Category Archives: Business

Is Radio One On The Verge Of Bankruptcy Or Great Comeback? Stock Trending Toward Zero

Adoption and continuation of policies that incorporate a maximum of forward thinking should be the most vital single consideration of all executives. – Charles Presbrey


I remember reading once about the founder and former owner of BET, Robert L. Johnson telling of a friend of his who made a joke that if African Americans owned all the largest corporations in America there would be no need for the Securities & Exchanges Commission. The mission of the the S.E.C. as it is more aptly known is to per their website, “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” A large part of that job is oversee companies involved in mergers and acquisitions. The reason Johnson’s friend said there would be no need for the S.E.C. if African Americans owned/ran America’s largest corporations is because they would never merge. In other words, everyone wants to be the chief and nobody wants to be the Indian. We would rather be the CEO of a small company than scale up and become part of the executive team of a much larger company. The big fish in the little pond mentality if you will. The rumor mill has it that at one time Bob Johnson approached Cathy Hughes about a potential merger between BET and Radio One, but was rebuffed because it would take Ms. Hughes and her son out of the Chairman/CEO roles of the new, larger, and stronger company. This mentality often explains why you will see twenty storefront churches on one block in African American neighborhoods, but I digress.

Radio One is your classic African American entrepreneur story. Founded in 1980, by then husband and wife team Dewey and Cathy Hughes, they were rejected by 32 banks (I wonder if any were African American owned banks) before being able to secure funding to buy their first radio station. After the couple divorced, Cathy Hughes would go on to build the company into the most valuable African American owned public company, valued today at almost $80 million and now run by her son, Alfred Liggins III. According to Yahoo Finance, as of December 31, 2013, Radio One owned and operated 54 broadcast stations located in 16 urban markets. However, the $80 million valuation today is a bit misleading though because fifteen years ago at its apex Radio One was actually valued at $1.5 billion when its stock price would summit just seven months after its IPO at $97.50 per share. A feat virtually unheard of among African American private or public owned companies. So what happen? How did the company lose almost 95 percent of its value over the past fifteen years?

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The company has had three major headwinds working against it since its apex. First, the dotcom bubble of 2000 really dealt a blow to the company that it honestly never recovered from. After their 3:1 stock split in June 2000, the stock would see its prices tumble 82 percent over the next few months before making a healthy recovery over the next few months. A few years into the recovery the stock price would reach back into the mid-twenties briefly, but it would then begin on its precipitous decline and over the next five years as the second wave of the internet boom took off. Tech companies like Pandora and other music sharing sites began to take off pushing radio companies against a wall. This would be the second headwind that started to push against Radio One. While the company was a player in the urban radio sector, it was by no means large enough or revenue diverse enough to withstand the onslaught that happen in that second tech wave. With new kids on the block companies like Pandora, Spotify, and the colossal of clout Apple’s Itunes on the scene and playing impetuously in radio’s sandbox, it then became harder and harder for radio to keep listeners. Mike Stern in an article from Medialife Magazine noted that, “Back in 2000, time spend was: radio at 2:43, TV at 2:37 and internet at :59. In 2010 it was internet first at 2:53, then TV at 2:47, with radio third at 1:24, according to the study. The culprit, no surprise, is all the other media options out there that didn’t exist a decade ago or were in their infancy. With yet more media options becoming available, presumably those declines will continue.” It also did not help that most radio companies response was to slash and try to hold the fort as oppose to consolidate and expand. Neil Rubin of The Detroit Times says, “Radio doesn’t help itself when it cost-cuts to the point of irrelevance. Rounds of layoffs by corporate-owned stations, Jacobs says, leave too many time slots with voices from afar that don’t know Taylor from Taylor Swift, so what’s the incentive to listen to their music instead of your own?” So not only were people spending less time listening to radio because of more options, but they were also dispassionate about what radio was offering, which only compounded the problem.  Lastly, Radio One’s attempt to diversify its revenues arguably was a mixture of too late and a poor strategic partner. In an attempt to create a rival to BET they announced TVOne, a joint venture deal with NBCUniversal, a company who at the time was in the process of being a joint venture itself between General Electric and Comcast, with the latter eventually almost a decade later owning NBCUniversal outright. While it may have been called a joint venture on paper, when an $80 million company (Radio One) and a $150 billion company (Comcast) do a joint venture, it is hard to know exactly what “joint” means, because it sure does not have to mean equal. The Daily Beast reports Radio One’s ownership originally was 36.8 percent while Comcast held 34 percent, but there is no mention of who owned the remaining 29.2 percent. Making the matter even more perplexing is that also in that 2011 article, the Daily Beast reported, “Comcast acknowledged in an email to The Daily Beast that it facilitated this stock acquisition, though it said the terms of the deal were “confidential.” allowing Radio One to increase its ownership stake from 36.8 to 50.8 percent in TVOne. It never states that Comcast decreased (or increased) its ownership, so who or whatever mystery investor held that 29.2 percent may have been exiting their investment. Also, it stands to reason that just because Radio One has majority ownership does not necessarily put it in control of TVOne. Hello, dual class stock ownerships. The joint venture only speaks of the ownership stake and not the voting stock, which can be two completely separate situations. However, if Radio One is in it for the revenue, then this could be in their favor long-term or they could have more ownership of a joint venture classified in the mystery investor’s portfolio under Titanic given that since the Daily Beast article in July 2011 until now the stock price is virtually unchanged despite this increased ownership. In the early parts of 2014, there have been some forays in the five dollar price range only to see the stock tumble back down the rabbit hole. Simply put, in hindsight Radio One needed a dance partner and it chose the wrong one when it came to television.

