BUSINESS PLAN - BLACK TELEVISION NEWS …

1 BUSINESSPLANR evised January 2012 IntroductionThe mission of this innovative, life-changingnetwork is to provide intelligent programming that is informative, educational,entertaining, inspiring, andempowering for its African Americanaudience. BLACK TELEVISION News Channel s(BTNC) original programming targets a dynamic,high-growth, loyal consumer who finds himself,today, marginalized to soundbites concerningsports, crime or entertainment by the mainstreamnews media and is grossly underserved by cabletelevision s programming TELEVISION News ChannelExecutive Summary of BUSINESS Plan1 The development of BLACK TELEVISION NewsChannel s operational model and programmingconcepts began several years earlier, when aregional news channel partnered with an AfricanAmerican entertainment network to produce anightly one-hour newscast.

2 This pilot newscastwas delivered to more than 10 million cabletelevision homes during an 18-month trialperiod. Simultaneously, feature news-talk programs targetingAfrican Americans wereproduced anddistributed to approximately two million cable homes throughoutthe State of Florida. This multi-million dollar trialperiod not only enabled BTNC s management toevaluate the demand for its programming, but alsooffered an opportunity to create valuable newsgathering content partnerships. Likewise, thetrial period enabled BTNC s management to testnew IP video transmission platforms and forgestrong marketing and promotional alliances withinthe BLACK faith-based community, as well as withAfrican american BUSINESS leaders, entertainersand TELEVISION News Channel s experiencedmanagement team is led by former Watts, Jr.

3 Mr. Watts is a graduate of theUniversity of Oklahoma s College of Journalism, acelebrated athlete, an ordained minister, a populartelevision commentator and a successfulentrepreneur. Mr. Watts offers BTNC a lifetime ofexperience and relationships in BUSINESS , politicaland BLACK communities. Bob Brillante, co-manager, and Frank Watson, vice president/generalmanager, are in charge of BTNC s operations. is a 35-year cable TELEVISION veteran. In1998, Mr. Brillante founded Florida s NewsChannel (FNC), building the nation s first all-digital news gathering and TELEVISION productionfacility. FNC pioneered the use of high-techvirtual reality news environments and switchedbroadband video transmissions. Mr. Brillante screative use of content partnerships and high-techtelevision transmission and productiontechnologies propelled Florida s News Channel tothe forefront of the nation s regional newschannels.

4 Mr. Watson has 30 years of experiencein broadcast operations, and he has managedground-up projects involving leading edgetechnology in radio, TELEVISION and the promises attractive equity growth andstrong cash flow for its investors because of its (1)launch to more than 35 million TV households; (2)tested and proven programming models; (3) costsaving content partnerships; (4) operationalefficiencies and multiple revenue streams. BTNC will launch as a public interestchannel for a2temporary three-year period. At the beginning ofthe network s fourth year of operation, BTNC willconvert to a traditional for-profit commercialchannel. Once BTNC converts to a traditional full commercial channel, the network plans tocollect a $.14 per subscriber per month license of license fees will increase revenues bymore than $69 million annually.

5 Revenuesgenerated by BTNC s eMall merchandising service,mobile streaming, commercial production services,HDTV simulcast license fees, and video news andentertainment podcasts are not represented on theTen Years Source and Use of Fundsfinancialforecast. BTNC s healthy subscriber base androbust subscriber growth are at the foundation ofthe network s strong equity valuation. BTNC splan to launch as a public interest channel willprovide the network million satellite TVhomes at launch. In addition, BTNC s ability toreach the nation s African american householdsthrough its faith-based and historical blackcolleges marketing alliances promises strongsubscriber lift for its satellite distributionpartners, Dish Network and TELEVISION s multi-system operators (MSOs) such as Comcast andTime Warner Cable were enticed to providecarriage for BTNC s programming for two obviousreasons: (1) MSOs want to avoid the migration oftheir 17 million African american cable TVcustomers from terrestrial cable service to satelliteTV; and (2) MSOs are required to satisfy diversityand pro-competition legislative and regulatoryobligations.

