Showdown at the Apollo: Inner City Broadcasting and the Heritage Networks Face-Off for Control of It's Showtime at the Apollo. Who Will Emerge the Victor in This Mega-Bucks Battle. (B.E. Exclusive)

By Scott, Matthew S.; McKinney, Jeffrey | Black Enterprise, January 2003 | Go to article overview

Showdown at the Apollo: Inner City Broadcasting and the Heritage Networks Face-Off for Control of It's Showtime at the Apollo. Who Will Emerge the Victor in This Mega-Bucks Battle. (B.E. Exclusive)


Scott, Matthew S., McKinney, Jeffrey, Black Enterprise


TWO OF THE BLACK BUSINESS WORLD'S HEAVYweights have squared off in a bitter bout over the rights to produce and distribute It's Showtime at the Apollo, the top-rated African American variety show. At stake are millions in television syndication advertising dollars. But a collapse in negotiations over the lucrative contract raises important questions about each of the combatants' approach to business.

In one corner is 80-year-old Percy E. Sutton, a one-time New York City borough president and former head of Inner City Broadcasting Corp. (No. 58 on the BE INDUSTRIAL/ SERVICE 100 list with $59 million in revenues). Known affectionately as "The Chairman," Sutton has been linked to the revitalization of the world famous Apollo Theater since 1981 when he purchased it with $250,000 of his own money and arranged some $18 million in financing to renovate it. For the last 15 years, he has created and distributed It's Showtime at the Apollo, a historic television show that helped the Harlem landmark recapture its legacy as an incubator for black musical and cultural talent.

In the other corner is Frank Mercado-Valdes, a 40-year-old former Golden Gloves boxing champion who, 10 years ago, launched The Heritage Networks (No. 90 on the BE INDUSTRIAL/SERVICE 100 list with $30.5 million in revenues). Mercado-Valdes' television syndication company makes its money by securing the syndication rights to air movies such as Shaft and Cotton Comes to Harlem, and then selling the advertising time to sponsors. The tough, no-nonsense negotiator got his big break when Universal Domestic Television sold him the weekend syndication rights to its hit TV drama series New York Undercover, marking the first time in broadcasting history that a minority-owned company acquired a network syndicated series.

In August, news surfaced that Mercado-Valdes had outbid Sutton for the syndication rights to produce It's Showtime at the Apollo for the 2002-2003 season. That turned up the heat on a simmering riff between the two entrepreneurs and set the stage for a battle over control of syndication dollars derived from the Apollo brand. Already, things have gotten pretty nasty. Upset by what he calls an unfair bidding process, Sutton is not giving up his 15-year investment developing It's Showtime at the Apollo without a fight.

To offset losing the show, Sutton is producing a spin-off program called Showtime in Harlem, which offers virtually the same format as the new Showtime at the Apollo (Mercado-Valdes dropped the It's when he started producing the show). Adding more fuel to the fire, both shows are jockeying for control of the same audience in New York and other markets during the Saturday 1:00 a.m.-2:00 a.m. time slot.

While it may seem counterproductive for two black-owned media companies to broadcast competing shows, with similar names and formats, in the same time slot, there's much more to this squabble than that. Sutton hopes to regain control of the show to build on the prestige he earned from resurrecting the Apollo franchise as well as reap syndication dollars and additional revenue he says Showtime at the Apollo will command in the future. Mercado-Valdes hopes to combine Showtime at the Apollo with his new Weekend Vibe series to create a two-hour block of urban entertainment television, which will enhance his company's leverage with advertising firms. The referee in the battle, the nonprofit Apollo Theater Foundation, is using negotiations for the rights to Showtime at the Apollo to establish greater control of the Apollo brand. By doing so, the business savvy board hopes to implement its new mandate to expand and extend the brand, while making the overall theater operations profitable.

A GOOD DEED TURNED BAD

The seeds for the It's Showtime vs. Showtime fiasco were sown in 1991 when, after a decade of struggling to run the theater and produce the show, Sutton created the Apollo Theater Foundation with help from the Harlem Urban Development Corp. …

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