New Urban-Oriented Net Has Uphill Battle

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Just as several women's networks are in the works to
target that underserved audience, a cable channel aimed at African-Americans is staking
out Black Entertainment Television's turf.

Space Station TeleVision -- an African-American-owned
company that includes entertainment entrepreneur Quincy Jones as a principal -- plans to
launch a network later this year that will target the urban market. It will offer
entertainment and lifestyle programming with crossover appeal to white audiences,
officials said last week.

The planned network -- New Urban Entertainment TV, or
NUE-TV -- already has a deal to be carried on AT&T Broadband & Internet
Services' (formerly Tele-Communications Inc.) Headend in the Sky, according to SSTV
executives. They insisted that the time is right for another black-oriented programming
service.

Nonetheless, NUE-TV will face a tough road trying to line
up distribution, advertising and black-oriented programming, industry sources predicted.

At this point, NUE-TV has no MSO backing, which should make
getting carriage a tough proposition. And it faces an entrenched competitor in BET -- the
dominant network for blacks, with 56 million subscribers -- which is owned by Robert
Johnson and Liberty Media Group.

NUE-TV faces another big hurdle: It must raise $150 million
to operate over the next three years, although it only needs a fraction of that sum to
launch in the fall.

SSTV officials would only say that they are in
"advanced discussions" with a major entertainment-industry player about
financing. NUE-TV doesn't have any carriage deals yet with cable operators or
direct-broadcast satellite providers.

Chevy Chase, Md.-based SSTV has two cable and DBS veterans
behind it. SSTV founder and chairman Dennis Brownlee was an early partner in U.S.
Satellite Broadcasting, and SSTV president Robert Townsend is the ex-president of Bell
Atlantic Corp.'s "Stargazer" video-on-demand initiative and a veteran of
New York Times Cable and Home Shopping Network. Jones is expected to play a large role in
developing NUE-TV.

As a basic ad-supported network, NUE-TV is looking for
digital and analog carriage. It expects to be up on a satellite with a partial schedule in
the third quarter, with a full-fledged launch in the first quarter of next year.

Brownlee said the network will offer entertainment
programming focusing on African-American creative expression, but he also expects its
lineup to appeal to a broader audience than just blacks or urbanites, cutting across color
lines.

"African-American style leads the trends in music and
fashion," Brownlee said.

New Urban Entertainment -- which SSTV created in 1997 with
sports superagent David Falk -- also holds an equity interest in NUE-TV, and it will
supply programming to the network.

Operators are waiting to hear more details on NUE-TV's
programming plans.

"Just like there's room for more children's,
women's and news channels, there's room for more than one for African Americans
-- certainly for one with quality programming," said Patty McCaskill, vice president
of programming for Charter Communications.

Brownlee and Townsend maintained that they are not trying
to compete with BET, which they said emphasizes music videos and targets a younger
audience. NUE-TV's demographic will be 18- to 49-year-olds, they added.

"African-Americans will be at the core of our
market," Brownlee said. "We see a large segment of the market that's
underserved here ... But our target is much broader."

Several premium services -- such as BET Movies/Starz!3 and
digital music-video channels from The Box Music Network and MTV Networks -- cater to
blacks and the urban market. And in May, Home Box Office will debut a multiplex called HBO
Zone, targeted to a young, multiethnic audience.

HITS' transponder 8 is filled with urban-oriented
services, such as The Box Urban, The Box Edge, BET on Jazz and BET Movies/Starz!3. But BET
is really the only basic network targeting blacks, and it sees NUE-TV as a potential
rival.

"I think of any new channel, black or white, as
competition to us, whether it's urban or another Discovery [Communications Inc.]
channel," said Curtis Symonds, BET's executive vice president of affiliate
marketing and sales.

He predicted that NUE-TV will face an uphill battle on
several levels, from securing distribution to finding black-oriented programming.

"It will be tough to get an operator to add one more
African-American channel on a system," Symonds said. "Many operators will say
that they've already got BET."

He also pointed out that there isn't much
black-oriented programming available, and that the market is very competitive now that
United Paramount Network, The WB Television Network and Turner Broadcasting System Inc.
are looking for shows for black viewers.

"They are swooping up programming that targets this
audience," he said.

During the past several years, some would-be challengers to
BET, such as World African Network, failed to get off the ground.

Touting their network's appeal and odds, Brownlee and
Townsend pointed out that African-Americans represent a lucrative audience for marketers.

While African-Americans represent only 12 percent of U.S.
households, they watch 50 percent more TV per week, per household; they spend almost $3
billion per year on cable TV; and they represent about 25 percent of premium-cable
subscriptions.

Yet even with all of that buying power, blacks still have
only one basic-cable network.

"The answer to that is the undervaluing of the

African-American consumer," said Nina Henderson, vice president of BET Movies.
"For example, black urban radio has always been undervalued. The same dynamic was
carried through to cable."

Added Symonds, "We struggle with 56 million homes. We don't get the value [the
cost-per thousand households for ads] that we deserve."

Basic networks need advertising support, and
decision-makers are only now starting to value blacks and their buying clout, according to
Henderson.

"As that is better understood, you'll see more
competition [against BET]," she added. "Now a value is being placed on those
eyeballs. You can say the same thing about women's channels."

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