A Network's Tactic
For Getting on Air:
Religious Channel Called In
Prominent Blacks for Help;
White Family Benefited
By PETER GRANT
Staff Reporter of THE WALL STREET JOURNAL
On a rainy morning in March 2002, three buses of African-American protesters emptied in front of the headquarters of Charter Communications Inc., a cable-TV operator, in suburban St. Louis. Soon a limousine pulled up, and the Rev. Al Sharpton stepped out to lead the demonstrators in chants of "No Justice, No Peace."
Within a few weeks, Charter met the protest organizers' main demand: that the company begin carrying the Word Network, a three-year-old cable and satellite channel whose programming consists mainly of African-American church services.
Thanks to such tactics, the Word Network has become one of the nation's top five religious networks, beamed by satellite or cable operators into 32 million households, mostly in the U.S., according to Word officials. Some of the country's most-prominent black leaders -- including the Rev. Jesse Jackson, Dick Gregory, Martin Luther King III and Johnnie Cochran Jr. -- have interceded on Word's behalf.
In return, many of the organizations run by the activists have received donations from backers of Word, according to Rev. Sharpton, Rev. Jackson and other participants. Rev. Sharpton and Rev. Jackson declined to say how much they've received. Others familiar with the matter say that their customary fee was about $10,000 plus expenses per event. "It is not unusual for people that we help to help the organization," Rev. Jackson says. "That does not affect our integrity at all. It's the way we survive."
But Word is an unusual cause for African-American activists. The network, a nonprofit organization, is controlled by Kevin Adell and his father, Frank Adell, members of a white Detroit-area family that made a fortune in the auto and broadcasting businesses. A substantial portion of the network's revenue, which was $7.6 million in the year that ended May 31, 2002, has gone to pay other Adell companies for rent, satellite transmission and other services, according to court documents reviewed by The Wall Street Journal.
Neither Kevin, 37 years old, nor Frank Adell, 75, who serve as president and chief executive of the Word Network, responded to repeated requests for an interview.
African-American leaders have been using confrontational tactics with U.S. businesses for more than 20 years to increase minority hiring, funnel business to black vendors and cease discriminatory practices. Facing boycotts, lawsuits and protests, numerous large corporations have made concessions, including Texaco Inc., Coca-Cola Co. and the Denny's restaurant chain. For black leaders, the tactics were justified to overcome years of racism.
In the case of Word, backers say playing hardball was necessary to make up for the television industry's history of discrimination and negative portrayal of blacks in programming. "We were not in the shakedown business," says Sam Riddle, one of the protest's lead organizers. "We were in the shakeup business."
The Adells also have a history of receiving the support of African-American activists for business and personal legal battles with a tenuous connection to Word. But in recent years, they have met increasing skepticism. Four black clergymen who were involved in the initial discussions about the Word Network sued the Adells shortly after Word was formed, charging that they were not given the ownership stakes and other participation they were promised. That case was settled out of court for undisclosed terms.
Meanwhile Kevin Adell's personal legal battles, such as an effort to force a homebuilder into involuntary bankruptcy, have caused other black leaders, including Rev. Sharpton, to distance themselves from the family. "Does Kevin pimp racism for his own personal ends?" asks Mr. Riddle. "It could certainly be perceived that way."
Building a Fortune
Frank Adell and his brothers, Robert and Marvin, built the family fortune in the 1960s and 1970s. Their company, Adell Industries Inc., made the stainless-steel moldings that fit over the edge of car doors, a feature that Robert patented. The brothers had a falling out in the late 1980s and eventually went to court over the breakup of the company. Today Marvin, 68, still runs the enterprise and says he doesn't speak to Frank anymore. (Robert is deceased.)
In the early 1980s, Frank Adell became interested in broadcasting and aligned himself with a group of prominent African-Americans in the Detroit area to bid on Channel 38, the last full-time commercial television license available in the region. The group, which formed Adell Broadcasting Corp., eventually included Horace Sheffield Jr., a prominent labor and civil-rights organizer, who died in 1995. His son, the Rev. Horace Sheffield III, is head of the Detroit chapter of Rev. Sharpton's National Action Network.
James Panagos, who was Adell Broadcasting's original programming manager, says the Federal Communications Commission granted Adell the license partly because its stockholders included minorities. An FCC spokeswoman says that the agency used to weigh minority ownership when making licensing decisions but stopped the practice more than 10 years ago in response to court challenges.
