BET expands into pay-per-view.

With the recent acquisition of a pay-per-view movie channel, Black Entertainment Television Holdings (BET) CEO Robert L. Johnson is steadily developing his $61-million cable franchise into a multimedia company with broad interests.

In June, Johnson announced a letter of intent to acquire an 80% stake in the Santa Monica, Calif.-based Action Pay Per View. The two-year-old, 24-hour satellite-deivered movie channel is available in 5 million homes, including the service area of Denver-based Mile-Hi Cablevision, a system Johnson purchased last September for $100 million. BET, which ranks No. 17 on the BE INDUSTRIAL/SERVICE 100, broadcasts cable offering to 35.8 million homes. Johnson would not disclose the terms of the deal, but at press time, he said the agreement would be finalized by mid-July.

Johnson says the acquisition allows his company to reach three primary goals: to increase distribution in urban locations; to enhance ad sales through cross-channel promotions; and to create the first vehicle to distribute films targeted to black audiences. He also says the service, renamed BET Action Theatre, places him in a market exhibiting strong growth.

"This gets us into a part of the industry where revenues are not regulated by the FCC," says Johnson. "It also allows us to create a studio...It will allow the black creative community to produce the kind of movies we want ot see, but Hollywood won't make."

Johnson says BET Action Theatre will not only make movies, but will also have its own built-in distribution network. The company's programming strategy involves shows created by BET airing exclusively on the pay channel, then being turned into videos for distribution in the United States and abroad. The movies will also be available for domestic syndication.

Lemuel Daniels, an associate director at Bear Stearns & Co. who follows BET, says this aggressive strategy is expected to add value to BET's stock price. A weak economy and new cable industry regulations have battered the stock--from a high of $26 per share in 1991, the stock plummeted to $12.50, and at press time, traded at $16.25.

Daniels notes that "in his last fiscal report, Johnson stated that he was three months ahead of schedule in adding 2 million more subscribers." He surmises the acquisition will offer an attractive market for advertisers, silence critics who say BET's programming is limited and place BET in a solid position to fend off potential challengers.