Johnson, Liberty Raise Bid for BET Holdings


Black Entertainment Television founder Robert Johnson and
Liberty Media Group figure to step up investments in assorted start-up projects once they
close their deal to buy the 36 percent of BET Holdings Inc. that they don't already

Johnson and Liberty, which is Tele-Communications
Inc.'s programming subsidiary, cut a deal with BET's board of directors last
week after agreeing to raise their buyout offer to $63 per share from their earlier offer
of $48. Shareholders will vote on the deal this summer.

The $48 offer was rejected in January as too low by the
one-person special committee appointed to review the bid. The $63 offer was endorsed by
that committee, director Delano Lewis, and by the committee's advisers from Goldman
Sachs & Co.

The earlier offer, made in September, was also opposed by
many shareholders, some of whom expressed their disapproval by filing class-action
lawsuits. Leading institutional investor Mario Gabelli, whose funds controlled about 17
percent of BET stock as of Jan. 17, was quoted in published reports as being satisfied
with the offer. Johnson said he had spoken to some of the largest shareholders, and they
were "very satisfied."

The purchase price works out to about $518 million,
including payments for stock and options and $46 million for various other related costs,
according to a Securities and Exchange Commission filing. The buyers have arranged for a
syndicate led by The Bank of New York Co. to raise $600 million for the sale and related
expenses, including refinancing the BET network's existing credit line.

David Doft, an analyst who has long followed BET for Furman
Selz & Co., estimated that the deal was for 13 times the current year's cash
flow, which puts it at the bottom end of the scale of recent network sales.

But Johnson and Liberty already held 90 percent voting
power in the company, whereas other deals that went for higher multiples -- such as Fox
Kids Worldwide Inc.'s $1.9 billion acquisition of The Family Channel's parent,
International Family Entertainment Inc. -- were strategic acquisitions of scarce, widely
distributed cable networks. "I think that this price is very appropriate," Doft

Liberty CEO Robert Bennett said the deal was for a
"full, fair price," and the buyers will "make it work" at that price.
Johnson said he recognized that the price would have to be negotiated upward, and he and
Liberty have a longer-term view of when they will recoup the investment than a public
company might have.

Johnson and Bennett said the benefit of taking BET private
is the ability to make investments in start-ups, such as BET on Jazz: The Cable Jazz
Channel and B.E.T. Weekend magazine, without taking heat from stockholders about
their losses.

In an interview, Johnson said he has plans to invest in
some "major programming initiatives" at BET, and he said to look for
announcements on new digital channels at the National Show in Atlanta in May.

He said he'll be focused on building advertising
revenue at BET, adding, "With programming investments, sometimes you have to spend
money before you get that money back" from advertisers.

Johnson has also explored the possibility of partnering in
a new Las Vegas casino -- a deal that could cost BET up to $100 million, Doft said. He
said Johnson has lots of ideas about extending the BET brand -- known to some 90 percent
of African-American consumers -- into non-television-consumer markets. Most were bound to
lose money for at least a couple of years. "Shareholders were not so thrilled with
that," the analyst said.

One new investment, aimed at bolstering BET on Jazz's
programming and building advertiser support, was announced last week: Johnson said BET
Holdings has agreed to buy an 80 percent stake in Festival Productions Inc., which
produces the JVC Jazz Festivals. Financial terms weren't disclosed.

Johnson said Festival will generate concert programming,
solidify relationships between the network and jazz artists and provide signage
opportunities to advertisers. It should also help to "get fans energized" to
call cable operators and ask them to carry BET on Jazz. The network, launched two years
ago, has about 2 million subscribers in the United States and almost 1 million