Q&A: BETs Johnson Raps AFTRA

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BET Holdings Inc. chairman Robert Johnson has been one of the most successful cable
entrepreneurs as his Black Entertainment Television cable network embarks on its 20th
anniversary. But recently, Johnson has been the focus of several biting articles that have
portrayed his business practices in an unflattering light.
Multichannel News editor
in chief Marianne Paskowski and senior editor R. Thomas Umstead sat down with Johnson to
address several issues, including his battle with the American Federation of Television
& Radio Artists, public criticism over BET's programming lineup and the role of the
network within the African-American community.

MCN: BET is headed into its 20th anniversary, and
anniversaries are usually times when people look back at the successes accomplished along
the way. Unfortunately, you and BET have hit a few bumps in the road. There have been
criticisms about how you've done business and how BET has developed over the past 20
years. My first question to you is: Looking at what you've done and looking at some of the
criticisms that have come about, are you concerned at all or worried at all about what's
happening with BET and its perceived image at this point?

RJ: Not at all, because I disagree with your
premise. BET has not come under criticism from our primary and major stakeholders -- the
cable operators. We're having probably one of the best years in the history of BET with
our advertising relationships, with our shareholders -- who are very happy with their
investment in BET -- with our employees and with our viewers.

To try to imply that because we have an antagonistic union
that's trying to enter into negotiations with us and our talent -- and we object to that
as a negative after 20 years -- is a false premise, and all of the other articles that
float from that are union-inspired.

MCN: A quote from you in The Washington Post stated
that while you're distributed in 50 million to 55 million homes, only 6 million view BET
regularly. Wouldn't you say there's room for improvement if that's the case?

RJ: That's a misinterpretation of the facts. The
fact is, we said we have 60 million cable households that receive BET. Of that number, 6
million are African-American households. That's what we were created to do -- to serve the
African-American cable subscriber -- and that's who we target. And that's who we sell off
of, and that's who we market ourselves to the cable industries on.

So when individuals say, 'BET is in 60 million homes. Ergo,
it should program like ESPN or like Lifetime [Television],' we don't program to that mass
audience. We program to a niche audience, and our economics are based on niche economics,
not off the 60 million universe.

MCN: How do you think your soon-to-be-competitors
are going to do? You have Major Broadcasting Corp. Network and New Urban Entertainment
Television (NUE-TV), and both have carriage commitments from AT&T Broadband &
Internet Services. Do you view them as competition, and do you welcome them?

RJ: No, I don't view them as competition. We have a
contract with AT&T to carry our core BET, and we have a commitment from them to carry
BET II: The [Black] Family Channel, should we choose to launch it.

I don't consider competition until it actually exists. An
idea on a piece of paper or a belief that someone is going to launch a channel as
competition -- that doesn't mean they're going to exist.

If there's going to be competition for BET, it's probably
going to come from us. We've already created four channels of competition for BET. We have
a jazz channel, we have a pay-per-view channel called Action Pay-Per-View, we've got a
movie channel called BET Movies, we've got a gospel channel called BET Gospel and we can
launch four BET digital-music channels tomorrow if we wanted to.

MCN: Well, I wouldn't call that competition -- I
would call it brand extension.

RJ: The point is, the viewer has to make a choice.
Do I watch BET or BET II?

MCN: You said you also have an agreement with
AT&T Broadband to launch BET II if you choose to. What are the dynamics that go along
in that decision?

RJ: It's the same dynamics that any programmer --
whether it's the new guys or us -- would have to deal with. If you going to come out with
so-called original programming, you have to have writers and producers to create the
content from whole cloth.

Right now, you have a different economic model that exists
today for most cable channels and certainly for most niche channels. So if you're going to
come with original programming, you've got to show me an economic model that works. You've
got to show me that you're going to spend for original programming, generate revenue from
cable operators on new channels that are not paying you for the channel and generate
revenue from the advertisers that won't even talk to you until you reach 25 million to 30
million homes.

From the standpoint of launching BET II, The [Black] Family
Channel, if we can, in working with the industry to solve that problem, then we'll launch
it. But without that economic model that we feel can be solved, I don't see how anybody
can make money creating all original programming with no fees from the cable operators and
no advertising.

MCN: Sure, the way it's going right now is that
they're looking for launch fees from you. Because of the new economic model, are you
asking for something like a 30 million-household guarantee?

RJ: I was asking for any number of models. I was
asking for a C-SPAN model, where the industry could turn the channel into a not-for-profit
service. If we made any money, we would rebate it back to the cable operators or continue
to invest in the programming, or we'd do a joint venture with them.

Or have cable operators and BET put up money, and if we
make money, we share it as a business.

Or a rebate model, where they would sign up to a point, and
if the business gets to a point where it's covering the cost, anything above cost coverage
and additional money from gross would be rebated back to the cable operators.

