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New network for African Americans

/ Source: Business Week

Come January, 2004, Philadelphia-based Comcast and Lanham, Md.-based Radio One plan to launch TV One, a cable network focused almost exclusively on entertaining African Americans between 24 to 54. This is an older audience than the demographic targeted by Black Entertainment Television. But Johnathan Rodgers, who heads the TV One effort, insists the strategy will pay off soon enough.

Comcast (CMCSA) and Radio One (ROIA) have pledged to put $130 million behind TV One, along with Bear Stearns’ Constellation Ventures and other capital investors. Comcast is the nation’s largest cable provider, serving more than 21 million subscribers and operating in 21 of the 25 top markets, where half of America’s black audience resides.

Radio One is the nation’s largest urban radio network through its 66 stations nationwide. The new cable network will feature a mix of dramas, sitcoms, game shows, movies, news, and documentaries relating to African-American experiences and cultural tastes. As Rodgers puts it, “The mission of TV One is to be for African-American adults what Lifetime is for women.”


The 57-year-old Rodgers has plenty of experience for the task at hand. He has spent 20 years in a variety of executive positions at CBS and six years as president of Discovery Networks. Under his leadership, the Discovery Channel network grew from two channels with a value of $1 billion to a 14-channel, $20 billion division. He left in March, 2002, to work for Radio One CEO Alfred Liggins, his longtime friend and mentor. While Liggins put together the concept for TV One, Rodgers joined the endeavor in March, 2003. Rodgers also serves on the board of directors for Procter & Gamble.

Making TV One a success won’t be easy. Creating a cable network requires attracting investors, building a system of distributors, and developing programming — all at the same time. Rodgers’ goal is to simultaneously launch TV One in as many major cities as possible and sell the network to Comcast’s competitors — Cox and Time Warner Cable. He also understands that cable operators are quick to shun a network that can’t attract an audience, and he’s aware that good programming is expensive.

So how will Rodgers crack this nut? BusinessWeek Online contributing correspondent David Liss recently asked him to explain the intricacies of the African-American viewing market and how he’ll measure success. Edited excerpts from their conversation follow:

Q: Why build out another African-American cable network?

A: Creating and building TV One provides a channel that African-American adults know that they can go to 24/7. This opportunity does not exist today. African Americans love television. We spend about $3 billion a year on cable bills. In fact, the largest portion of the average African American’s entertainment dollar goes toward their cable bill. This indicates how important TV is to the typical African American.

If you look at HBO, blacks comprise 13 percent of the general U.S. population, yet comprise 20 percent of the HBO network’s subscribers. African Americans appreciate high-quality television. Yet, in the 50 years since television became a commercial force in this country, African-American adults have never had a destination point or a TV channel they can call their own.

Q: What about Black Entertainment Television?

A: It’s not a “BET or us” situation. BET is primarily oriented toward younger viewers. The average age of a BET viewer is 21. TV One is not intended to be a competitor to BET. Our desired demographic is the much older than the BET viewer.

Another way to look at it is to imagine that only one television network existed to reflect the culture, aspirations, history, politics, and entertainment preferences of the white audience and that this one network was MTV. While BET is a good network, it’s not for all African-American people.

There’s plenty on television for African Americans to watch. In general they watch about 20 hours more per week than non-African Americans. On average, African-American women watch even more, about 25 hours per week.

Weekly ratings show us that African Americans also watch TV differently than the general population. The top 20 African-American TV shows are different than the top 20 shows for the general population. Rarely do they have programs in common. There definitely are television shows for African Americans but no overall destination or home for African-American viewers.

Q: How will you generate profits?

A: This network will be profitable because there’s huge consumer demand. Last year, African Americans spent $631 billion on consumer goods, making them the 11th-largest consumer group in the world.

Our approach is to use a traditional business model, with low cost and high revenue. We’ll produce attractive programming economically and deliver to advertisers programming that they want — efficiently. We will have two revenue sources: advertising and subscriber revenue from cable-TV and satellite operators.

For the short term, our goal is to live up to the expectations of millions of African Americans out there who have been demanding a service like this. They’re expecting our programming to be excellent from day one. Our projection is that we’ll break even between the fourth and fifth year of operations, and we anticipate being profitable by our fifth year.

In addition, our long-term objective is to see how the channel can grow as part of the Radio One enterprise and help to grow Radio One Corp.

Q: What’s the biggest problem with how networks and corporations communicate news, information, and advertising to African Americans today?

A: Effectively reaching the African-American viewing audience requires more than just inserting African-American characters on a TV show. We will stay strictly and completely focused on this demographic category. What we hope to do is to create an environment by which corporations and advertisers can know exactly who they’re reaching and when they’re reaching them.

I also serve on the board of directors at Proctor & Gamble. This experience has enhanced my knowledge and understanding about creating the right marketing environment to reach African-American and Hispanic adults — the two largest areas of population growth in the country. We’ll be creating a look and feel that will make us a comfortable place for African-American viewers. Ads must be presented in an environment that reflects the tone and values of who we, as African Americans, are as a people.

Q: How about other corporations? What are the most important things that companies can do to communicate effectively with African-American viewers?

A: More consumer research needs to be done on the African-American community. You have to find out what people think and what their attitudes and preferences truly are.

Also, businesses need to understand that black people in America have a different perspective based on the fact that “all men are created equal” didn’t apply to us for a major portion of our country’s history. This comes from our experience as a people with everything from slavery to racial discrimination to everything else in society that has separated African Americans from the mainstream population.

Corporations must assign diversified workforces to design marketing campaigns targeted toward African Americans and other ethnic groups. General market approaches do not necessarily work with minority audiences.

Q: How about comparisons between TV One and other networks, such as Telefutura, Telemundo, Univision, and CBS?

A: The revenue structures between network television and cable television are different. Network-television broadcasters are focused on reaching as broad a swath of the American population as possible. If African Americans come into their flow, that’s fine. [In that sense] we hope to have the same entertainment values as CBS’s target audience.

One of the beauties of cable television is that it’s a focused, targeted medium. Nickelodeon goes after kids. ESPN goes after sports. TV One goes after African-American adults. Our programming fits in the cable spectrum.

Q: How will you be judged?

A: I will be judged like any other CEO — on my ability to accomplish the task. There was no time to stop and learn the job. I have learned about the needs and preferences of the African-American community over my entire life and how to program and run a TV channel from over 30 years experience in television and print journalism.

The two most important lessons I learned from my television experience is to build programming to attract an audience and to create an advertising environment that advertisers find the most beneficial. These are the two most critical objectives I bear in mind as I build everything else.