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Passing the BET Baton

4/10/2005 8:00 PM Eastern

After 25 years of relentlessly promoting and building up Black Entertainment Television's operations, the company's founder and CEO Robert Johnson will be leaving the company to pursue new entrepreneurial ventures at the end of the year. Johnson and president and chief operating officer Debra Lee sat down with Multichannel News and Broadcasting & Cable to discuss BET's future. An edited transcript follows:

MCN: When you leave BET, how do you see the division's future?

ROBERT JOHNSON: When I leave at the first of 2006, I know for a fact that BET will be in great hands, because Debra Lee will become the CEO, and because she have all the authority to make BET the preeminent media company targeting African-Americans in the U.S.

She has the background — she's been with the company almost 20 years and has held a number of key positions on the way to becoming CEO. She has exhibited tremendous leadership running BET, and she has the full confidence of the Viacom [Inc.] leadership: [chairman] Sumner Redstone, [president and co-COO] Tom Freston and [president and co-COO] Les Moonves.

On the Viacom side, when we sold BET to Viacom, Sumner Redstone assured me and Debra that BET would maintain its independent voice and direction in serving African-American viewers and in meeting the needs of our cable affiliates and advertisers. He's kept that promise and at the same time has given us the full support of all the Viacom assets to help us continue our preeminence as an African-American media company. So, walking out the door, I couldn't be happier about the future of BET.

MCN: You've said BET will remain an independent company. But how important has Viacom support been?

DEBRA LEE: The best part of being part of the Viacom family is that they understand brands. On the cable and broadcast side, they have very distinct brands, and they let executives run those divisions according to the brand strategy. That was one of the reasons we felt comfortable selling the company.

Having said that, they've made all the resources, information and research we need available to us, and we've done several different deals between various divisions. We have a deal with CBS News to help us produce BET Nightly News. We've bought programming from Paramount that appeals to our audience. We are in discussions on an ongoing basis about things we can do together. It has given us access to a lot of information and resources that we didn't have as an independent company.

MCN: You've been making some changes to your programming strategies?

JOHNSON: As Debra said, the future for us is creating content that the 18-to-34 African-American demo wants to see. We've already seen how successful that can be with our 106 & Park, which is the highest-rated music video entertainment show among any audience, and our BET Awards is the highest-rated award show targeting African-Americans. We are looking at other formats, including reality shows, we want to strengthen our position in comedy.

Debra is also looking for a senior programming executive with deep connections to the Hollywood creative community. Instead of producing shows in-house, we are looking for the best and brightest people in Hollywood who can produce shows in a way that is economically viable for BET.

MCN: BET was a pioneer in convincing advertisers to target African-American audiences and consumers. Yet, some would argue this is still a relatively underdeveloped area. What are you doing to further develop your advertising revenues?

JOHNSON: As a company, we have been growing our advertising sales at 15% or more over the last 10 to 15 years. So advertisers realize that BET is one of the most effective ways to target African-American consumers.

One of the reasons Viacom wanted to acquire BET was because they recognized that the fast-growing African-American consumer market is still somewhat underserved in terms of programming content. That means there is an upside in the potential advertising spending targeting that market.

While we recognize that there are competitors coming into that market, we have already faced competitors — whether it is Fox or UPN. We aren't concerned about the competition, because we think there is just so much upside for BET. We think we will continue to deliver Viacom the kind of margin performance they expected when they acquired BET. From a margin standpoint, we are one of the most effective business brands in Viacom.

MCN: Over the years, you have complained that BET's affiliate fees are far lower than other networks'.

JOHNSON: I've said all along that BET affiliate fees should be higher. We've been in this industry for 25 years. We started when most other programmers started, yet BET's fees are lower. For the most part, the industry has failed to appreciate the attractiveness of the African-American and urban consumer. African-Americans are heavy users of cable. The penetration of basic cable is higher among African-Americans than it is the white community. The penetration in pay TV [among African-Americans] is almost double what it is in the white community. [The take up of] pay-per-view events, boxing and the like, is always going to be higher among African-Americans and Hispanics.

African-Americans are a very loyal, very valuable customer base. We think that programmers who program to that audience ought to be supported and rewarded for delivering that valuable customer base.

We now have the support and clout of Viacom's affiliate arm to help us do that. But it's still an educational process. Operators need to realize that more and more cable customers are going to be minorities. If you are going to sell to that market you have to have programming that is appealing to them, and you have to have executives who reflect that community.

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