I'm not looking to make money off a BET II channel if the
cable operators feel that it's in their interest to do. I just haven't found any cable
operators willing to invest in any kind of contract.

MCN: Yet you have AT&T Broadband now already out
there. It already said it's going to provide an opportunity for these other two channels
to launch.

RJ: AT&T said they would give an opportunity for
us and those other channels to launch. An opportunity means, 'Show up and tell me why you
want to be carried.' It doesn't mean, 'I'm going to commit to carry you in X number of
analog channels, and I'm going to commit to a fee of 10 cents per subscriber, per month.'
It doesn't mean, 'I'm not going to ask you for launch support because I'm so committed to
this channel,' and it also doesn't mean, 'I'm going to turn to my advertising side and my
consumer retail side and say: Buy advertising on this channel that I'm launching.'

That's something the industry will have to demonstrate, and
I think the other guys will have to find out if the industry will provide them with an
economic model that works for original programming.

Nobody in the cable industry, other than the pay guys,
consistently does the type of original product you see on television: dramas and sitcoms.
That's basically the television model.

A typical Hollywood sitcom costs $850,000 [per episode].
Let's say a niche network like BET is able to really be aggressive and get into the
$600,000 range. Let's say we're going to do three pilots of 10 [episodes], which is a nice
little order for these things. So, $600,000, times 10, times three, is 30 times $600,000.
That's $18 million.

Now if one succeeds and the other two fail, you then have
to go ahead and produce another 20, so you have to put in another $12 million, and you
have to write off the two that failed. So you have to write off $12 million.

And then even if the one that's on the network succeeds
after three years, [but] you haven't recouped on the investment -- because nobody does
that in the first run -- where do you take a niche sitcom? You don't take it to NBC. You
don't take it to ABC. Cable sitcoms don't migrate up and, certainly, niche-target
African-American sitcoms don't migrate up. They migrate down. Where do they go?

MCN: Why does it have to be sitcoms? Why can't it be
something historical and educational?

RJ: Don't trip on me with this idea that we're
talking about educating the viewer. Look at the problem we had, and it goes back to the
article you guys took.

You guys took an insignificant comic-strip writer [The
Boondocks
cartoonist Aaron McGruder], because he was black, and said he is a viable
critique of a company. You let this guy raise himself to a level to where he can criticize
a company with over 500 employees who have credentials that read like a black 'Who's Who.'

The idea that somebody would suggest that this company with
African-American graduates of Harvard [University], Brown [University] and Yale
[University]; with master's degrees from every institution of prestige; board members like
Delano Lewis, who has just been nominated by President Clinton to be ambassador to South
Africa, [as well as] Denzel Washington and Herb Wilkins; that the foremost investors in
minority companies would lend themselves to an enterprise that was not serving the public
interest is both absurd and based on arrogance, stupidity and jealousy.

Now why a paper of your character would give somebody this
position to criticize, personally, me, and then all of the people who work at BET and
associate with BET, is beyond me.

MCN: Because you're in the cable industry, it was a
news item, and he is not your only critic.

RJ: He is the only critic. As I said, you cannot
name me a significant shareholder who has the rights to BET who has criticized BET. We are
getting the best ad revenue ever from our major advertisers. We are getting some of the
best ratings on our programs with our cable operators.

MCN: I can agree with you and everything you're
saying -- that your shareholders, your advertisers and your viewers are satisfied -- but
let's talk about the artistic community, the AFTRA members who were writing that letter to
you in Variety. Doesn't it bother you that they wrote what they did?

RJ: No, you're talking about a union. The cable
industry understands union. That's why the cable operators doesn't have any unions. So I'm
not going to go out front and say I'm going to lay down and have BET roll over on our
economic model for AFTRA. The cable industry doesn't do it.

If we needed AFTRA at our negotiations with comedians, we'd
bring them in, as we did with [BET] Live from LA, as we do with our
Arabesque movies. We don't need them in this, and to take from that [the fact] that
there's some criticism … they have a vested interest to try to get people to
criticize us just to see if they can force us to the negotiating table. I can tell you
right now, it ain't gonna happen, because there is no justification for it to happen.

As far as our entertainers and celebrities, believe me, as
we do more programming like Arabesque, we will have the same relationship with the
motion-picture actors and actresses and the people in front of the camera, behind the
camera and the film industry that we're having with the music-video industry.

When's the last time you heard Puffy [Combs] call up and
say, 'I want to criticize the so-called music videos on BET?' When's the last time Russell
Simmons or Lauryn Hill did that? They don't say it because they have a relationship with
BET; they're stakeholders. And when we build a relationship with our stakeholders, they
support us.

