URL: http://www.nytimes.com SUBJECT

1114 of 1258 DOCUMENTS

The New York Times
February 18, 2007 Sunday

Correction Appended

Late Edition - Final
A Media Mogul Tries Remote Control
BYLINE: By RON STODGHILL
SECTION: Section 3; Column 1; Money and Business/Financial Desk; Pg. 1
LENGTH: 3607 words
DATELINE: CHARLOTTE, N.C.
ROBERT L. JOHNSON, the black billionaire, is ringside at a charity boxing match here, awash in a sea of white businessmen. A low-key deal maker, he prefers intimate dinners with the likes of Bill Clinton, Harvey Weinstein or John Malone. But tonight he has joined members of the South's ultra-elite for a quasi-frat party, a swaggering, testosterone-fueled evening featuring hundreds of tuxedo-clad honchos feted with steak and martinis and greeted by scantily-clad hostesses. Mr. Johnson takes to the slugfest as the night wears on, rolling his shoulders to dodge imaginary blows, as if he himself were up against the ropes.

Which, perhaps, he is.

Mr. Johnson, who founded and then sold the Black Entertainment Television network to Viacom for $3 billion in 2000, is working hard these days to appear as more than just an outsider in Charlotte, where he also happens to own the beleaguered local National Basketball Association franchise, the Bobcats. So far, though, that is pretty much how the locals view him. There may be many reasons why the label of outsider clings to Mr. Johnson, but one easy explanation is that he rarely gives the Bobcats hands-on treatment.

As Mr. Johnson tries to recast himself as a mainstream business mogul, his calendar has become very crowded, thanks to a high-powered push to start and buy several companies. That spree has produced a sprawling portfolio of properties, including a hedge fund, a private equity firm, a chain of more than 100 high-end hotels, several commercial banks and savings institutions, a film company and several gambling ventures.

And however loudly each of those businesses may clamor for his attention, however boisterously the communities they serve may want more face time with the boss, Mr. Johnson is in no rush to soothe their nerves.

''I am not an operational executive anymore,'' he says, impatience creeping into his voice. ''I run a holding company, and my role is that of a rancher, running herd over a field of cattle.

''It's not just one ball in the air for me now, but lots of them,'' he adds. ''This is my second act.''

As Mr. Johnson zips across the business landscape, trying to defy the aphorism that there are no second acts in American life, his handling of the Bobcats, which he bought in 2003 for $300 million, may provide a crucial litmus test. Mr. Johnson, the first African-American owner in a league populated by African-American stars, is intent on using his wealth and celebrity to break down economic and cultural walls that have historically marginalized black entrepreneurs, and to give black executives corner offices in a broad range of industries. So he sees a successful run as the head of a professional sports franchise as an emblematic challenge.

For all of that noble sense of purpose, though, Mr. Johnson is a famously flinty loner. His go-it-alone attitude has done little to soften his image among some here as a person simply looking to milk a Southern boomtown. That image, along with a reluctance to pour more money into the Bobcats, has not endeared him to local fans -- helping to undermine his fledgling hoops franchise.

The basketball legend Michael Jordan, who joined the Bobcats last summer as a minority partner and manager of operations, attributes Mr. Johnson's strains to the rigors of the learning curve. ''Bob is one of the most sophisticated businessmen that I know, but being that he didn't have any experience in this business, he may have been more tight with the dollars than he should have been,'' he says. ''But Bob knows now that he's got to spend, that being successful in professional sports requires a whole different approach. Like me, he's very competitive and knows how to win.''

Mr. Johnson's attendance at the charity boxing match last month was a good-will gesture toward a city that has rebuffed him by considering him an absentee owner, a carpetbagger of sorts, and labeling the Bobcats as scrubs. Ever indefatigable, he says he has plenty of time to change all that.

''We're still early in this process,'' says Mr. Johnson, whose team has a record and attendance that rank near the bottom of the league. ''Nobody loses money on an N.B.A. franchise, and I will certainly not be the first.''

BOB JOHNSON has spent at least half his 60 years as a pre-eminent force in African-American pop culture, a shrewd backstage operator who tied a bow around black celebrity and converted urban music, fashion and comedy into the cash cow called BET.

