News

Backers Pony Up $35M for BET.com

8/15/1999 8:00 PM Eastern

New York -- Black Entertainment Television announced two
new initiatives last Wednesday that would extend its brand in both the cable-television
and Internet arenas.

In a deal touted by executives as the largest investment in
an African-American Internet venture, BET -- along with Microsoft Corp., Liberty Digital,
News Corp. and USA Networks Inc. -- will invest $35 million in a new Web site targeted
toward African-American audiences.

Meanwhile, the company also announced plans for its BET II
service, which will offer 90 percent original family programming and public-affairs shows.
But BET Holdings Inc. chairman and CEO Robert Johnson said the 24-hour network would only
launch if the industry embraces it either with financial support or significant subscriber
commitments.

BET will hold a majority interest in the new BET.com Web
site and run it from its offices in Washington, D.C., Johnson said. The remaining
companies will hold minority stakes, but actual percentages were not disclosed.

BET.com, which is expected to launch in November, will
feature a "broad array" of content covering topics relevant to African
Americans, including sections on news, entertainment, sports, education, finance, travel,
health, e-commerce, e-mail capabilities and other content-based services.

It will also offer online shopping with products and
services appealing to the African-American community.

Johnson said the site is an extension of Microsoft/BET
Web-site venture MSBET.com. That site's content, which is based more on BET's
programming information, will be folded into BET.com.

Company executives are banking that BET.com will help to
close the "digital divide" that exists due to the low rate of computer
penetration and Internet access in African-American households compared with whites and
other minority groups.

"There is no better company than BET to lead this
venture in creating the premiere online destination for the African-American community --
until now, a vastly underserved market," News Corp. president and chief operating
officer Peter Chernin said.

"This is both an economic opportunity and a social
opportunity that is vital to this country," Johnson added. "We are excited
because we believe African Americans are going to look to BET.com as their source of
information, entertainment, e-commerce, community and content to make sure that we are
competitive as a people in the 21st century."

BET is also attempting to stay competitive in the cable
arena with its proposed launch of BET II: The Black Family Channel.

The service, which could launch later this year, is the
company's response to recent calls from AT&T Broadband & Internet Services
president Leo J. Hindery Jr. for a family-values channel targeted to an
"underserved" African-American community

But while BET is prepared to launch the service, Johnson
said, BET II would have to garner support from operators before it gets off the ground.

While Johnson would not set specific guidelines for the
network's launch, he did say it would take a significant financial investment from
the industry or a major initial subscriber-launch figure -- somewhere in the neighborhood
of 20 million -- to make it viable for both BET and the industry.

BET Holdings currently has four African-American-targeted
networks -- BET, BET Movies/Starz!3, BET on Jazz and a digital gospel channel -- but only
BET has any significant distribution numbers.

"If the cable industry is saying, 'We want a
second [African-American] channel,' we're willing to respond and launch the
channel," Johnson said, "but we're not going to launch it unless the
industry puts up subscribers and/or a financial commitment."

The channel would compete against several other potential
African-American-targeted networks, including MBC Network -- led by African-American
celebrities such as heavyweight champion Evander Holyfield and former Major League
Baseball star Cecil Fielder -- for rare analog channel slots.

Hindery has said that he would commit AT&T
Broadband's resources and lobbying clout to a new African-American family-values
network. Sources said AT&T Broadband made an offer similar to one that it presented to
Oxygen -- 7 million subscribers by 2001 if the network lands other affiliates.

One top MSO executive said he would be interested in
looking at the new BET proposal, but he fell short of saying he would commit analog
subscribers to the venture.

Johnson said if a second channel is carried, it would make
sense for it to come from BET, which has an established presence in cable.

"We're the best qualified to launch the channel,
we have the infrastructure already in place, we have the support of civil-rights
organizations, we have the affiliate-marketing team, we have the advertising-sales team,
we have the ability to cross-promote and we have the capital," he added. "For
anyone else to go to another company on a risky venture like this doesn't make
sense."

The service is expected to feature African-American
children's news and information shows during weekday mornings, followed by topical
African-American news and entertainment for women and families.

Its weekend programming is expected to target students,
seniors and African-American men, although no shows have been officially announced.

Along with original programming, the network will include a
multilayer, community-based strategy that will encourage viewer interaction through
call-in shows and Internet tie-ins.

March