MCN: There has been some criticism toward BET
concerning the amount of music videos that you play and, consequently, the lack of
original programming. How do you respond to that?

RJ: As far as the music videos are concerned, music
will continue to be the anchor of BET because music is the anchor of African-American
culture. For BET, which positions itself as an African-American content provider, not to
bring music would be absolutely ridiculous. So we're going to stay in music.

Now sure, we'll get criticism from Julian Bond. Julian Bond
is a 60-year-old civil-rights leader. I'm not programming BET for Julian Bond: I'm
programming it for the people.

Now let me turn to this question of original programming. I
want to do it. To me, BET Tonight with Tavis Smiley, talking to people who would
never get on television, is original programming. Lead Story, where
African-American journalists, in a Meet the Press-kind of format, talk to
policymakers is original programming. It's not seen anyplace. Teen Summit --
there's no show in the entire cable-broadcast industry where African-American kids get in
a room and talk about issues. That's original programming.

So what do you want us to do? You want us to do drama? Tell
me somebody on the cable network that produces drama and makes money. Tell me somebody on
the network that produces dramas that make money.

MCN: I think the criticism comes from the fact that
there's a significant segment of the African-American community who you admitted you don't
necessarily target with your programming, who would like to see something else. And
unfortunately, because BET has been the only distributor of African-American programming,
it has been determined by outside observers that it falls upon you to be able to do that.

RJ: If you're saying that we cannot provide every
program that every African American wants to see, and they criticize us for the fact that
we can't provide every program that they want to see, that's a justifiable criticism. But
that's a criticism based on the fact that you cannot provide a show for over 6 million
African Americans and meet all of their tastes.

I can assure you that there are probably 10 million of them
who would love to see us do nothing but religious programs. There are another 10 million
who would love nothing but sports. So you have to do what you can, and you have do it
based on some economic reality.

If the cable industry said, 'We will help you produce
drama,' we would produce drama. If they say, 'We'll help you produce sitcoms,' we will
produce sitcoms. We're not afraid to do sitcoms or dramas, and we're not sitting around
hoarding cash, saying, 'We don't want to do them.'

The point of the fact is that I have investors like the
cable operators do. I'm not going to spend money on a noneconomic model because somebody
wants to see a drama. I can't afford a drama. But if I could, I have no problems with
drama.

In fact, we're doing dramas now with the Arabesque movies.
Those are original products created from our romance novels. But you know what? I can't
sell those movies to a network. What's the back end for a niche product that was
originally produced for a niche channel?

MCN: There are several Hispanic-oriented networks,
such as Telemundo, that have similar problems with advertisers, and they tend to sell
their original product internationally. Is that something you've considered?

RJ: You go to Africa and look at the per-capita
income, look at the telecommunications infrastructure, and -- other than South Africa and,
maybe, Ghana -- you tell me where I'm going to sell? Networks like Telemundo and Univision
can sell to Mexico, Central America, all of the Spanish-speaking countries in Latin
America and Spain.

MCN: So how do you grow BET? You're certainly
extending the brand.

RJ: I want to talk about BET. I don't want to go to
something else. This is a publication aimed at the cable operators, and I don't want to
get the cable operators thinking, 'You're going over here and talking about that.'

MCN: The reason we bring it up is because there are
cable operators we've talked to who are a little concerned about the fact that the money
they're paying to BET is now being used to fund these other ancillary business, as opposed
to being used to build up BET and its cable services. That becomes a cable-operator
problem.

RJ: Our point to the cable industry is that we are
putting into BET the kind of dollar investment in programming that the other cable
channels are doing. If you compare our percentage of investment in marketing and
programming with the other cable channels, we feel very comfortable that we're giving the
cable operators a good return on their investment.

But at the same time, I don't think we should be treated
any different than the other cable networks that are extending their brands into other
areas. And when we have delivered other BET programming brands to the industry, the
industry hasn't embraced them to the extent that they embraced some of the brands of the
other programmers. Look at BET on Jazz's distribution compared to [The] History [Channel].

So when the industry says BET is not giving back, we've
given back. Look at the distribution of the BET Movies channel, BET on Jazz, BET Gospel
and BET Action vis-à-vis the other spinoff programming channels. Look at ESPN2 versus BET
on Jazz. Look at the fact that the industry is carrying four news channels into 50 million
homes, but Jazz is struggling to get up to 5 million homes.

So the industry's got to be consistent when we deliver them
anchor brands that we feel serve the African-American community, but they don't get
carried. We'll deliver the industry any channel they want.

The point is, they've got to meet us the same way they meet
Discovery [Communications Inc.], the same way they meet ESPN, the same way they meet
Turner [Broadcasting System Inc.], the same way they meet Viacom [Inc.] with distribution.
Look at TV Land. It's a channel with all reruns. Original? It's all reruns. But look at
their distribution.