While running BET, which he founded in 1980, Mr. Johnson found himself routinely criticized by blacks for showing racy music videos day and night instead of creating original programs with socially uplifting themes. In Mr. Johnson's pragmatic view, though, music videos were a television executive's dream: they drew huge audiences and were cheap to put on the air. He reminded naysayers that the ''E'' in BET stood for ''entertainment,'' not ''education'' or ''enlightenment.''

''My tombstone will read: 'This is the guy who aired rap videos,' '' Mr. Johnson says. ''But you know how I deal with that? I put it where it belongs, which is in the pretty-much-irrelevant category.''

Many blacks lashed out at Mr. Johnson again when he sold BET to Viacom, a mainstream corporate buyer. Mr. Johnson, who has blended a surgeon's emotional detachment with an accountant's fixation on the bottom line throughout his career, seems unaffected by those barbs as well. He says he is aware that some consider him miserly and emotionally disengaged, but he shrugs that off as the price of success.

''I never saw myself as running a family business for family benefit; I always wanted to create businesses that were built on maximizing shareholder value,'' Mr. Johnson says. ''And my philosophy has always been predicated on the fact that talented African-Americans ought to be given an opportunity to create real wealth in this country, and that white Americans have to allow us to get onto the starting blocks.''

For Mr. Johnson, born in Mississippi in 1946 as the ninth of 10 children, the starting block was a grimy factory basement in Freeport, Ill. His mother and father had jobs at the Burgess Battery plant in Freeport, and Mr. Johnson worked there as a maintenance worker one summer while attending the University of Illinois at Champaign. According to ''The Billion Dollar BET,'' an unauthorized account of Mr. Johnson's career by the journalist Brett Pulley, Mr. Johnson clashed often with his superiors and was fired. The boot, though, came with some advice. ''If you're going to get a job, you better work for yourself,'' his supervisor told him, according to the book. ''Working for other people just doesn't seem to be your cup of tea because you've got a unique way of how you want to do things.''

After graduation from the University of Illinois, where he met his wife, Sheila Crump (they divorced in 2002), Mr. Johnson studied public administration at Princeton. The couple moved to Washington in the early 1970s, a time when the civil rights movement was opening the door to more black voices in the media. Mr. Johnson worked in various public affairs posts before becoming a lobbyist in 1976 for a cable television trade group.

One of the group's board members was John C. Malone, who was in the early stages of turning his company, Tele-Communications Inc., into one of the nation's largest cable companies. Mr. Malone and other cable operators were scrambling for programming that would give them an edge over traditional network television giants. Mr. Johnson approached Mr. Malone with the idea of creating a cable channel that catered to audiences in cities with large black populations.

''I was like Johnny Appleseed back then, buying up lots of things that fit our model because we needed programming,'' Mr. Malone says. ''It was great that Bob's idea had a positive social element to it, but it also fit my model.''

Mr. Malone jumped at the idea, and in 1979 invested $500,000 for a 20 percent stake in the newly formed BET. Over the next decade, BET slowly gained traction with black audiences, gradually expanding its air time from a few hours a day to a full weekly schedule, recruiting major advertisers and lining up other strategic partners like the HBO unit of Time Inc. BET's gospel programs, black college sports, and black news and music gave the channel a solid niche.

''We were the unicorn,'' Mr. Johnson says. ''People were surprised we existed.''

In 1991, Mr. Johnson took BET public, making the network the first black-owned company on the New York Stock Exchange. Mr. Johnson retained 56 percent of the voting power in a company with a market value of $472 million, according to Mr. Pulley's book. Despite that success, BET had doubters. ''I think the public was very cynical about a black-run and -controlled business,'' Mr. Malone says. ''There were a lot of bodies in the cable industry on the side of the road. The attitude was, 'Let's give it a shot, but I don't expect it to be successful.' ''

TO continue attracting larger black audiences without huge investments in content, Mr. Johnson began to rely more heavily on music videos. After all, with ad rates substantially lower than those of rivals like MTV or VH1, the notion of creating high-minded original programming was not financially feasible, Mr. Johnson says. But by the early 1990s, gangsta rap music was gaining cultural prominence and its messages were edgier -- and more rife with images of sex and violence -- than the R&B music that BET had offered earlier. Many adults were offended, but young viewers loved the stuff.