Adell Broadcasting tailored much of Channel 38's programming to the Detroit region's large African-American audience. The station began selling time to black ministers, charging about $500 to $600 per half hour, Mr. Panagos says. Infomercials were a staple of the station's schedule, he says.
In 1999, the Adells devised a plan for a national network focusing on gospel music and black church services. They organized a group of five African-American clergymen in the Detroit area to travel to El Segundo, Calif., to meet with executives of DirecTV, the country's largest satellite-television company. Rev. Jackson also attended the meeting, which was intended to persuade DirecTV to carry the new Word Network.
The day before they met with DirecTV, the clergymen asked for a stake in the new network at a meeting with the Adells, according to Denise Johnson, a broker of religious media who helped the Adells arrange the participation of the five clergymen. She says the Adells agreed to give each clergyman a 3% stake.
DirecTV executives agreed to carry Word partly because officials believed that the ministers were owners and active participants, according to people with knowledge of the situation. As the launch date approached in early 2000, however, four of the clergymen had a falling out with the Adells and eventually filed a lawsuit alleging that the Adells weren't honoring their commitments. (Bishop Charles Ellis III, the fifth clergyman, is the only African-American serving on Word's board, according to its most recent tax filing.)
In legal papers responding to the four ministers' lawsuit, the Adells denied that they had promised to make the ministers partners in Word.
Word's revenue comes primarily from the fees ministers pay to have their services carried, currently about $2,500 per half hour, according to Lewis Gibbs, the network's head of operations. The ministers typically earn a portion of that revenue back by using their programs to sell tapes, CDs and other material.
Much of Word's revenue is pumped back into other Adell companies. The Adells own Word's headquarters building in suburban Detroit. And in a 1999 document obtained by a division of Hughes Electronics Corp. in a separate Adell legal battle, Word agreed to pay an Adell entity called Satellite Television Network Inc. a fee equal to 95% of Word's net programming revenue or STN's costs, whichever is lower. The fee covers STN's legal fees, payments to contractors, supplies, and salaries and overhead expenses related to its transmission of Word's signal to DirecTV.
To sell time to ministers, the Word had to persuade other cable and satellite operators besides DirecTV to carry the network. It hired Betsy Kellman, a veteran cable executive, who began to pitch Word to the heads of programming of numerous operators. But heavy competition for available channels made Word a tough sell.
"When [Word] took a traditional approach, the result was zip," Mr. Riddle says. "When we started kicking down the door, carriage zoomed."
In the spring of 2000, Kevin Adell and Rev. Sharpton showed up unannounced at the headquarters of what was then AT&T Corp.'s cable operation. AT&T Broadband had been talking to Word about a possible deal, but nothing had been finalized.
Allan Singer, the No. 2 executive in charge of programming, ushered the two visitors into a conference room, and Rev. Sharpton soon began yelling at him, accusing the company of discrimination, according to someone familiar with the situation. Almost immediately after the meeting, AT&T Broadband agreed to carry Word. Rev. Sharpton says he doesn't recall the meeting. AT&T Broadband has since been sold to Comcast Corp., which declined to comment on the internal meetings of the prior owner.
At about that same time, Mr. Riddle says he began working on behalf of Word. Mr. Riddle, 57, has been a well-known activist since 1972, when he led a civil-rights demonstration that shut down a Big 10 basketball game between Michigan State University and the University of Iowa. "My history is one of confronting and then exacting concessions," he says.
Mr. Riddle, who lives in the Detroit area and makes his living as a political and media consultant, says he planned most of the demonstrations with Rev. Sheffield, keeping Kevin Adell apprised. When they targeted a cable or satellite company, they typically would first reach out to local civil-rights organizations to get them involved. In some cases, Mr. Riddle gathered protesters from homeless shelters, fed them breakfast and gave them about $50 each. "I like to refer to it as 'rent a demonstration,' " he says.
The pressure tactics wouldn't have been necessary if cable and satellite companies offered more positive programming about African-Americans, says Mr. Riddle, who argues that too many of the blacks seen on television are involved in sex, drugs or violence. "We gained carriage because we were right," he says.
Rev. Sharpton or other representatives of the National Action Network and its chapters attended protests at the headquarters of EchoStar Communications Corp., Charter, Mediacom Communications Corp., in Middletown, N.Y., and XM Satellite Radio, in Washington. Protesters called the homes of executives of Charter, EchoStar and Mediacom. A few also showed up at the home of EchoStar's chief executive, Charlie Ergen, and at a high-school basketball game in which his daughter was playing.
