Radio One CEO Prepares for Shareholders
Monday, May 26, 2008
On a wall of his office, seven floors above a stretch of shopping centers in Lanham, Radio One chief executive Alfred C. Liggins III has a poster that reads: "Words . . . lead to destiny."
For the past several years, Liggins has been assuring Wall Street that his company is on the brink of becoming the platform of choice for African American consumers and the advertisers who want to reach them on radio, online, through cable and magazines.
His words, like the sign on his wall, may have sounded largely aspirational.
But lately, Liggins's Web ventures -- the key, he thinks, to his media empire's success -- have been taking shape. That, along with financial gains by his TV One cable subsidiary, is what Liggins wants shareholders to focus on at this week's company meeting.
"The strategy is to build a company where we can compete for $28 billion in Web revenues by providing content for African Americans and build scale for advertisers," he said. "I think our ability to build that online won't take long."
This month, having sold its struggling Los Angeles radio station, Radio One launched a Web portal called Interactive One. Featuring news, lifestyle, entertainment and religious content, the site has also become the sales agent for AllHipHop.com, which averages nearly 5 million visitors a month, according to the company. Liggins is also branching out into the social-networking world. Last month, the company paid $38 million for New York-based Community Connect, which operates a number of branded Web sites, including BlackPlanet, MiGente and AsianAvenue. Community Connect claims about 23 million users.
Most social-networking sites have been slow to find ways to make money from their traffic. Liggins is cautious about making revenue projections, saying that the company's online effort is nascent and that ethnic niches "are the last thing to grow in [media] sectors."
But advertisers "will do business with us because we reach 82 percent of African American households in this country," he said.
In recent months, Liggins has spent much of his time traveling between suburban Maryland, New York and the West Coast, overseeing the convergence of the company's new media ventures and trying to build relationships with potential advertisers and sponsors. He tends to spend less time talking publicly about his core business, the radio company founded by his mother, Cathy Hughes. The company has been undercut like much of the industry by iPods, the Internet and satellite radio.
The topic became unavoidable this month, when the company's stock dipped below $1 and analysts demanded explanations for the compensation package the board is giving Liggins and Hughes. Under the deal, which will be finalized this week, Liggins will receive $1 million for having been underpaid the past three years. He will also get a 70 percent raise that will bring his annual salary to $980,000. He will also get the opportunity to match that with a bonus. Hughes will receive a 75 percent salary increase, bringing her pay to $750,000 a year.
Liggins expects shareholders to ask about that at the company's annual meeting in the District on Wednesday, given the company's stock performance. The compensation package will bring Liggins in line with what chief executives at other media companies make, he said.
The board "brought me up to parity. . . . My compensation isn't significantly different from [chief executives at radio] companies like Citadel and Cumulus," he said. "They thought that was fair."
Meanwhile, he will continue to focus on dual goals: creating a new programming strategy for TV One, a cable/satellite network whose revenue is increasing and distribution is expanding, and figuring out how to make a profit from the company's Web ventures.
"I'm trying to get out from under depending 100 percent on cash flow from radio," Liggins said. "I'd like to see us get down to 50 percent in the next five years."
This month, when Radio One reported a 2 percent revenue decline, Wachovia analyst Marci Ryvicker wrote that the result was one of the company's "best performances to date."
Radio One stock closed flat Friday at $1.19. Liggins acknowledges that share value has taken a hit.
"The vast majority of our decrease in stock price can't be squared on the efforts of people who work here," he said. "We're in a really tight industry. I feel great about where we sit today because I believe that not only does Radio One have a second act, it's just starting."