''Bob took a cold view in responding to the market, and the fact was he just didn't have the financial muscle of an MTV,'' says the media consultant Willis Smith, whose firm in Durham, N.C., specializes in black television programming. ''He could not afford to offer what many viewers wanted from him. But in the end, he kept BET profitable regardless of what people have said about the quality of his programming.''

Mr. Johnson's most vocal critic was the young black syndicated cartoonist Aaron McGruder, whose ''Boondocks'' comic strip ran in 250 newspapers nationwide and focused on a couple of brothers transplanted to the suburbs from their inner-city neighborhood. He routinely lampooned BET. One of his most controversial strips featured a woman's round, nearly nude backside, with text that, among other things, said: ''In order to follow the fine example set by Mr. Johnson, we present to you, the reader, in the spirit of black uplift -- a black woman's gyrating rear end.''

Some newspapers dropped the strip, and it ignited a public spat between Mr. McGruder and Mr. Johnson. Mr. Johnson declines to discuss the matter, and Mr. McGruder, who no longer writes the strip, was unavailable for comment.

By the late 1990s, having regained complete control of BET for himself and Mr. Malone through a stock buyback, Mr. Johnson was ready to move on. The opportunity came when Sumner M. Redstone, the Viacom chairman, offered to buy him out for $3 billion in 2000.

''A lot of black people were hurt when he sold BET because we have this history where our entrepreneurs are expected to be emotionally attached to their companies,'' says Alfred Edmond Jr., editor in chief of Black Enterprise magazine. ''But Bob Johnson has never been one to personalize his relationship to his companies. They are just assets to him, and he prides himself on being able to drive up their value.''

However much Mr. Johnson has sought to burnish and enlarge his reputation, his ownership of the Bobcats has resurrected some old criticisms. Like television, the basketball business is driven by ratings, advertisers and talent -- and so far Mr. Johnson has stumbled, in large part over issues that have haunted him before: customer complaints about product quality, and accusations of a lack of commitment to the community.

''There has been a feeling here that Bob -- and he is trying to do better -- is this rich dude from Washington, D.C., and comes down and buys a franchise and doesn't even show up here much, not even for games,'' says Felix Sabates, a Charlotte businessman and minority shareholder in the Bobcats. But he expects Mr. Johnson will be successful.

Mark Packer, a local radio host, says: ''In a city like Charlotte, it is important for fans to see the owner, and we don't see much of Bob Johnson. But even more than that, the product that he is putting on the floor is an inferior product. Over the two and half years he has had this team, he simply hasn't spent enough money to put a winner on the floor.''

The criticism does not end there. Scott Fowler, a columnist at The Charlotte Observer, wrote recently that ''thousands of people in our area view the Bobcats with resentment or indifference.''

''These folks wouldn't go to uptown Charlotte to watch a Bobcats game if someone handed them free tickets and pointed to a limousine to take them there,'' he added. That's a hard knock in a sports town where Mr. Johnson's polar opposite, Jerry Richardson, the white founder of the Carolina Panthers of the National Football League, ferries his fans around in a golf cart. The owner-as-average-guy touch and the Panthers' success on the field have endeared Mr. Richardson and his team to locals.

ON the afternoon before the charity boxing match, Mr. Johnson sits in a Charlotte eatery, a few blocks from the Bobcats' yet-to-be-named coliseum, reflecting on the history of black capitalists in America -- a past, he says, that is painfully slight.

''The fact is, black people do not have much of a history in creating wealth in this country. As a result, we are not trusted to handle other people's money,'' he says. ''We are valued mostly for our physical talent, our artistic talent and maybe our ability to sell to other blacks. But when it comes to building value in companies, or managing the money of whites, overseeing investments, there has always been this discrimination.''

He shrugs and stabs his crab cake. ''But let's face it, on the other hand, race discrimination gives me a natural public relations advantage. Because of race discrimination, I can get a pat on the back just for being first,'' he says. ''That's how I get the visibility, the first-mover advantage. That's what I like -- to enter the arena first.''

