Radio One Inc. chief executive Alfred C. Liggins III said yesterday his $56 million acquisition of popular radio personality Tom Joyner's morning show will help stave off the threat of Internet and satellite radio in the urban radio market.
"As we start to look to grow our company, one of the things we look to own is content," Liggins said in his Lanham office. "In this genre, nobody's got better talent under wraps than we do now. If we can develop personalities, we can make a lot more money. I want to get out of the music presentation business -- that's what's happening over the Internet. That's what's happening in satellite radio."
Tom Joyner's morning radio show has a weekly audience of 8 million people.
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Joyner, whose show is broadcast in 115 markets and has an audience of about 8 million people weekly, has become a radio franchise. Known as the "Fly Jock," he formed Reach Media Inc. with partner David Kantor two years ago. The Dallas-based company controls Joyner's syndication deals, the Web portal BlackAmericaWeb.com and an event-planning business.
Liggins said he had been trying for more than a year to persuade Joyner and Kantor to merge with Radio One. The executives began serious discussions a month ago and expect to close their deal in January, he said. Joyner and his partners agreed to a half-cash, half-stock deal and will keep a 49 percent stake in their company.
Analysts said Liggins's play for Joyner strikes at satellite competitors and counters Sirius Satellite Radio Inc.'s recently announced five-year, $500 million deal with Howard Stern.
It's a signal that the valuable assets in radio are now personalities, not stations, said Holland Cooke, a radio consultant with McVay Media in Cleveland. "What will cause a listener to choose your station versus another is the content," he said.
That's a lesson Radio One learned when it outbid Howard University-owned WHUR-FM (96.3) for Joyner's morning show in 2000 and put it up on Radio One's WMMJ-FM (Magic 102.3). The move lifted the station's ratings instantly.
Joyner is on Radio One stations in about 15 of the company's 22 markets. In a few cities, including Detroit, stations that compete with Radio One have the rights to air his program. Radio One executives will reevaluate Joyner's contracts when they are up and said they would likely put Joyner on more Radio One stations.
"We had a vision and a mission going into this to reach as many African Americans through media as we can, and the only way we could do that was to take on a partner," Joyner said. "Radio One has the same vision. We've got big plans."
Those plans include expanding Joyner's personality to television. His "Sky Show," a concert aired live on the radio, is also broadcast on TV One, a cable channel aimed at black viewers launched this year by Radio One and Comcast Corp. Joyner is also pitching an idea to air recordings of his morning show on late-night television.
"We expect Tom will be talking up TV One on air," Liggins said.
Another cross-promotion vehicle will be BlackAmericaWeb.com, which is closely tied to Joyner's morning show and had 539,000 viewers last month, according to Web tracker ComScore Media Metrix. Liggins said he has not decided what role the site will play in Radio One's Internet strategy, which is to build the company's local radio station sites and create a black-oriented Web portal.
Liggins also said he expects to rely on Reach executives' expertise to win more lucrative deals for Radio One on-air personalities, including Russ Parr, who is in 45 markets mostly on Radio One stations, and Steve Harvey, who hosts the company's morning show in Los Angeles.
Wall Street reacted lukewarmly to the deal, pushing down Radio One's stock 24 cents, to $13.10.
CIBC World Markets Corp. analyst Jason Helfstein, who covers Radio One, said the negative sentiment toward the stock is probably because Joyner and his team will partially be paid with Radio One stock, which has hit a 52-week low.
Radio One and other broadcasters have been in a slump for most of the year, battling eroding listenership due to the growing popularity of digital music, online radio and satellite competitors. Reach Media's 2005 revenue is expected to be $50 million, according to the companies.
"The reason they are issuing stock is [Joyner] wanted the stock, and it was probably necessary to do the deal," Helfstein said. "It gives [Reach] a chance to participate in the equity upside of Radio One."
