Tinged by recent industry criticism about its practices,
the Walter Kaitz Foundation may undergo a series of changes to more effectively place
minorities within the cable industry.

Some observers said the perceived problems with the
foundation -- including the function of its annual fund-raising dinner -- stemmed from a
lack of total commitment to the foundation by the industry.

"Unfortunately, some operators use Kaitz when it suits
their needs to make them look better. They don't integrate it into their corporate
strategy," said Tracy Jenkins, Fox Family Channel's director of affiliate sales
and relations for the Rocky Mountain region and a Kaitz fellow.

The foundation -- which was founded in 1983 to facilitate
the hiring of people of color into senior- and middle-management positions -- has come
under fire recently from several key industry executives for not doing enough to place
minorities within the industry.

Some cable executives are now questioning whether the Kaitz
Foundation is effectively allocating its $1.8 million yearly budget, mostly generated from
its annual fund-raising dinner. The foundation placed 30 fellows this year.

"They are looking at what they perceive to be a lot of
money without looking at what goes on behind-the-scenes and at the value that's being
added to the fellows through the program," said Paula Winn, president of the

So now, people are indeed asking: What does go on

"Everyone believes in the imperative of diversity, and
I am hopeful that this impacts future Kaitz placements," said Leo J. Hindery Jr.,
president and chief operating officer of Tele-Communications Inc.

Hindery aroused attendees at this year's Kaitz gala
with his stirring comments about affirmative action in the workplace. "Kaitz needs to
change in recognition of the enormity of the industry and the issue of diversity," he
said at the fund-raising dinner.

Even several of Kaitz's own board members have
expressed some concerns with the direction that the organization is headed in.

"I want [the Kaitz Foundation] to help us figure out
how we can make the experience great for both the companies and the fellows," said
Rich Cronin, president and CEO of Fox Family Channel Worldwide and new member of the Kaitz
board. "Some experiences are better than others. We should survey what's worked
and what hasn't."

Curtis Symonds, executive vice president of marketing and
affiliate sales for BET Holdings Inc. and another board member, said, "My major
concern is to find out what it will take for the industry to take the Kaitz Foundation
fellows to the next level."

Newly elected Kaitz board chairman John Hendricks, chairman
and CEO of Discovery Communications Inc., admitted that the foundation's efforts to
attract and place qualified minorities may need to be examined going forward.

Hendricks said that while the foundation does an excellent
job placing minority candidates in middle-management positions, there may be opportunities
for the organization to set recruitment efforts in three other areas: the CEO level, the
college-graduate level and even the high-school level.

"Maybe there are other ways to tackle the problem. Do
you start at the entry level, attack it before college and provide some sort of
sponsorship at the high-school level?" Hendricks asked.

"Maybe we need to do more influencing on the first
level so that we can move effectively through the rest of the levels. The first step,
however, is to admit that there is a problem," Hendricks added.

"This is a great time for us to look back, see what
we've done and make some decisions. We will continue to have regular reviews,"
Hendricks said.

For years, industry executives and observers have quietly
questioned the business procedures of the Kaitz Foundation. With more than $1 million
generated each year at the dinner, some executives have asked why the foundation is only
generating 30 fellows per year and what it is doing with the rest of the money.

The Kaitz Foundation, which is listed as a public charity,
is required by law to show its Internal Revenue Service 990 forms for the past three years
to anyone who asks. However, Multichannel News' requests to see the forms last
week -- made by phone to John Goddard, the foundation's treasurer -- were ignored, as
were requests to the foundation's offices in Oakland, Calif.

Hendricks said that of the $1.8 million raised by the
foundation each year -- about $1.7 million from the dinner and $100,000 from membership
fees -- about $400,000 goes toward the dinner expenses. After that, around $900,000 is
allotted for the recruitment of fellows -- some $25,000 per fellow, plus overhead

That $25,000 figure has come down over the years, according
to Doug McCormick, president and CEO of Lifetime Television, who has spent four years on
the foundation's board. "It used to be in excess of $30,000 per fellow," he

Hendricks also defended the $25,000 figure, saying that
companies would pay similar amounts to headhunters to hire middle-management employees
with starting salaries of $60,000 to $70,000 -- the average salary of a Kaitz fellow.

The remaining $500,000 is set aside for an endowment fund
that will be used for research and development of more effective ways to recruit qualified

One thing that Hendricks is looking to implement is a more
tech-savvy Web site to attract more potential fellows.

Another project that Hendricks mentioned is a thorough
survey of present and past fellows and their experiences within the industry. He admitted
that there have been mixed feelings from fellows about how they're perceived.

"There are some who feel that they didn't want to
be known as Kaitz fellows because the perception is that they didn't get their jobs
on their merits, but because they were somehow special," Hendricks said.
"There's also a question of just tracking where they are now, and if they moved
upward or outside of the industry."

However, some industry executives feel that the Kaitz
foundation is only part of the problem. Many pointed to the lack of total commitment to
diversity among MSOs and other companies within the industry.

While many companies make concerted efforts to recruit
minorities, several others still depend solely on the foundation.

"It's easier to say, 'There aren't
enough,' than to say, 'Let's bring more into the fold,'" Winn
said. "The onus of getting people in the program shouldn't solely be on the
shoulders of the Kaitz Foundation."

"The Kaitz Foundation is well-intentioned, but
there's not as much commitment from the top executives of the industry to make it
work," added Julian Thompkins, director of affiliate sales and marketing at Fox
Sports New York.