Mr. Johnson has just returned from Utah, where he attended the Sundance Film Festival in search of opportunities for Our Stories, a Los Angeles-based film company he started late last year. The trip was bittersweet. While the dearth of black-oriented films at the festival disappointed him, it also solidified his faith in the prospects for his new venture. His partner is the indie-movie mogul Harvey Weinstein, whose own new enterprise, the Weinstein Company, will serve as his distributor. JPMorgan Chase has sunk $175 million into Our Stories.

''What I like about Bob is that he dreams over the horizon when most people can't,'' Mr. Weinstein says. ''This is about an African-American entrepreneur who is starting a black-owned movie studio because he stepped forward and had the expertise to pull it together.''

In a sense, the financial model for Our Stories -- tapping the resources of mainstream white investors as a means of gaining the economic efficiencies afforded by scale -- is how Mr. Johnson has built most of his companies, and it distinguishes him from most of his African-American counterparts. His private equity fund, for instance, is financed partly by the Washington-based Carlyle Group, while his hedge fund has backing from Deutsche Bank.

Other black entrepreneurs, like Madame C. J. Walker, the black hair care products maven; Alonzo Herndon, founder of the Atlanta Life Insurance Company; and John Johnson, the publisher of Ebony and Jet magazines, also made fortunes in niches selling products aimed at black customers -- but their financial platforms were mostly homegrown and their market visions more narrow. Bankrolled with personal savings or family loans, and powered by social as well as economic goals, most African-American businesses were passed down to family members with little concern for outside investors.

There are, of course, exceptions, like Wally Amos, the founder of Famous Amos cookies. ''I knew there were people who would not buy my cookies because I am black,'' says Mr. Amos, who started his company (which is now owned by Kellogg) in 1975. ''But that was not my problem; it was theirs. To me anybody with a mouth was a potential customer.''

Mr. Johnson says his approach is like that of the late Reginald F. Lewis, the black Harvard Business School graduate and corporate lawyer whose venture capital firm acquired Beatrice International Foods, the global food, beverage and grocery store conglomerate, in 1987 for $985 million. The transaction, bankrolled partly by the onetime junk-bond king Michael R. Milken, created the largest black-owned business in the United States, with annual revenue of $1.8 billion.

''Look, the social activist mold that was poured for Al Sharpton or Jesse Jackson or Vernon Jordan was not poured for me; the artistic mold that was poured for Oprah Winfrey and Jay-Z was not poured for me, either -- that is not the DNA that I got,'' Mr. Johnson says. ''The mold that was poured for me is the same one that was poured for Ken Chenault, Richard Parsons, Stanley O'Neal. I create wealth and value. That's what I do, and I'm good at it.''

Mr. Malone concurs and says that blacks have been unfair to Mr. Johnson. ''It's a real challenge in the black race to be successful and not be regarded as having sold out,'' he says. ''It's a terrible shame that the entire black community doesn't embrace people like Bob, honor him.''

In Charlotte, at least, Mr. Johnson has his share of white critics. So while it might be convenient to attribute Mr. Johnson's struggles with the Bobcats as partly a function of the color of his skin, there is a strong possibility that a more involved, hands-on black owner might be enjoying a smoother honeymoon than Mr. Johnson.

IN the three years since he took over the Bobcats, Mr. Johnson has -- largely from a distance -- initiated a series of senior management shakeups and cuts, a move from an old arena to a new one and, for season ticket holders, a price increase followed by a price reduction. As the N.B.A. showcases its top athletes today at its annual all-star game in Las Vegas, no Bobcats players will be featured. The Bobcats reside at the bottom of the Southeast Division of the league's Eastern Conference with 19 wins and 33 losses. And in a brand new arena that the city built for the Bobcats despite local opposition, the team's home attendance ranks 27th among the N.B.A.'s 30 teams.

''I don't know of a professional sports franchise that can fill up an arena when they're in last place; you have to win games,'' says Mayor Patrick McCrory of Charlotte. ''It's just that simple.''

