“Massive Ratings Don’t Always Translate into Big Profits.”

Programming a TV network is both art and science, and this CFO is happy to supply the science. An interview with Michael Pickrum, CFO of Black Entertainment Television LLC.

When it comes to financial executives getting involved in a company’s operations, Michael Pickrum has an enviable task: watching television. As CFO of Black Entertainment Television, a 30-year-old multimedia company owned by Viacom, Pickrum oversees the costs and revenue associated with programming two cable networks, BET and Centric, along with the company’s forays into online and mobile entertainment.

Trained as an electrical engineer, Pickrum headed up BET Interactive for several years before helping to fold it into the cable network operator and becoming CFO of that larger company in 2007. Since then, the network has become more “scientific” about how it creates and buys sitcoms, reality shows, and music programming, says the 40-year-old Pickrum. Part of many standard cable packages, BET has increased the number of homes it reaches by 8% since 2006; last year it boosted ratings by 17%. The network claims many popular African-American actors and musicians among its performers, including Mo’Nique, who recently won an Oscar for her role in the 2009 film Precious.

Your programming really covers the waterfront. How do you break it down?

We have three primary genres: original series, specials, and music programming. For original programs, one of the new ones, The Family Crews, starring Terry Crews, the dad from Everybody Hates Chris, is doing well. Then there are our specials, like the “BET Awards,” “Rip the Runway,” and “BET Honors.” I would argue that no one does awards shows better in the industry. Our “BET Awards” was the top-rated cable awards show for 2010. Then we have what we call the juggernaut, 106 & Park, the number-one daily music show in the cable business. And then there’s Mo’Nique, the talk show. We’ve done talk shows before, but we really got it right this time. The show was generating great ratings even before Mo’Nique’s recent ride through Hollywood.

Does “most popular” automatically translate into “most profitable”?

No, no, no! That’s the goal, but it doesn’t always happen that way. For example, there are some reality shows that are emotional and physical train wrecks, so you get massive ratings, but advertisers don’t want to be anywhere near them. To be fair, we’ve had our share, but now we’re really focusing on creating popular shows that are not necessarily salacious or over the top; [we want to] get great ratings and then monetize them.

Does Mo’Nique winning an Oscar have a big impact on your business?

Everything now gets more expensive for me. No, I’m just joking. Mo’Nique has a contract with us and she is honoring her contract. When her contract ends, of course, it will be a negotiation. And we will definitely try [to charge more for advertising during her show]. Whether that happens or not is another discussion.

What role does finance play in an entertainment medium that is largely built around ratings?

At the end of the day, programming a network, there’s some aspect of it being an art. But there are a lot of analytics and research you can do to inform that decision-making. Several years ago, for example, we took a very deep dive into research about our audience, to learn things like which celebrities we should use, and in what kind of format.

One of our successes involves the “BET Awards.” Our finance team, our programming team, and our marketing team looked at the ratings throughout the show to see how they built. We decoupled all the elements and delineated what we thought drove the ratings success. Then we restructured and refocused on what we thought drove ratings for our BET specials, and it came to fruition this year.

What’s your role in acquiring a new program or Web-based series?

As the CFO, I’ll be the first to say I try not to overpay. You start from the creative, aesthetic standpoint: Does the program make sense? Then you determine what rating you think it can generate. Based on that, you get a sense of how your ad sales team would be able to monetize that rating and what revenue can be generated. After that, it’s just a question of negotiating the price.

In terms of cost, how do sitcoms compare with reality shows or, say, a “Webisode”?

The short answer is “many millions of dollars.” If you think of it as a continuum, on the right-hand side you put “sitcom” and that’s multiple millions of dollars. I don’t want to discuss the details of our shows, but Star Trek, the Next Generation cost around a million dollars an episode, and that was years ago. In the middle is reality TV. And then on the far left would be Webisodes. Depending on how creative you are and what you’re doing, you might spend $100,000 to $200,000 for several episodes.

Has the election of Barack Obama been good for BET?

I think when you look at what we’ve accomplished it has more to do with [CEO] Debra Lee’s vision and leadership and our approach to how we manage our business. That being said, I think it’s fair to say that given what President Obama has accomplished, and given how he may have impacted society’s view on African-Americans and our audience, yes, I’m sure people may pay a little more attention. But the real indicator is, do people who tune in stay?

What impact has the recession had on BET? Has it been good in the sense that more people may stay home and watch TV for entertainment?

We didn’t have to do huge restructuring or, God forbid, go out of business. If anything, it was, “Let’s make sure we’re focused on the right priorities and making bets in the right places.” We’re in new media platforms and we’re trying to grow our business in other areas, but the key driver of our business is our network. If we’d had more resources we might have done some other things. But the reality was that we needed to, first, make sure the network was succeeding and generating the right ratings, and then, look at our other opportunities and make sure we made investments there. For example, we did a rebranding, or a relaunch, of our secondary network called Centric.

When Nielsen breaks out the top 10 shows among African-American audiences, the results are usually surprisingly generic — like American Idol, or sports events — and generally don’t include BET shows. Is cracking that list a goal for you?

Our audience is not monolithic; our audience likes the same things that other Americans like. For us, it’s not just shows, it’s about programming an entire network. You can cherry-pick a single show, but we’ve been the number-one network among black households for the last 6 to 10 years.

During what percentage of your workday is the TV on?

About 80% of the day, but often in the background. The other 20% is when I really have to focus on something.

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