Merge Or Die: Radio One & Johnson Publishing Company


“Pride is a form of selfishness.” – David Lawrence

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There are two cars traveling across the United States of America. Starting off they they both think they have enough gas to go all the way, but about one-fourth of the way into the trip they realize they only have enough to make it three-fourths of the way there. The two cars had become acquaintances on this journey often seeing each other at the same rest stops and gas stations. From time to time they even exchange small talk and have a distant fondness for each other knowing they were on the same journey. As they finally approached the crossroad of a decision, just how would they make their decision? Well, if the goal is being their guide and not their ego, they decide to pool resources. They “merge” the two vehicles resources into one. In other words, they decide which car is in the best shape, siphon the gas from the other, take spare parts, and ultimately continue on their way. But someone must now give up their control to further this trip and that is ultimately where many African American businesses fail to ever reach the “destination” of becoming or remaining a viable and growing business.

In 2015, Johnson Publishing Company, African America’s largest owned publishing company, decided it needed raise more cash and was going to set about doing so under the direction of CEO Desiree Rogers’ leadership by selling 70 million iconic African American photos it has culminated since its founding for a price tag of $40 million. An amount roughly equal to almost half of the company’s current annual revenues. This follows on the heels of four years earlier the company giving up a 40 percent stake in the company for a cash infusion from J.P. Morgan Chase’s Special Investments Group also under the leadership of Ms. Rogers. The J.P. Morgan infusion clearly has not helped the company as traditional media companies are seeing print go the way of the dinosaur and JPC is no exception. Ebony Magazine, JPC’s flagship brand, saw ad revenue plummet 24 percent in 2014 versus Time’s Essence Magazine, which trails Ebony in average circulation, only saw its ad revenue fall 7.5 percent over the same period. Essence is benefitting by being a part of the larger Time umbrella that allows advertisers to buy spots in multiple publications and platforms offered by Time Inc. and its 90 diverse brands within the publishing juggernaut. Johnson Publishing Company has one. It had two, but Ms. Rogers also early on in her tenure chose to discontinue the historically popular JET Magazine. Now, the company consist of Ebony Magazine and Fashion Fair Cosmetics, a cosmetics company that JPC founded during the 1970s. Oddly, Ms. Rogers decided that keeping a cosmetics company as opposed to JET, even though reports say her strategy is to shore up Johnson Publishing’s core business.

And in the other corner, over the past few years there has also been a story of tumultuous change in nearby Silver Spring, Maryland at Radio One, Inc. The company founded by Cathy Hughes in 1980 and currently run by her son Alfred Liggins, III. One of only three African American owned publicly traded companies has seen its share price drop over 70 percent in the past couple of years. Rumors have it that prior to selling BET to Viacom, founder Bob Johnson, actually approached Ms. Hughes and Co. about a merger. How serious that conversation was is unknown, but what we do know is that it did not happen. Radio One’s leadership ultimately favoring a partnership with Comcast to launch TV One. It would ultimately buyout Comcast in the early part of 2015 after that ten year partnership and have a 99.6 percent controlling interest in the television station. As of its December 2014 10-K filing, the company owned 56 broadcast stations in 16 urban markets which is the core of the company’s business. It also owns some digital properties such as Global Grind, BlackPlanet, and a number of other marginal digital assets. There has been some belief that Radio One could be on the verge of a comeback after converting one of its radio stations from a news station to an 80s and 90s based hip-hop station in Houston. The station itself has received rave reviews from critics and listeners, but what it has seemingly failed to do is  land some of the industry’s blue chip advertisement accounts.

What do these two companies look like merged? Well, first they would have a combined $1.3 billion enterprise value and $540 million in annual revenues. There has not been an African American owned company to generate $1 billion in revenue annually since Virginia State University’s alum Reginald Lewis created TLC Beatrice in the late 80s. This would put the merged company well over half the way there. It would also expand both companies demographic reach. Radio One’s demographics are primarily 18-40, while JPC’s are 40 and up. Radio One’s younger demographic could be exactly is needed to pick up a new generation of readers for Ebony Magazine and may even allow for a relaunch of JET. JPC’s demographic, arguably a more mature, economically stable, and better educated demographic could be what Radio One needs to attract more well heeled advertisement accounts. It would also save the drastic mistake Johnson Publishing Company is making currently with the sale of its photograph collection which could be a source of revenue for the newly merged company across the plethora of digital platforms that Radio One has at its disposal.

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It is often baffling that African American businesses continue to get bailouts from companies like J.P. Morgan or Morgan Stanley, but will not consider a merger because everyone continues to want to be the general of a small (perhaps dying) enterprise instead of the soldier of a larger thriving enterprise. We saw it with Carver Bank in New York, once an African American owned bank, but instead of merging with One United in Boston found itself needing to be bailed out after the Great Recession from Citigroup, Goldman Sachs, and Morgan Stanley. Did it approach One United? No, in a “show” of sorts the bank’s CEO, Deborah Wright, tried to assure many of banks constituency that the institution had not lost its way. Radio One and Johnson Publishing Company are looking down the same road. Two companies that desperately need each other and African America desperately needing a sign that our businesses understand the bigger picture beyond egos. Otherwise, both may become historical footnotes well before their time was intended leaving a crater in the African American private sector that does not and did not need to be there. These two companies are heading to the same destination, but will run out of gas well before either reaches it if both are not willing to share the ride there.

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