Content

Broadcasters in Black

2/13/2012 12:01 AM Eastern

African-American viewers recently
had a chance to relive soul singer Al
Green’s 1972 performance from the culture defining dance and music show Soul Train,
part of a hastily developed, seven-hour
marathon of the series in tribute to the
show’s producer and creator Don Cornelius.
He had died three days earlier.

In years past, viewers could only turn on
the cable box, to BET or sister network Centric, to see
Green sing such classic hits as “Let’s Stay Together,”
which was famously crooned by President Obama last
month at a Harlem fund-raising event.

Cover_Story_Image_02/13/12But the aforementioned Soul Train marathon could be
seen with a pair of digital rabbit ears courtesy of Bounce
TV, one of several African-American-targeted networks
launching in the broadcast-television space.

REAL ESTATE AVAILABLE

With a plethora of bandwidth due to the expansion of broadcast
diginets, network executives say over-the-air multicasting
is providing greater opportunities for niche services to
gain distribution and reach their target audiences.

National broadcast networks like Bounce TV and
Kin TV, as well as regional broadcast services such as
The Soul of the South, are betting that gaining carriage
on digital channels in markets with large African-
American populations will prove to be a better business
proposition than waiting for distribution on channellocked
cable lineups.

And if those broadcast channels were must-carry
channels, then such start-up networks could effectively
compete with cable networks like BET or TV One for
African-American eyeballs and advertising dollars. The
FCC so far has declined to extend must-carry beyond a station’s primary digital channel.

“If they can get [must-carry] distribution on cable systems, it’s a pretty brilliant stroke
of strategy to target that bandwidth on the digital spectrum and program that way,” Bob
Reid, president of the Africa Channel, an independently owned cable network, said. “With
eight, 10 or 20 cities, you can reach a majority of [African-American] viewers.”

Chip Harwood, president of distribution consultant Princeton Media Group, which is
working with The Soul of the South, said most multicast pacts are straight barter deals
in which the network puts its programming on the channel and the station typically gets
some six to eight minutes per hour of local ad avails. The network sells the national time.

“Think of it as almost 24-hour syndication. [The stations] can either sell the time, or
return it back to us and we’ll sell it and do a revenue share with them,” Harwood said.

In other situations, Harwood said, the network enters into a lease management agreement
in which they purchase the station outright and handle all ad-sales efforts. “Soul of
the South will own about 13 of our own stations at launch,” he said.

The newcomer entertainment outlets are hoping to take advantage of the new
broadcast-TV shelf space made available with the shift to digital transmission, which
provided stations the spectrum to air multiple channels through the same bandwidth
that previously carried just one analog signal.

These new diginets are new breeding ground for upstart networks looking to get on
the air quickly.

There is an upside for broadcasters, too, as they fight in Washington, D.C., for continued
access to broadcast spectrum in the face of the push for wireless broadband (see
Rules).

At a press conference at National Association of Broadcasters
headquarters last November, launching a new
effort by stations to protect their spectrum turf, NAB president
Gordon Smith said broadcast-spectrum reclamation
could be a threat to the multicast channels that are the
best way to get diverse content to minority populations
that are disproportionately over-the-air viewers.

HOME FOR DIVERSITY

Andrew Young, a Bounce TV co-founder and former legislator,
Atlanta mayor and U.S. ambassador to the United Nations,
was prominently featured at the Washington press
event, pitching multicast as a way to get diverse voices on
the airwaves and attract advertisers who might not be able
to afford larger networks.

While that broadcast spectrum has become available,
cable-system lineups have tightened. Operators have focused
on products with higher margins than video — such
as broadband and phone service, mobile video extensions
and HDTV — leaving little bandwidth for the launch of new
cable networks, and particulary niche-targeted, independent
outlets.

Comcast’s pledge to launch two African-American
owned-and-operated networks over the next two years
on its cable systems — one of which reportedly may be a
music service created by hip-hop mogul P. Diddy — per its
NBCUniversal merger promise represents one of the few
planned launches of such networks so far in 2012.

“We feel like we can better serve a grossly underserved
audience specifically by going with a free, over the air
service,” Ryan Glover, president of Atlanta-based network
Bounce TV, said.

His network targets 25-to-54-year-old African-American
viewers mostly with acquired off -network series like 1970s
animated series Fat Albert and the Cosby Kids and off -syndication reality series Judge Hatchett,
along with well-known movie titles such as Shaft, The Wiz, Lady Sings the Blues and Let’s
Do It Again
.

Bounce launched in October and has multicast carriage deals with stations representing
53% of the country — and, crucially, reaching 72% of African American households.

Glover said multicasting allowed the network to launch quickly and at far less cost
than the typical cable network.

Without having to worry about creating original programming early in the startup
phase — a requirement necessary for most new cable networks to gain distribution at
launch — the network, backed by civil rights leaders Martin Luther King III and Andrew
Young, was able to effectively finance the channel’s launch.

“What we launched our network with was a fraction of the cost that Oprah [Winfrey]
launched OWN [with],” he said. As of December 2011, Winfrey’s partner Discovery Communications
said it had spent $254 million on OWN.

“The startup costs, the acquisition fees and the original programming slate that you
eventually have to delve into for cable drives your expenses up,” Glover said.

Most cable networks, however, enjoy a revenue generating advantage over broadcasters
through its double revenue stream of advertising revenue and operator subscriber fees.

