"MTV—they changed their business model," Diddy said. "It left a wide open space."
Revolt TV launched last October and has major distributors, including CNBC parent Comcast and Time Warner Cable. A spokesman said the network is available in about 25 million homes, roughly a quarter of the country.
ESPN, the most profitable network in the country, will earn $9 billion in operating revenue in 2014, according to estimates from research service SNL Financial. Revolt TV is expected to generate $23 million in operating revenue.
ESPN itself can present a barrier to some small networks trying to get their start because it charges very high carriage fees to cable companies. That can mean some distributors are short on cash to pay for smaller, less critical channels.
ESPN will generate $7 billion in such fees this year, according to SNL Kagan. The second-largest generator of fees is Time Warner's TNT, which is expected to earn $1.7 billion.
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Diddy said he was hopeful that his network would get a boost from viewers using a variety of devices in addition to traditional TV. "Five years from now a brand like Revolt will be available on a billion devices," he said. "We're the first network that was brought up in this social media age."
He also told the audience he had a "tip" for them. Although his company is private, anyone who could invest in it would have an opportunity similar to owning a technology giant when it was first starting, he said. Revolt is akin to "Apple or Microsoft when they were in the garage," he said.
—By CNBC's John Jannarone.