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  BET Chief Envisions Entertainment Empire of Sports, Concerts, Cable TV — and D.C. Arena

By Paul Farhi
Washington Post Staff Writer
Monday, August 22, 1994; Page F01

Bob Johnson can see it all now:

Janet Jackson is playing the BET Arena, the 23,000-seat facility built by Johnson's Black Entertainment Television in downtown Washington. The show is sold out, thanks to round-the-clock promotion on the BET cable network. Don't worry if you can't get a ticket, though — you can still see it on BET's pay-per-view network. Want Janet's latest album? Johnson will sell you that, too, on BET's home-shopping program. And don't miss next week's NBA game at the arena, featuring the BET-owned Washington Bullets. ...

"It all fits together," said Johnson, coming to the edge of his seat inside BET's sleek, modern Georgetown headquarters. "This {city} is our corporate home. If we own the arena, if we own the team, we become the focal point of black entertainment in this country." Not to mention, which Johnson eventually does, the entire world.

Except that, for now, this is all a figment of Robert L. Johnson's imagination. There's no Janet Jackson concert, no downtown sports arena. The basketball Bullets and the hockey Capitals are owned by Abe Pollin, the region's other sports plutocrat; and Pollin isn't selling, at least not yet and maybe ever to BET and Johnson.

Johnson, 48, aims to change that. Two weeks ago, seemingly from nowhere, the chief executive of the nation's largest black-owned television company popped up with a bold offer to finance a downtown arena. There is, however, one catch: Johnson wants to control the terms of the teams' lease at the arena, the better to position himself to buy them once Pollin decides to sell.

The offer makes Johnson the man of the moment — and the man in the middle. Depending on your point of view, he is either the savior or the spoiler in the District's effort to lure the Bullets and Capitals downtown from the suburban USAir Arena in Landover.

On one hand, Johnson would take the District off the hook, substituting his money for the $150 million or so in public funds (taxes and bonds) the cash-strapped District would need to finance an arena. On the other, Johnson is tempting fate with Pollin, who probably would keep his teams in Landover rather than move on Johnson's terms.

"I'd be very happy to do business with Abe Pollin," Johnson said. "What I'm not willing to do is sit back and let the taxpayers foot the bill for Abe's arena while he takes all the upside. I didn't ask the city to pay for my corporate headquarters."

Such quiet insistence and controlled confidence make Johnson something of an irresistible force as the arena drama plays out. He is Ivy League smart, elegant of manner and appearance and armed with formidable connections, both locally and in corporate boardrooms across the country. He's also not used to losing.

In 1979, as a 34-year-old lobbyist for the cable TV industry, Johnson floated an idea for a cable channel catering to African Americans. With $15,000 of his own money and $500,000 from the cable industry's biggest company, Tele-Communications Inc., Johnson launched Black Entertainment Television.

The idea and the timing were superb. There wasn't much programming of any kind for cable operators then, let alone programming that might appeal specifically to the urban markets that were just beginning to get cable. BET is available in more than 39 million homes, including a lot of places you might not expect, such as Rapid City, S.D.

What's more, BET now occupies a singular place in the annals of black capitalism. In late 1991, Johnson took BET's parent company, BET Holdings Inc., public. The stock sale not only made Johnson wealthy (his 55 percent share is worth about $130 million), it also made BET Holdings the first company controlled by an African American to be traded on the New York Stock Exchange.

But here's the thing about Bob Johnson: He doesn't want to be just a niche player, albeit a rich one. Bob Johnson wants to be a player.

Someday, Johnson says, he would like to be an ambassador, maybe to Germany or France or Britain. That's heady stuff for a kid who came up via Freeport, Ill., where his formative entrepreneurial experience was a paper route.

At first he thought he might want to try the foreign service, a career path nurtured while he was a student at Princeton's Woodrow Wilson School of Public and International Affairs.

He got to Washington after graduation, all right, but instead of the State Department he wound up in consecutive positions at the Corporation for Public Broadcasting, the Urban League, as an aide to then Del. Walter Fauntroy (D-D.C.), and eventually the National Cable Television Association.

Now, with BET firmly established, Johnson talks a lot about "taking the next step." He has said repeatedly, and still maintains, that his goal is to create the first major black-owned media and entertainment company, a conglomerate in the mold of Walt Disney Co., Rupert Murdoch's News Corp., or TCI and Time Warner Inc. (which own 21 and 18 percent, respectively, of BET's stock).

Adding a sports team and an arena would allow him to play in those big leagues — to "take a seat at the table," as he puts it.

For all its success, BET still is primarily a cable-network operator, and not much more. Although Johnson has established an array of joint ventures, partnerships and start-ups in everything from direct marketing to radio syndication and film production, none of these businesses has yet to contribute much to BET's bottom line.

Through the first three quarters of its current fiscal year, for example, revenue from the cable network (license fees paid by cable operators and advertising sales) accounted for 86 percent of the parent company's $72 million in sales. The other businesses, including two magazines, have incurred losses or struggled to break even.

