Russ Parr, tall and square-jawed, leaned into the microphone at the WKYS-FM studio last week and began his riff on President Bush's State of the Union address and the coverage by the major television networks. "When Bush started talking about North Korea, they flashed to a Japanese guy in the audience. He was sitting there going, 'I'm freaking Japanese. I'm not Korean,' " Parr said sarcastically. He then moved on to Bush's comments about fighting AIDS in Africa: "I just felt that he wasn't genuine."
Parr, sitting in Radio One Inc.'s tiny studio in Lanham, then began sparring over the phone with black conservative commentator and Bush defender Armstrong Williams. Soon the phone banks lighted up, and dozens of listeners from Washington, Richmond, Cleveland and Charlotte were voicing their concerns. "The president did not convince me that we should go to war with Iraq. This is all about oil," said Scott from Cleveland.
Parr's outspokenness, mixed with his banter with the many black listeners who call, has made his program the top-ranked morning show among 18-to-34-year-olds in the Washington market, according to Arbitron Inc., the radio market research firm. Parr's show is syndicated in 33 cities.
He and other Radio One personalities, including Los Angeles comedian Steve Harvey and Atlanta-based morning host Ryan Cameron, are key to Radio One's main strategy: wooing the black American listening audience. That strategy is driving Radio One's steamroller expansion, which has resulted in the creation of a national network of stations and in recently announced plans to build a cable network with industry leader Comcast Corp.
That network -- scheduled for launch this summer -- will be 38.5 percent owned by Radio One and guided by the company's chief executive, Alfred C. Liggins III, son of company founder Cathy Hughes. Liggins is searching for executives to lead the network and is working on deals with three investors to provide financial backing, he said.
Radio One has bet its future on the idea that by directing its programming, marketing, research and community involvement to black listeners, it can outmaneuver massive radio companies such as Clear Channel Communications Inc., Infinity Broadcasting Corp. and Cox Radio Inc. in competition for that segment.
The company hopes to use that market research and programming know-how in the launch of its cable network targeted at black viewers. But if past is prologue, Radio One has a struggle before it. Only the 23-year-old Black Entertainment Television has profited by focusing exclusively on the black viewing audience, and in a world of 150 digital cable channels and more than 225 satellite stations, no new network is a sure success.
Radio One is run by a tight-knit team of executives: Chief Financial Officer Scott R. Royster, General Counsel Linda J. Eckard Vilardo, Chief Operating Officer Mary Catherine Sneed, and Liggins, who will have to balance steering Radio One with his role as chairman of the cable network.
The risk the company is taking may be exacerbated by its swift expansion. It has spent more than $1.6 billion buying 50 radio stations in less than four years, and the cable investment will cost it $70 million over four years. With $650 million in long-term debt, Radio One has more debt than the average radio company.
The new undertaking also comes at a time of economic uncertainty, as the advertising market continues to recover from a steep drop in 2000.
Radio is an extremely competitive business, in which rivals switch formats overnight and launch unexpected ratings wars, analysts say. And Wall Street's reaction to Radio One's cable deal has been lukewarm, with the company's stock, which trades on the Nasdaq Stock Market, hovering around $15, compared with a high of $24.81 in May. The cable venture is not expected to turn a profit for at least four years.
"We like the investment, but it does kind of dilute the management's existing focus on radio," said Kit Spring, an equity analyst at Denver-based Stifel, Nicolaus & Co., which makes a market in Radio One, meaning it stands ready to buy and sell the company's stock.
In addition to pleasing Wall Street, Liggins and his crew will have to win the approval of the black television viewer, which, as evidenced by BET's struggles, will be no easy task. BET was lambasted late last year when it cut most of its public affairs programming because the shows were not attracting enough viewers to be profitable.
"When it comes to African Americans owning media, there is a tremendous expectation," said Todd Burroughs, a journalist who has written about black media and who completed his dissertation at the University of Maryland on the subject. "People say they want public affairs and information, but what they really want is entertainment. Other than serving the public interest, there might not be enough audience for these programs to survive on the ratings economic model."
