News

MBC, Urban Net Snag AT&T Deals

11/07/1999 7:00 PM Eastern

Making good on former CEO Leo J. Hindery Jr.'s
promise, AT&T Broadband & Internet Services gave carriage deals to two start-up
African-American-targeted networks last week.

Meanwhile, Black Entertainment Television's proposal
for a new basic service for AT&T Broadband and other cable outlets remains on the
table.

Both Major Broadcasting Corp. Network, a family-values and
lifestyle network backed by heavyweight boxer Evander Holyfield and entertainer Marlon
Jackson; and New Urban Entertainment Television (NUE-TV), owned by Space Station
TeleVision, whose principals include Quincy Jones, signed affiliation agreements with
AT&T Broadband.

Those two African-American-owned networks threaten to be
the first serious competition on BET's patch, and the AT&T Broadband deals give
them both a nice boost for openers.

But BET officials were undaunted, saying that their
proposed family-oriented service, dubbed "BET2," is alive and still being
discussed with AT&T Broadband and other MSOs.

Last week's affiliation agreements permit analog and
digital carriage for the two services. AT&T Broadband executive vice president of
programming Madison Bond said a decision hadn't been made on what portions of the
rollouts will be analog or digital.

But Bond did point out, "AT&T is fundamentally a
digital company going forward."

The two carriage deals don't guarantee any specific
number of AT&T Broadband subscribers to either MBC Network or NUE-TV, according to
Bond. But he said his MSO made a firm corporate commitment, and it plans to support
diversity in its programming -- an effort that started with the creation of a
Hispanic-programming tier.

"As a company, we are committed to diversity of voices
on cable," Bond said. "We do intend to work toward expanding our distribution of
African-American programming … This is really a continuation of something we have
been doing for a while. It's going to be a long haul."

Hindery had promised to add at least one African-American
network to AT&T Broadband's lineup and to commit the MSO's resources and
clout to that service. AT&T Broadband's actions last week showed it is following
through on that plan.

"We looked at a number of different African-American
services," Bond said. "We looked at who is behind these networks and the
programming that they can deliver."

MBC, based in Atlanta, has access to $200 million from its
principals, including Holyfield.

"This agreement sends a clear message to the industry
at large that AT&T is making good on its commitment to promote ethnic
programming," MBC CEO Alvin James said. "We are very excited to be involved in
offering programming that is family-friendly. We also feel that we have crossover
appeal."

MBC, which started out offering programming via backyard
dishes in November 1998, also has a carriage deal with Comcast Corp., according to James.
The first MBC Comcast rollouts will take place in Detroit and Mobile, Ala., he said. MBC
also just closed a deal with the National Cable Television Cooperative, he added.

Chevy Chase, Md.-based NUE-TV plans to launch in mid-2000,
according to SSTV president Bob Townsend. The network plans to target African Americans,
but to also appeal to a broader urban audience, with general-entertainment and
public-affairs programming. Its goal is to reach a mix of 40 percent original programming.

NUE-TV already has a carriage deal with Headend in the Sky,
AT&T Broadband's digital platform.

Townsend said he sees MBC as more of a regional service.
NUE-TV plans to mix general entertainment along with information programming.

"We plan to offer news and information," he said.
"We are working with a major news service to put it together. It will be one of our
signature program types."

NUE-TV also plans to acquire African-American-targeted
off-network shows that are not in syndication now, Townsend said. And NUE-TV, unlike BET,
won't air paid programming, he added.

In terms of financing, Townsend claimed that NUE-TV is
"in position to raise $200 million -- a mix of debt and equity."

BET also submitted a proposal to AT&T Broadband for its
second basic service. Bond said AT&T Broadband is still in discussions with BET about
that proposed network. But it remains to be seen if AT&T Broadband decides to add a
third new African-American network.

BET Holdings Inc. chairman Robert Johnson has said that he
will only launch BET2 if the cable industry embraces it with financial support or big
subscriber commitments.

BET executive vice president of affiliate marketing and
sales Curtis Symonds said the BET2 proposal is still on the table with major MSOs, and not
only AT&T Broadband. "It's still in discussion," he added.

Symonds said, "We submitted a proposal for BET2 to
AT&T. We talked with them. We were told they were going to select one
[African-American service]. Now they have decided."

Liberty Media Group owns a large stake in BET, which
reaches just over 58 million homes.

Symonds noted that MBC's and NUE-TV's carriage
deals with AT&T Broadband are merely "an open license" to get distribution,
since there are no set subscriber commitments.

He believes "the door is still open" for AT&T
Broadband to do a deal with BET2. And since the MSO has picked two African-American
services so far, but it hasn't given them subscriber commitments, he thinks AT&T
Broadband "just made it open hunting season" for the new networks, and
they'll have to fight it out for distribution.

Madison Avenue was eager to see what MBC and NUE-TV will
have to offer.

'The ultimate decision is in the hands of the
consumer," said Doug Alligood, senior vice president of special markets for BBDO.
"The black population is diversified, and it doesn't all like the same thing.
But the offerings have been very limited. We welcome additions to the landscape, but
they've got to perform."

September