All I'm saying is, we have responded with investment in
programming, investment in channels, and then I look to the industry to respond with
distribution and financial support as they do for the peer-group companies that have been
around 20 years like BET.

MCN: The news channels are a byproduct of
retransmission-consent agreements if you look at how Fox News Channel and several of the
others launched.

RJ: And that's a good justification for it, but
that's not a reason to criticize BET. Plus,

The fact that our BET SoundStage club at [Walt] Disney
[World] is reaching more white customers than any BET product we have because it's on
Disney, that's an opportunity for the BET brand to cross over to another market. The same
thing with our restaurants, the same thing with the other things we're investing and the
same thing with our dot-com business. I think dot-com is going to be a tremendous tie-in
with our BET core channel.

MCN: You're still getting some criticism from
operators about the amount of infomercials. I think we even talked about this a couple of
years ago -- about getting rid of the infomercials and again adding more programming. Is
that still a possibility?

RJ: No, because I think the infomercial issue is not
an issue. I have a list here of people who are doing infomercials: USA [Network], [Sci Fi
Channel], Discovery [Channel], [The] Learning Channel, Comedy [Central], CNBC, Fox Family
[Channel], Court TV [Courtroom Television Network], TNN [The Nashville Network] and
Lifetime.

We don't do infomercials in primetime, or even beyond
primetime, when the core of our viewers are watching our programming, and neither do these
guys. They push them out to the out hours, where viewing is incontestably small. But they
do them because it's a source of additional advertising revenue.

We get the lowest advertising revenue of any cable company
that's 20 years old, so for us, infomercials have been a source of income, and it's not
different from many, many African-American businesses that rely on alternative sources of
revenue when they don't generate it from the mainstream source. So I don't think we're any
different than that, and we're certainly no different from these cable channels that I
named.

MCN: So do you believe that the criticism you're
receiving is unjustified in your mind?

RJ: It's absolutely unjustified because it's
motivated by a campaign by AFTRA to try to organize BET. I don't even know Jay Leno. Jay
Leno probably never watched BET, but he's an AFTRA dues-paying member, and I don't see any
black people on Leno doing comic stand-up at all, so, I dismiss anything that is inspired
by AFTRA completely.

So what upsets me is not what AFTRA's doing -- that's a
union, I understand what unions do. What upsets me most about this is that there is a
group -- a segment of the white, liberal media -- that's buying into this because in their
minds, they think BET should be educational TV. So they'll pick on our videos.

Paul Farhi of The Washington Post, to criticize our
videos, called Julian Bond. What the hell is Julian Bond gonna say? 'Oh, I love those sexy
women on there.' You know? He didn't call Russell Simmons. He didn't call Puffy Combs. He
didn't call Lauryn Hill. He didn't call Whitney Houston. He didn't call Mariah Carey.

If I were to change BET tomorrow to 'BET Educational TV,'
not a person would say anything except all of the bleeding-heart liberals that were
watching. Except nobody would watch it.

MCN: Is it then a matter of an ideal that some
people have of what BET should be, as opposed to what it is, based on a business that
you're running? I will tell you, Bob, in my circle of friends, 35-year-olds and up,
there's a large group of people who don't watch BET because it doesn't appeal to them.
Now, again, is that a factor of there being nothing you can do to reach that audience
because you cannot develop the programming that you need to reach an audience like that?

RJ: Let me tell you something: There's a large group
of rich people who never liked television. There's a large group of people who love books
and who never watch television.

All I know is this: Our goal is to serve the largest number
of African-American subscribers that we can. That's what the cable operators pay us to do.
And we feel that with our core commitment to music -- which is the defining culture of
African Americans -- that's what we're doing. That's our first goal: to serve that up the
largest audience. That's what we do.

Now, to program to specific age-group demos and everything
of what you might like or what I might like, we will do that insofar as we can do it
economically, and we feel that we do that with our movies and with our other programming
and songs.

But the thing that bugs me is some attitudes out there that
BET should be the most enlightening institution for black Americans in the world. But they
never define what enlightening is.

Now what's enlightening on the networks? UPN [United
Paramount Network] is killing everybody with [WWF] Smackdown. Do we grow up
to be who brings Smackdown on, or do we grow up to bring Sex in the City,
like HBO [Home Box Office]? Is that growing up? Or are we forever doomed to do Touched
by an Angel
, and that's all you can do because that's enlightening.

We'll continue to do different programming. Because we keep
looking for the center of the black viewing audience, we keep doing that. And we'll
continue to provide a good return to our shareholders. That's all I am required to do.

But if somebody expects me to all of a sudden wake up and
say, 'Let me go out and poll every black American demographic group and say: OK, now I'm
going to produce a show for you, you, you and you -- that's not going to happen.

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