an expensive proposition," said Michael Goodman, a senior analyst with the Yankee Group, a Boston market research company. "It's even more difficult to do when you're talking about a minority group."

Now Radio One Inc., the country's largest radio company serving black listeners, will try its hand at attracting viewers with plans to launch its own cable network.

Under the plan announced last week, the still-to-be-named cable network will target black viewers 25 to 54 years old and begin broadcasting at midyear.

The Lanham company hopes its well-heeled partner, Comcast Corp. and its millions of cable customers, will enable it to do what others haven't been able to: grab a substantial share of a market dominated by a single player, Black Entertainment Television, for more than 20 years.

There are 12.8 million black households with televisions in the United States - 9.8 million with cable or satellite service - according to Nielsen Media Research, which tracks television trends. The research company also found that blacks watch more television than any other group.

Radio One and Comcast executives say it is a market that has long been under-served. Many analysts agree that there's plenty of room for another station aimed at blacks.

"It would obviously be a competitor to any BET holdings, but there is still a significant part of the population it could reach," said David Joyce, a senior equity analyst with Guzman & Co. in Miami. "I think there's still room for more content for that demographic."

But so far, those who have tried haven't been able to match the success of BET.

Cable stations have become pickier about the stations they carry, making it more difficult for stations to survive. High start-up costs are an issue too. At least one cable station has gone out of business because it didn't raise enough capital.

"You've got to have deep pockets because you're going to eat it for the first couple of years," said Jason Maltby, who manages advertising accounts for MindShare, a firm that advises companies where to air commercials for their products.

New Urban Entertainment Television, started in 2000 by Dennis Brownwell with headquarters in Chevy Chase, shut down last year after it couldn't raise the $150 million needed to continue running the company. It had just under 3 million subscribers.

Atlanta-based MBC Network, started by Florida attorney Willie Gray with backing from Holyfield and Jackson, has had a slow start and reaches 20 million homes after three years in business. BET reaches more than 70 million.

Black channels also face stiff competition from mainstream stations and the major broadcasting networks because advertisers can use those to reach black viewers, analysts said.

"There is still a large segment of advertisers that consider that they're reaching black audiences through regular advertising," said Jack Myers, editor of the Jack Myers Report, a media industry publication. "It's expensive to develop a separate campaign."

Hispanic cable stations, on the other hand, have succeeded because they have a defined audience of Spanish speakers, many of whom can't be reached on English-language television. There are five major cable stations targeting Hispanic viewers.

BET succeeded because of founder Robert L. Johnson's connections in the cable industry and because of cheap programming - such as infomercials and music videos - that kept costs down, analysts said.

Johnson founded BET in 1980 with $480,000 in loans and the promise of a $250,000 to $500,000 investment from John Malone, the cable mogul who founded Tele-Communications Inc.

Johnson had a hard time persuading cable providers to carry his station at first. But soon, cable executives recognized that African-Americans were a new niche market.

"What sold BET in the early days was the uniqueness and the ever-growing value of the black audience," said Michael Lewellen, a spokesman for the company.

The company expanded during a time when cable was new and there was plenty of room for new channels. Now, there is a lot more competition for a slot on cable lineups. Some cable companies charge to air new channels.

"When BET started there was a hunger for content," said Vaughn P. Benjamin, president-elect of the National Association of Minority Media Executives. "Now I've got a satellite dish and 700 channels. Now I don't need your content."

"If you're a start-up, you better be able to pay someone until you get enough eyeballs and start to bring some money in," he said.

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