The trick will be finding the right balance between news, opinion, sports and entertainment, and, in time, developing the expensive original programming necessary to brand a network. For example, other cable networks have endeared themselves to black viewers with original shows such as "Soul Food" and its movie "The Josephine Baker Story," said R. Thomas Umstead, programming editor at trade magazine Multichannel News.
"Nine out of 10 original programs don't work," Umstead said. "It's going to be a very long road for [Radio One] before they are able to get off the ground."
It took a long time for Hughes to get radio operations running, after she and her then-husband, Dewey Hughes, bought the WOL-AM station at a Federal Communications Commission fire sale in 1980. As with today's TV market, few blacks owned radio stations then.
The company grew slowly until going public in May 1999. The same year, Clear Channel, the nation's largest radio conglomerate, bought the country's second-largest radio company and divested 100 stations to meet FCC regulations. Radio One acquired 12 of those stations for $1.3 billion. Two years later, it acquired 15-station Blue Chip Broadcasting Inc. for $190 million. Last month, the company bought a station in Dayton, boosting its total to 66.
The company's voraciousness mirrored the consolidation throughout the radio industry after rules limiting the number of stations one company could own nationally were lifted in 1996.
Radio One's growth has been methodical, Liggins said. All of its stations are in metropolitan areas home to large numbers of blacks. And with the exception of a successful modern rock station in Philadelphia, all have urban formats: variations of hip-hop, rhythm and blues, gospel, and jazz.
Liggins said he has no plans to become as big as the 1,200-station Clear Channel, saying Radio One's strategy does not require it. "We look for underperforming stations where we can either make their urban formats better or switch them to urban formats and grab higher audience shares," he said.
To execute its strategy the company is relying heavily on its 60-person research department. Before Radio One enters a market, switches music formats or compiles playlists, it randomly calls thousands of people and conducts 20-minute surveys of those who tune in to its radio stations.
The research department hit the phones when Radio One purchased a light-rock station in Atlanta -- a competitive radio market with six urban-formatted stations. Surveys showed that listeners were interested in a contemporary gospel music station and, more important, that the new format would not hurt Radio One's three existing stations aimed at blacks in the city.
The company's "Praise" WPZE-FM is now the third-ranked station in Atlanta, according to Arbitron.
Radio One has increased ratings and advertising share in markets such as Atlanta by connecting with black radio listeners, said Jason Helfstein, an analyst for CIBC World Markets in New York, which also makes a market in Radio One stock and expects to do investment-banking business with the company.
The company has been helped by advertisers' increased interest in the black market. The black population is growing at a faster rate than that of the nation as a whole, according to the 2000 census. And the black community's buying power is growing: In 2001, blacks earned $601 billion, compared with $543 billion in 2000, according to Target Market News, which studies the black consumer market.
Over the past 10 years, radio stations targeting black listeners have increased their share of the advertising dollar, according to radio industry marketer Interep National Radio Sales Inc.
"More and more clients are realizing they can't put together a good marketing plan without inviting African Americans to do business," said Pam Somers, Radio One's senior vice president of corporate sales. That many white youth also listen to hip-hop stations helps with advertisers as well, she said.
"We deliver a young audience, but our goal is to be the urban provider in the community," Somers said.
Connecting with the black community requires more than playing the latest Ja Rule or J-Lo hit, said Radio One's Sneed. Parr, who lives in the D.C. area, and the company's other radio personalities are constantly hitting the streets to mingle with listeners.
"If you're not [at parties, clubs and grass-roots events], you'll never be a big personality in the community," Sneed said. "Those are the things that separate stations from one another."
Parr's attempts to connect with his listeners include his plans to take his show to Atlanta for the National Basketball Association All-Star Game this Friday. He also has a weekly segment called "Hook 'Em Up Wednesday," during which he plays matchmaker.
He quizzes callers from Detroit to Richmond: "What celebrity do you look like?" "Do you have any gold teeth?" "You have any kids?" "Do you have good credit?" "So, if you're so great, why don't you have a man?"
If callers want to meet each other, Parr helps hook them up.
Sounds like an idea for a cable TV segment.