Re-enter the “what could have been” scenario in a merger between BET and Radio One. It would have created a much deeper entrenchment of a company that would have been the epicenter of African American entertainment media. A virtual monopoly if you will on their core demographic segment. You could even make the argument that with TV and radio under its belt the new company then could have gone after print, say for instance acquiring Black Enterprise, Essence, or perhaps some of the larger African American newspapers around the country. At this point we are easily talking a multi-billion dollar company, again with a monopoly on its demographic. All that needed was for egos to be set aside. A task that I understand is easier said than done at times. The problem is not finding a way at all now sees both Essence and BET in the hands of other communities and Radio One teetering on the brink of financial distress.

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The company’s current financial situation is a puzzlement to the eye as it has two and half times the EBITDA and almost twice the revenue (pictured above) that Salem Communications, but has a negative net income of almost $66 million versus Salem’s positive net income of almost $11 million. This positive net income allows Salem Communications to offer a dividend making it even more attractive to investors in this low interest/yield environment and therefore creating more demand on the stock, which may explain why Salem with less revenue and EBITDA has a market cap of two and half times of Radio One. However, maybe Radio One has started to follow the advice of Dick Kernen of the Specs Howard School of Media Arts in Southfield and get laser focused. Kernen said in the Rubin article that, “If you’d come into a (television) station 25 years ago pitching an idea for 24 hours of weather,” he says, “they’d have called security. But the Weather Channel has flourished, along with endless others. Meanwhile, the fastest-growing radio format is Christian, with an audience advertisers can depend on to be loyal.” The latter part may explain Salem Communication’s oversized success for its size, since it is a Christiancentric multimedia format that includes radio.

Radio One maybe getting the message though. Recently, its Houston 92.1 station got some of that laser focus switching from a 24 hour news format in favor of 80s and 90s hip-hop, which was more suited to its urban clientele. It has been nothing short of a smashing hit and with the 30-45 year old demographic who tend to be job stable and many have families in one of the country’s hottest economies. One could argue that 92.1 is in an advertising sweet spot. This is just one station in one market, but it also is 92.1’s third format since I have lived back in Houston since 2010, which tells me Radio One’s team is willing to tinker until it blows up or they get it right. They also recently completed the acquisition through their Interactive One subsidiary of a very popular digital publication founded by Russell Simmons called, which has entrenched itself among the millennial demographic. You wonder though if the company would ever have the heart to part with its leadership if this current run does not work, but for now it seems the board and Ms. Hughes are going to continue to have faith in her son to run the show. So maybe what we are seeing is not a company on the verge of bankruptcy, but a company sharpening its vision for the future. The stock is still going in the wrong direction, but maybe the company is going in the right direction. Value stock, anyone?

For The Greater Good, Make Donald Sterling Keep The Clippers

Don’t cut off your nose to spite your face. – 12th Century Idiom


I am a fan of prenuptial agreements. As a banker you come to realize that money, divorces, and emotions are a Molotov cocktail waiting to explode. A former associate of mine allowed car loans that both she and her now former husband purchased new vehicles with to be all in her name because of his poor credit. As the marriage dissolved and headed for divorce she just wanted it over and was willing to sign whatever to expedite the divorce. By the time she came to her senses she realized that she was stuck with a bundle of debt for two cars, her car was upside down, no recourse, and an ex-husband who basically got a vehicle free and clear. The point is that emotions of the short-term moment often end with long-term consequences that are more detrimental to the injured parties. Enter, Donald Sterling.

For those who are unaware Donald Sterling is a lawyer who made his wealth not through litigation, but through leveraging his earning into real estate holdings. According to Nadja Brandt of Bloomberg, “He owns at least 160 apartment buildings, office properties and single-family homes in the area, many of which he purchased with cash, according to county records compiled by data provider LexisNexis.” In addition, over the past eighteen months she reports, “They’ve purchased at least 12 houses and three multifamily buildings from the beginning of 2013 through last month for a total of $58.7 million, according to Los Angeles County Office of the Assessor records.” Now, with the NBA forcing the sale of the Clippers amongst public pressure, Mr. Sterling is about to be let loose with $1 billion in capital, the expected sale price of the team, to go on a real estate buying spree. Currently, the Los Angeles Clippers produce about $15 million net income per annum according to recent Forbes assessment. A significantly less amount of capital to accumulate property than a sale thanks to having to keep significant capital tied up in the operation of the team.