It doesn't help that Charlotte fans still nurse a grudge over the last pro team that rolled into town. Back in the late 1980s, the businessman George Shinn started the Charlotte Hornets but relocated to New Orleans after his unsuccessful bid for a new basketball arena.

Mr. Jordan, the former Chicago Bulls star, says: ''There has been a wedge that's been created here. There was trust and respect that had been earned and then the team leaves. People are still upset about that.''

For his part, Mr. Johnson says he is ready to mend those wounds. Yet even as he tries to demonstrate passion for Charlotte and the Bobcats, he sounds the notes of a brass-tacks, no-nonsense entrepreneur. ''I like this city,'' he says. ''It's business-oriented. It's got the big banks; the government is profit-oriented; it's a transportation hub. It's non-union.''

It is that approach that leaves some observers wondering whether Mr. Johnson has what it takes to lift the value of a sports franchise that, in the end, is linked to team loyalty and winning. As Mr. Edmond of Black Enterprise observes: ''What makes him a great entrepreneur may end up handicapping him as the owner of a sports franchise where fans expect owners to love the team as much as they do.''

Bought for $300 millionMusicOwns a jazz recording company, Three Keys Music, featuring smoothjazz artists.FilmStarted the Los Angeles-based film studio Our Stories last year, with the producer Harvey Weinstein. JPMorgan Chase is providing $175 million in debt financingNightclub/restaurantsOwns a Disney nightclub in Orlando, Fla., and high-end restaurants throughout the country.

BANKING AND FINANCIAL SERVICESHedge fundThe venture with Deutsche Bank provides investment vehicles for pension funds and institutions.Private equityFormed an alliance with the Carlyle Group to identify investment opportunities in media and financial services. Intends to raise $500 million in capital commitments401(k) servicesHas majority ownership in RolloverSystems, a Charlotte, N.C.-based company that specializes in 401(k) rollovers.Commercial bankingMr. Johnson's Urban Trust Bank focuses on minority and urban customers and has branches in Washington and Orlando. Urban Trust Education Finance expects to start offering student loans this year.REAL ESTATEHotels and lodgingThrough RLJ Development and Urban Lodging Fund, Mr. Johnson owns more than 100 hotels and resorts, many branded as Hiltons and Marriotts.$3 billion in assetsGAMBLINGLottery machinesA Puerto Rico-based firm operates video lottery terminals throughout several Caribbean countries.(Source by RLJ Companies)(pg. 4)
URL: http://www.nytimes.com
SUBJECT: WEALTHY PEOPLE (91%); SPORTS (89%); MINORITY BUSINESSES (89%); AFRICAN AMERICANS (89%); BOXING (89%); SPORTS & RECREATION (78%); WEALTH MANAGEMENT (78%); CELEBRITIES (74%); ENTREPRENEURSHIP (74%); HOLDING COMPANIES (70%); PRIVATE EQUITY (69%); TELEVISION INDUSTRY (69%); SAVINGS & LOANS (69%); HOTELS & MOTELS (65%); BASKETBALL (90%); HEDGE FUNDS (50%); COMMERCIAL BANKING (50%); SPORTS & RECREATION EVENTS (89%) Basketball; Biographical Information; Blacks; Millionaires and Billionaires
COMPANY: BLACK ENTERTAINMENT TELEVISION INC (56%); VIACOM INC (56%)
ORGANIZATION: NATIONAL BASKETBALL ASSOCIATION (91%); CHARLOTTE BOBCATS (93%) Charlotte Bobcats
TICKER: VIA (NYSE) (56%)
INDUSTRY: NAICS515210 CABLE AND OTHER SUBSCRIPTION PROGRAMMING (56%); NAICS512110 MOTION PICTURE AND VIDEO PRODUCTION (56%); SIC7812 MOTION PICTURE & VIDEO TAPE PRODUCTION (56%); SIC4841 CABLE & OTHER PAY TELEVISION SERVICES (56%); NAICS515210 CABLE & OTHER SUBSCRIPTION PROGRAMMING (56%); NAICS512110 MOTION PICTURE & VIDEO PRODUCTION (56%)

Download 4.36 Mb.

Share with your friends: