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BET Founder, Cable Spar Over New Net

1/02/2009 7:00 PM Eastern

Robert L. Johnson made a fortune in getting cable operators to pay to distribute his BET channel. Now, he wants to start a new broadcast-television network that he’ll give to cable operators for nothing. Only this time, cable isn’t buying.

Johnson, who sold BET Holdings to Viacom for $2.3 billion eight years ago, has entered into a partnership with Ion Media Networks to create a new network called Urban Television. Aimed at African-Americans viewers, the network has proposed not just a slate of entertainment shows, but also a range of public-interest programs on health, wellness and personal finance.

It’s how the deal is structured that has cable operators up in arms.

Ion will contribute spectrum from 42 stations to the venture, retaining a 49% minority interest. Johnson’s Urban Television, in majority control with a 51% stake, will use one of Ion’s digital subchannels to distribute the programming over the air. While it’s true that Urban Television would be free to cable, the problem for cable operators is that Johnson wants the Federal Communications Commission to force cable to carry Urban’s programming.

Under established law and FCC policy, TV stations are allowed to demand carriage of a single programming service. The Ion-Urban venture would double cable’s load, imposing a multicast must-carry burden that the FCC has refused to adopt in a fight that goes back at least a decade.

“The [FCC] has left no doubt that digital multicast must carry is not entitled to compulsory carriage on cable systems,” the National Cable & Telecommunications Association said in FCC comments filed on Dec. 29.

Johnson’s clash with cable is ironic. He was a lobbyist for NCTA before starting BET more than two decades ago. Over the years, BET has fought FCC largesse to TV stations in the form of expanded cable-carriage rights.

FCC chairman Kevin Martin proposed regulations similar to the Ion-Urban plan, but never put them up for a vote. Martin’s Media Bureau could issue a favorable ruling before Martin steps down near the Jan. 20 arrival of the Obama administration. A Media Bureau ruling can be appealed to the five FCC members.

When TV stations had only their analog channels, the FCC allowed two or more stations to program a single channel in a time-sharing arrangement that included must-carry rights. According to the NCTA, Ion and Urban are proposing to divide spectrum, not time, because their programming will air simultaneously, not sequentially.

“[The FCC] makes plain that the type of time-sharing contemplated by the rules is a division of time — the hours of operation — not a division of subchannels or 'streams’ which would be broadcast simultaneously by two or more licensees,” the NCTA said.

Civil-rights and minority-entrepreneur organizations — including the National Urban League and the Rainbow Push Coalition — hailed the Ion-Urban proposal. Among other things, they said it would vastly increase the number of TV stations owned by minorities.

“Only eight African-American stations remain among the nation’s over 1,700 full-power commercial-television stations,” the groups said. “Urban’s success with this pro-social business plan would be a First Amendment gift of major magnitude to the nation.”

At the urging of local TV stations, the FCC twice considered whether to adopt multicast must-carry rules. Both times, in 2001 and 2005, the agency said the law required carriage of a TV station’s primary video, with the word “primary” interpreted to mean just one programming service per station.

The Ion-Urban request, if successful, could produce the result the National Association of Broadcasters has been seeking since at least 1998.

“NAB strongly supports the Ion-Bob Johnson initiative. This is the type of free, innovative and niche programming that NAB has always believed should flourish in a digital multicast world, but which has been blocked for competitive reasons by the largest cable MSOs,” said NAB spokesman Dennis Wharton.

September