D.C. Finalizes Radio One Deal
Friday, January 25, 2008
District officials announced a deal yesterday that would enable Radio One to build a new headquarters in the city, bringing the nation's largest African American radio broadcaster back to its home town a decade after it moved to Maryland.
Under the agreement with private developers signed yesterday by Mayor Adrian M. Fenty (D), the city will provide $22 million in grants and incentives for the project, to be built above the Shaw-Howard University Metro stop at a total cost of $144 million.
The deal was closed with enough haste that Radio One officials were not able to attend a ceremony marking the occasion. With the D.C. Council's approval of a $22 million funding package for the project two weeks ago, there was no reason to wait, city officials said.
"It's especially exciting . . . to welcome back Cathy Hughes," Council member Jim Graham (D-Ward 1) said, referring to the founder of Radio One who bought a faltering AM station in 1980 and transformed it into the District's only black talk station. The company is now run by her son, Alfred C. Liggins III, who was in New York for meetings and unavailable for comment, Radio One officials said.
The development project is being led by Thomas Hotz and Chip Ellis. Ellis is a real estate broker and personal friend whom Liggins had hired seven years ago to look for possible sites for the company in the District. The company sought a location that would keep its costs comparable to those it paid in Lanham, its current home.
The deal took several years to complete as the developers and city officials navigated a series of obstacles that included objections from council members, historic preservationists and neighborhood activists.
Though critics decried the escalation of incentives from the $10 million originally discussed, and the no-bid sale of the land, community representatives praised the project yesterday for its give-backs to the area, including new retail, affordable housing, off-street parking, reduced rents for small businesses, scholarships to Howard University students and funds it would draw to restore the historic Howard Theater, which is adjacent to the property.
"Bringing the company back with its enormous reputation . . . was a huge priority for my administration," Fenty said, calling it a "catalytic project" that would bring the District almost $19 million in taxes over 20 years and $1 million a year in new spending.
Radio One had at one point considered owning part of its new headquarters, but the company will lease space from the developers, according to Ketan Gada, the District's manager for the project, known as Broadcast Center One.
The agreement comes as Radio One has struggled in an increasingly tightening radio market. Last year, the company sold $150 million in assets -- stations it considered outside its core mission of reaching urban listeners -- but its stock price has continued to slide as its stations struggle to compete in such markets as Los Angeles, Philadelphia and Washington.
Analyst Frederick W. Moran of Stanford Group said the relocation of the company's headquarters will probably not have a material impact on Radio One's bottom line. But with the radio industry outlook generally gloomy, Radio One is in a particularly difficult position, Moran said, because it maintains a high level of debt -- about eight times its cash flow.
The company's emerging network cable, TV One, can shield Radio One stocks to a degree, he said. But short of selling its two most valuable assets -- TV One and its Los Angeles station -- and hoping for a fast economic turnaround, Radio One's primary avenues for growth are on the Internet.
Liggins has said he is working on new strategies to link the company's content on its radio, Web and print properties but has not disclosed the details.