Media giant Viacom Inc. Friday agreed to purchase BET
Holdings II Inc. in a stock deal valued at $3 billion.
The African-American entertainment conglomerate will be acquired via shares of
Viacom Class B common stock and the assumption of a $570 million debt.
The largest media and entertainment company geared to African Americans,
BET’s universe includes
BET.com, an online portal; programming interest in two XM Radio Satellite
program channels and BET Pictures II, a producer of movies and documentaries
that air on BET networks.
Also part of the transaction is Black Entertainment Television, which
reaches 62.4 million households in the U.S.; BET on Jazz: The Cable Jazz
Channel, a 24-hour network; BET International, a hybrid of BET and BET on
Jazz programming reaching 14 countries; and BET Books, a publisher of
African American-themed romance novels under the label of Arabesque Books.
The addition of BET’s media offerings is a significant milestone for
Viacom, according to Mel Karmazin, chief operating officer of Viacom.
“This is a major step forward in our strategy to expand in the
fastest-growing media industry segments and will immediately benefit
shareholders, as well as broaden our already formidable presence as the
largest national and local platform for advertisers,” he said.
“This is a strategically perfect fit,” he added. “We now have a major business targeting the African-American market, which is growing faster than the general population. African-American household income is growing faster, consumer spending is growing faster and the market consumes more media than the general market. Additionally, while ad spending in the general market is showing 6 to 7 percent growth, ad spending in the African-American segment is showing a growth of 15 percent.”
He noted that there is synergy between the two entities. “Viacom is home to the industry’s most creative and distinctive branded programming, the perfect environment for BET’s television and online
businesses to continue to grow and prosper,” he said. “For instance, we have 27 radio stations that target the African-American listener. We now have to ability to work closely with BET to promote and cross-sell our brands.
“Through the financial and
marketing support of the entire Viacom family, I expect BET continue to
build on its extraordinary legacy as a unique and independent programming
voice for the African-American community,” he said.
Robert L. Johnson, chairman and majority owner of BET Holdings and
founder of BET, will remain chairman and chief executive officer, reporting to Karmazin. Debra
Lee, BET president and COO will continue in that role following the
completion of the transaction, which is expected to occur early next year.
The union best services BET’s core audience, noted Johnson. “Combining
the assets of BET with the global resources and brands of Viacom will create
a platform that is even stronger and better positioned to deliver the wants
and needs of our audience,” he said. “We will continue to push programming
to new heights, expand our distribution globally and leverage the marketing
resources of the best advertising-driven media company in the world.”
By uniting BET and Viacom, the whole becomes greater than the sum of its parts, observed Michael Goodman, senior analysts at The Yankee Group. “BET has always been a solid company, but by joining with Viacom, which is massive, BET gains tremendous financial resources, flexibility and leverage in the cable/media field,” he said.
The merger will additionally help to bring more African Americans to the World Wide Web and narrow the Digital Divide, Goodman noted. “Viacomon has blended with the dominant supplier of African-American content, which is a powerful tool in cable, television, online and radio,” he said. “This will allow BET to expand its offerings and create new content that wil
l give African-American households more reasons to go online.”
BET will remain headquartered in Washington, D.C., with offices in New
York, Los Angeles, Chicago, and the United Kingdom.
Viacom’s brands include CBS, MTV, Nickelodeon, VH1, Paramount Pictures,
Infinity Broadcasting, UPN, TNN, CMT, Showtime, Blockbuster, and Simon &
Schuster.