Johnson knows that sports have been the ticket for other media companies; Ted Turner owns the Atlanta Braves and Hawks, for instance, and Tribune Co. operates the Chicago Cubs, while Walt Disney Co. has the Mighty Ducks hockey team in Anaheim, Calif. TCI chief executive John C. Malone, meanwhile, is pursuing a deal to buy Madison Square Garden and the New York Knicks and Rangers franchises. Johnson has had brief conversations with TCI about his ambitions for the Bullets and Capitals, and while there have been no specific commitments, he says the reaction generally has been supportive.

"In the 500-channel environment, having a sports team is like having a software asset," Johnson said. "It's a brand name" that can be sold in combination with a media company's other operations.

With its own arena, for example, BET could not only televise the Bullets, but also the basketball games of Georgetown, Howard and American universities, or boxing matches and concerts on pay-per-view. Johnson even dreams about hosting a national political convention or a presidential inaugural gala.

If that sounds "mainstream" — that is, colorblind — that's the point.

"I think Bob is at the forefront of the next generation of African American business people who are staking a claim to mainstream business in this country," said Earl Graves, publisher of Black Enterprise magazine and a longtime friend of Johnson.

But Graves adds that it won't be easy: "Let's face it, racism still abounds in this country. I think he's held to a higher standard than other CEOs because of who and what he is" by both African Americans and mainstream business people.

"Right now," Graves said, "he's still not at the table in the way he ought to be."

Johnson knows all about the intersection of race and business, but he knows it's a two-way street, both a boon and a hindrance simultaneously.

He said, for instance, that one of the selling points for BET is that it is good politics: Cable operators carry BET, in part, to demonstrate to their city councils that they offer a diversity of programming. That comes in handy when it comes time to seek a renewal of their municipal franchises.

Indeed, Johnson and a group of investors stressed both their local origins and their minority status back in the early 1980s to win the District's cable franchise.

But Johnson's group, District Cablevision, promised more than it could deliver, not unlike many partnerships that won municipal cable franchises during that period. As a result, he had to seek an outside investor.

In 1985 Johnson went back to an old ally, TCI, which advanced the funds to put the franchise back on track. Though Johnson still heads the original group that manages District Cablevision, TCI owns 75 percent of the partnership's equity. (Johnson, but not BET, is a partner in the franchise.)

TCI and Time Warner's roles in Johnson's success hasn't gone unnoticed by others in the African American media. One African American entrepreneur, who requested anonymity, said Johnson gave "legitimacy and credibility" to these mainstream companies as they sought to penetrate the black market.

This entrepreneur points out that other black business people, notably John Johnson (no relation to Robert Johnson), the chairman of the Johnson magazine publishing empire, came up in a harsher environment, a segregated world in which there was no helping hand from white-controlled corporations, and remain independent to this day.

With due respect to his elders, Bob Johnson points out that his alliances have been mutually beneficial.

TCI and Time Warner have opened doors that never would have opened, he said, pointing out that BET recently struck a video distribution agreement with Blockbuster Entertainment Corp. as a result of networking through his partners.

"The reality is, the sheltered, segregated markets no longer exist," he said. "You need partners who have confidence in you and can contribute the cash, the resources, the distribution, and the opportunities."

So now Johnson is pressing for one more big alliance — with Abe Pollin.

Pollin isn't commenting about Johnson's proposal, except to issue a statement indicating he will "review" any offer that is passed on to him by a nonprofit civic group acting as a negotiating agent for Pollin and the District. Pollin said he is legally bound to negotiate only with the civic group, known as the National Capital Development Corp.

Clearly, however, Johnson and Pollin are worlds apart.

By making his arena offer contingent on renegotiating the teams' leases at the time Pollin sells, Johnson knows he would wield a club to ward off potential buyers. By threatening to raise the would-be buyers' rents, Johnson would be able to keep the field clear for himself. But if Johnson were the only buyer, Pollin's asking price would shrink, compromising Pollin's interest.

Johnson wants to negotiate with Pollin to devise a formula "to protect {Pollin's} upside appreciation," but so far says he has been given an unrealistic deadline — the end of the month — to develop a detailed plan.

For his part, Pollin knows where Johnson stands. When Johnson broached the subject at a lunch last month, he said Pollin told him it was "premature" to talk about taking part in Pollin's deal with the city. Johnson said he let that sink in, and then told Pollin about his ambitions to own an NBA team. That, Pollin said too, was also premature, according to Johnson.

"So I made the appeal from a sociological perspective," Johnson said. "I told him, 'Abe, you're from the suburbs, I'm from the city. You're white, I'm black. The city is mostly black, and the players are too.'

"He said, 'Bob, it's premature.' "

Maybe, but Johnson isn't going away so easily. Late last week, Johnson said he was considering going to court to get an extension on the deadline for submitting a financial plan. For Bob Johnson, it seems, this isn't just business; this is a mission.

© Copyright 1997 The Washington Post Company

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