Multicast or must-carry broadcast networks typically only have advertising revenue
to fall back on.

Glover said that has already drawn inaugural blue-chip advertisers in car makers Toyota,
Ford and General Motors, but admits that it will need to increase its footprint to further
expand its advertiser opportunities.

“Our advertiser demand has been high and we look to
grow our general market partnerships in a very robust way
in the very near future,” he said.

Little Rock, Ark.-based Soul of the South hopes to build
both national and local ad sales revenue streams with a
more regional-focused distribution strategy.

The network, which expects to launch this spring, will
targeted Southern cities east of the Mississippi River,
where approximately 62% of the U.S. African-American
population resides.

“We can do that on 50 channels to get our whole footprint.
And there are hundreds of channels within that
footprint, so we don’t have to get every station,” Edwin
Avent, chairman and CEO of the network, said.

It will offer targeted, as-yet-announced off-network
series and movies. “We expect to launch with 25 of those
stations and by the end of the year
we’ll get to 50 stations.”

While the entertainment-based
outlet wouldn’t reveal its full station
lineup, the service will launch
via broadcast stations in Atlanta
(WSKC), Chicago (WOCK), Memphis,
Tenn., (WDXT) and Tallahassee, Fla.,
(WFXU) that have must-carry status
on cable systems in those respective
markets.

Avent said the network will offer
five hours of local news per week, tailored
to each market, giving the network
local advertising opportunities.

“With the Soul of the South model,
the network is counting
on national advertising as
well as local advertisers,
Avent said. “In some of the
instances, the local channels
that we will broadcast
on will sell their own advertising
and, in other instances,
we will control the local
advertising revenue and all
of the inventory in that local
market.

“We see ourselves more
as an NBC or a CBS in that
we have the network, but
we have the ability to offer local origination
programming through news that relates to the
viewers.”

FILLING A NICHE VOID

For African-Americans who don’t subscribe to
cable and can’t watch BET or TV One, broadcast
networks like Kin TV fill a void for targeted content,
according to Lee Gaither, president and CEO
of the Los Angeles-based programmer.

“A lot of folks depend on local news and
broadcast television to get their content, and the
notion of providing a broader base of content for
those audiences to draw from and not pay for expensive
cable bill to know what’s going on in the
world is a notion who’s time has come,” he said.

Kin TV will focus on lifestyle programming for 25-to-54-
year-old African-Americans, although Gaither would not
disclose specific content or distribution deals.

“We’re much more in line to be HGTV, Food [Network]
and Travel Channel for African-Americans,” he said.

Bill Carroll, vice president and director of programming
for Katz Television Media Group, said the startup broadcast
networks have a chance to succeed if they remain true
to their mission of serving a niche audience.

“Certainly in markets that have a significant African-
American population, it would make sense,” he said. “It’s a
good strategy both in terms of where the opportunities are
and where they’re likely to get the coverage, making it easier
than trying to get a significant channel position on cable.
They don’t need coverage in 100% of the country, they
just need to have substantial coverage in the markets that
make up the majority of the black audience in the U.S.”

For operators targeting African-American viewers, Carroll
added, the upstart broadcast networks could provide
a more efficient outlet for hyper-targeting than nationally-
distributed cable networks like BET and TV One, particularly
if they gain cable distribution
on must-carry channels that have to be
carried by pay TV providers.

Africa Channel’s Reid worries that
cable operators who have to carry
these channels may elect to drop independent
African-American channels
like the seven-year-old Africa
Channel, which offers entertainment
programming and news from the African
continent. The independent network
has secured carriage in about 10
million homes, notably securing deals
with major MSOs Time Warner Cable,
Comcast and Cox Communications.

MUST-CARRY SQUEEZE

“There’s room for them in the marketplace,
but my concerns and fears
for a network like the Africa Channel
is that cable systems who are in
individual markets required to carry
these stations — and they have to
eventually pay [retransmission] fees
to them — will have less licensing
fees available for national cable networks
like the Africa Channel,” he
said. “That would be unfortunate if
that were to occur.”

Soul of the South’s Avent believes
that niche broadcast networks could
ultimately reach their target viewers
with or without cable distribution as more if more viewers
cut the cable cord in a still-struggling economy.

“Our research shows that there’s a significant portion
of our target market that gets over-the-air television, and
with a digital antenna in some markets you can get up to
30 to 40 free over-the-air channels. Those are viewers that
[African-American cable networks] will never get.”


John Eggerton contributed to this story.

MULTICAST UNIVERSE

• There are 4,552 channels being broadcast from
1,726
full-power digital TV stations, up from 2,518 a
year ago (an increase of 2,034).

• Those channels include multicast programmers,
HD streams and mobile TV.

• More than 600 TV stations are carrying multicast
network programming.

• Multicast programmers include Antenna TV,
Bounce TV, Live Well, This TV, Me-TV, The Cool
TV
and The Country Network.

• Spanish-language digital TV channel availability
over-the-air has nearly doubled year-over-year to 216
multicast channels and 10 live mobile TV channels.

• Digital-TV players include Hispanic broadcasters
Azteca America, Latinoamérica Televisión,
Estrella TV, Telemundo, Telefutura
and Univision.

• The multicast pioneer was NBC Weather Plus,
which aired from November 2004 to December 2008.

SOURCES: SNL Kagan, NAB.org, Broadcasting & Cable

September