Rev. Sharpton, who is running for president, says his work for Word was limited to consulting and attending meetings with cable and satellite executives on the network's behalf. When he participated in demonstrations at cable and satellite companies, he says, it was only to protest hiring or other discriminatory practices. "It had nothing to do with whether they carried the Word," he says.
Mr. Riddle, who says he helped arrange for Rev. Sharpton to attend the protests and occasionally paid him, says the main purpose of the protests was to force the operator to carry Word. "The objective was to open up the satellite and cable industry to value positive programming like the Word, and Sharpton was a key player," he says.
Word initially approached Charter in 2000 soon after the network was launched. Ms. Kellman pitched the network to Patty McCaskill, who was then Charter's vice president of programming. Ms. McCaskill replied that Charter carried other religious networks that included black clergymen and that it would be prohibitively expensive for Charter to add the equipment necessary to pick up the Word's signal, according to people familiar with the situation
About nine months later, Mr. Adell visited Charter to try again. Ms. McCaskill told him the same thing. He responded by noting that Word has a lot of support in the African-American community, these people say.
A month or so later, Charter got a phone call from a National Action Network chapter saying that representatives wanted to meet to resolve a number of issues. When they came in a few weeks later with Mr. Adell, they began by raising concerns about Charter's minority-hiring practices and use of African-American vendors. Only after that did they bring up Word. They also maintained that they were operating independently of Word, people familiar with the situation say. A Charter spokesman declines to comment on the meeting. A spokesperson for Ms. McCaskill, who left Charter earlier this year, also declines to comment.
Once Charter agreed to carry Word, the protesters' demands for action on hiring practices and the use of minority suppliers virtually ceased, according to people familiar with the situation.
Soon after the Charter protest, African-American organizations came to Mr. Adell's help in a personal dispute: a legal fight over a $3.1 million home he was trying to build in Bloomfield Hills, a Detroit suburb. Mr. Adell filed suits accusing John Richards Homes Building Co., Birmingham, Mich., and a unit of Charter One Financial Inc., of conspiring to inflate the value of the land, among other things.
As the lawsuits were being filed, groups including the Michigan chapter of the National Action Network issued a news release accusing Charter One of discriminatory lending practices and other abuses, and organized several demonstrations in front of the bank's Cleveland headquarters. At a meeting with bank officials and Mr. Adell, protesters brought up Mr. Adell's lawsuit, alleging he was being treated unfairly because of his association with Word, according to people who were there.
Mr. Adell later tried to force John Richards into involuntary bankruptcy. A U.S. bankruptcy court quickly dismissed that effort and earlier this year awarded John Richards $6.4 million in damages, one of the largest judgments ever assessed against someone for a wrongful involuntary bankruptcy filing, bankruptcy attorneys say. "Adell's conduct was reprehensible and must be deterred and punished," wrote U.S. bankruptcy Judge Steven Rhodes in his ruling.
Partly because of the John Richards case, which is under appeal, Rev. Sharpton is rethinking his association with Mr. Adell. "My whole relationship with his organization is something I'm reviewing," he says.
John Richards principals have had a difficult time collecting because Mr. Adell has taken steps to shield his assets, including moving to Florida. There, he bought a $2.8 million home to take advantage of that state's homestead law, which makes it very difficult for creditors to seize residences. When marshals arrived to seize the contents of Mr. Adell's suburban Detroit home, the only thing left inside was a picture of a monkey with a note from Mr. Adell saying it should be saved for John Richards's lawyer, Norman Ankers.
In recent months, the protests on Word's behalf have slowed. Mr. Adell has been fighting to hold onto his home in Florida. In September, Judge Rhodes ruled that he can't use the state's homestead law to shelter the home from his creditors, partly because he failed to demonstrate that he intended to live in Florida permanently. On Nov. 14, three days before Mr. Adell's deadline for selling the house passed, Mr. Adell filed a petition in Florida seeking bankruptcy protection.
Meanwhile, Mr. Adell also has been busy trying to start a new network in Florida, Cubana One Network, which he also structured as a tax-exempt organization that is to feature programming targeted at Florida's large Cuban population.
In August, Cubana One issued a press release criticizing Bright House Networks, a major Florida cable operator, for not meeting with Mr. Adell and another network executive. It quotes Hilda Luisa Diaz, of the Jose Marti Educational Foundation Inc., as saying: "If there is space for six porno channels, there should be at least one channel available to disseminate ... uplifting family entertainment."
Soon after, Bright House executives agreed to meet, but a company spokeswoman says it has no plans to add the network at this time.