6 This regulatory oversight has beenadapted to protect independent networks such asBTNC. The recent NBC/Universal acquisition byComcast Cable has focused the attention ofregulators and policy makers on the current dearthof cable programming options available to thenation s most veracious consumers of cable Equity GrowthDuring the past five years, the sale ofestablished cable TV networks has ranged in valuebetween $54 and $60 per subscriber. Using thisprice per subscriber benchmark, BTNC s valuationat launch will be an impressive $ to $ these numbers in mind, BTNC is seeking $15million for startup operating expenses; and anamount significant to cover operating cash flowchallenges during the Public Interestlaunch Year Sources & Uses of Funds ForecastUnlike the network soperational expenses that canbe controlled by anexperienced managementteam, enhancedunderwriting and advertising sales are greatlyinfluenced by external factors.

7 Therefore, BTNC srevenue forecast is based on the following fourconsiderations:1. Most newly launched networks tend to overestimate the market s response to its relativelyunproven product without a history of verifiableaudience The sale of BTNC s overnight time periodsto prepaid gospel programmers,inspirational TELEVISION ministries andcommercial programming brokersprovides a predictable revenuestream. Adult African Americansare an extremely attractive targetaudience for gospel andinspirational has already received anmulti-million dollar offer to3In 2010, national TV (network, cable, and syndicated)advertising dollars aimed at African american audiences wereprimarily dedicated to cable TV, which saw increases of 17%.Network and syndicated TV saw some advertising expenditures spent in African american media reached$ billion in 2010, increasing 3% versus : Nielsen Report, The State of the African- american Consumer, September 2011.

8 Refer to the Financial section of4purchase its overnight advertising Several marquee brand companies are expressinginterest in sponsoring programs on BTNC,including those companies that participated in thetrial period. This interest is The availability and growth of culturally-specificadvertising dollars targeting African Americansbetween the ages of 25 and 54 years of age, as wellas the absence of original TELEVISION programsserving this audience today, creates an attractiveenvironment for BTNC s market TELEVISION s MostValuable Customers Currently, African Americans spend nearly $5billion per year on subscription TELEVISION amount constitutes the majority of theAfrican american consumer s entertainment Americans are also the nation s fastestgrowing group of on-line service subscribers; thenumerical majority in the top markets for bundledservices; and, as a group, 28% of the nation spremium service subscribers to services such asHome Box Office and Showtime.

9 AfricanAmericans subscribe to these services at twice therate of any other group. It is not surprising, giventhis segment s heavy media usage, brand loyalty,and high discretionary spending, that culturally-specific advertising targeting African Americans isnow a $2 billion market a market that has tripledin the last 15 Americans are the heaviest and mostloyal TELEVISION viewers. Overall, AfricanAmericans watch 60 hours of TELEVISION per week,between 40% and 50% more than any other , African Americans watch 44% moread-supported TELEVISION , including 43% moredaytime TELEVISION and 63% more late nighttelevision. African Americans also watch 44%more ad-supported basic cable, 28% more cablenetwork news, and 7% more TELEVISION newsoverall. However, none of the currently availabletelevision news channels place among the top 20rated networks for African Americans.

10 In addition to watching more TELEVISION moreoften, African Americans have significantlydifferent viewing habits from any other Americans are less dependent on appointment viewing habits, according to a 2012 Nielsen Research Study. In other words, AfricanAmericans are a perfect fit for a 24-hour newsprogramming service because they tune inthroughout the day and evening rather than simplyduring certain regularly scheduled programhours. It seems that the African american communityis not only a highly valued audience for TELEVISION s advertisers, but also a highly interested to a study conducted among 4,000adults by Jack Myers MediaBusiness Report, African Americans, alongwith watching significantly more TELEVISION onaverage than any other group, are also significantlyless likely to skip through commercials andsignificantly more likely to stop and view televisioncommercials.