Minorities Seek Broader Cable Ownership Plans

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Washington -- Just two months after cable launched a plan
to boost employment diversity, critics say the industry still is not doing enough to help
minorities purchase their own cable systems. Ownership, they say, is the only way
underrepresented groups can truly "get in the game."

Hoping to generate diversity within industry ranks, the
National Cable Television Association launched in September an Internet job bank called
Cable Careers Network. The move is part of a larger public-relations effort to attract
employees regardless of their race, gender, sexual orientation, age or disability.

But some cable insiders say diversity is best achieved by
focusing on minority ownership of cable systems, not employment.

"Jobs are good, don't get me wrong," said
Debra Lee, president and chief operating officer of BET Holdings Inc., parent of the Black
Entertainment Television network. "But it is really about ownership and equity …
That is the way you really create jobs and create wealth."

Few minorities occupy high-end positions in the industry,
according to Lee. "There are all kinds of other parts of this business other than
just being a programmer or an operator," she said.

Lee praised a recent effort by the National Association of
Broadcasters to create an investment fund for minority telecommunications projects.

The NAB Minority Investment Fund hopes to raise $1 billion
in equity capital for investments in media and communications projects headed by women and
minorities.

"I would rather cable focus on something like [a
minority investment fund] as opposed to jobs," Lee said.

The fund, which has assembled broadcast investors from
competing groups, including CBS Corp., Clear Channel Communications, Granite Broadcasting
Corp. and Fox Entertainment Group, was designed to give minorities and women a place at
the negotiating table.

"The (reason) we have not figured out a way to get
more minorities in ownership had everything to do with deal flow and … having people
sit at the table and know when the deals were going to be done," CBS president Mel
Karmazin said at a broadcasters' event held earlier this month.

Karmazin said the project could be both socially
responsible and fiscally rewarding.

Fund managers added that minority-oriented investment
projects have proven to be profit-worthy.

"(Minority companies) are in fact garnering above
average returns for their shareholders because people have come to the conclusion that
minority listening audiences … are very loyal listeners and that's what
advertisers want," said Reg Hollinger, an investment banker at Chase Manhattan Corp.

So far only broadcasters have made investment commitments
to the fund, but Hollinger said investment capital would not be limited to broadcast
projects. Minority entrepreneurs in cable are welcome to apply, he said.

But Robert Johnson, chairman of BET Holdings Inc., said
even if minority cable and broadcast ventures have access to equity capital, they will
still be more risky investments than competitive deals on the market.

"If you're looking for a return on your
investment … I don't see how you get it by going into a high-risk venture
assuming that the higher-risk venture is unproven management, limited experience and
limited access to capital in case something goes wrong," Johnson said.

Johnson said efforts such as the broadcast fund would not
be successful unless they were accompanied by government assistance to offset the risk
involved in launching minority ventures.

"It has to be coupled with a government subsidy, and
that's the tax certificate," said Johnson, referring to a measure introduced by
Sen. John McCain (R-Ariz.) that provides tax incentives to media owners who sell to
minorities and women. "Without the tax certificate, I don't see these funds as
being really viable."

Johnson also said it would be more difficult to bring
minorities into the cable industry than the broadcast industry because of the financial
barriers to entry.

Cable television systems require more capital to maintain
and operate than broadcast systems, Johnson said. And since local governments must approve
sales of cable franchise systems, buying costs can be high, he added.

Johnson suggested that inducements also be granted to
offset the costs of "flipping," or selling a cable franchise.

The NCTA said it has no comment on the NAB fund, or the
possibility of a similar effort in the cable industry.

Comcast spokesman Joe Waz said cable's new job-bank
effort should not be dismissed. "It's a significant initiative," Waz said.

Barbara York, vice president of industry affairs at the
NCTA said the job-bank site receives more than 2,500 visitors on the World Wide Web, and
lists more than 800 jobs.

"It's more than just a job bank," said York,
who said the Web site provides links to trade associations, program networks and both
trade and consumer press. "It's a telecommunity." MCN

States News Service.

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