Two significant items of importance to consider with a man who owns 160 apartment buildings before you let him loose with a billion bullets. He has already paid according to Housing Wire’s Trey Garrison, “The longtime Democrat and NAACP donor agreed to pay $2.625 million to a fund for tenants and prospective tenants injured by his discriminatory practices, plus $100,000 in fines” in 2009. Before that according to Garrison, “in 2005 after a settlement was reached, wherein a judge ordered Sterling to pay nearly $5 million in attorney’s fees to the plaintiffs.” Remember, he already owns at least 160 apartment buildings. Has anyone given any thought to how many he potentially could own by forcing the sale of the Clippers? No, because we are caught up in the emotions of the moment.

There are 12 players on the Los Angeles Clippers roster. The NBA is comprised of 30 teams with 12 players on each for a total of 360 players. So let us take a good hard look at the number of people potentially impacted by the sale because right now we are only talking twelve. Initially, Donald Sterling was going to fight the forced sale of the team, but I am sure he, his lawyers, and financial advisers may have come to the same conclusion I have looking at the numbers. He could arguably double his real estate holdings, which means he could potentially be the landlord of as few as 30 000 or potentially as many as 300 000 plus Los Angeles citizens versus the grumblings of twelve basketball players and staff. My math is still pretty sharp and the last I checked 12 is less than 30 000, so for the sake of the greater good please let this man keep his team. Most often it is best to take a step back and let the emotions clear the room to be sure a rational decision is being thought out and made. Otherwise, get out the scalpel.

The Slow Fall (Today) Of Apple Is Steve Jobs’ Fault

By William A. Foster, IV

Creativity is inventing, experimenting, growing, taking risks, breaking rules, making mistakes, and having fun. — Mary Lou Cook


There is a problem that Vince Carter, LeBron James, Kobe Bryant, and Allen Iverson all suffer from in relation to their legacy. They came after Michael Jordan. It will not matter how great they were or are in their careers, all are destined for the hall of fame, they and their legacies will inevitably be talked about in terms of being Jordan’s heir apparent. The reality is none of them were Jordan’s heir apparent because no one was ever going to be able to live up to the standards of one Michael Jeffrey Jordan. Six NBA championships, two three-peats, taking two years off to play baseball, countless scoring titles, and a shoe that over a decade after his last game is still clamored for by youth who were not even born when he retired. In technology, Steve Jobs’ legacy cast an even bigger shadow than Michael Jordan and it might ultimately bring down the company he co-founded in his parents’ garage and yes, it is all his fault.

I have always been wary of organizations and businesses where there is a leader and not leadership. That is too say that if I name an organization/business and what comes to mind is an individual and not a culture there is a problem. Steve Jobs was bigger than Apple much in the way that Warren Buffett is bigger than Berkshire Hathaway. The problem is not when these leaders are at the helm, but when they are no longer part of the organization it leaves a void that is often insurmountable to anyone coming after them. We have seen this become more apparent at Apple since Jobs’ death and the vacuum seems to be only getting larger.

Apple is a luxury brand because of its quality and price point. Outside of NEXT, Apple has never been a major acquisition company. If it did acquire a company it was small and erased all signs of that company’s previous brand at acquisition. There have been red flags of Apple losing its way for awhile, but many of us tried to simply look the other way. This is the company that Steve built and we all assumed that they will just figure it out. Steve’s presence or lack thereof can not be that major, right? Right? First, you had the release of the IPhone 4c which was suppose to give Apple entry into a cheaper price point. Wait, what? Cheaper? Apple should have asked Mercedes how going cheap works out for a luxury brand’s image. Mercedes introduced its under $30 000 model and quite frankly it is just a sad sight. Arguably, it has allowed other brands to catch up because you are producing a price point and quality not in your expertise. Next,  there was the dividend that you wonder if Jobs would have ever approved, especially if it meant caving to activist investors like David Einhorn and Carl Icahn. Then, there was the IPhone release with the bigger screen, but basically nothing else of consequence. Truthfully, Apple has enough cash to make this a very long drawn out demise, but it is a demise no less. It has gone too far from its cultural center. I once said that Apple needed to hoard its cash because it could be the thing that saves it from having to go through the pain that IBM went through facing extinction (bankruptcy) in 1993 as it tried to reinvent itself. It can not be stressed enough how hard it is to turn companies the size of Apple today and IBM yesterday around when things start going in the wrong direction. A strong resource position is vital to the ability to its future survival. Especially if Tim Cook continues to try and leave his mark on the company.

The potential buzz of Apple buying Beats Electronics was the nail in the coffin that left me without any doubt that this company is falling apart internally coupled with the aforementioned question marks. The stern hand of Steve Jobs is missed. He would run you into the ground to produce greatness and often did. Steve Jobs reminds me of my trainer in fact. Demanding as hell and you hate every exercise he puts you through, but you can not help but have a smirk at the results. The company who lost its way when Steve was ousted and only saved by “acquiring” his NEXT software and reinstalling him as CEO. It had a culture centralized to Jobs to the point where I wondered if he assigned bathroom times for every single employee in the company down to the groundskeepers.  Truth be told is that it appears it was centralized and he liked it that way and would have it no other way. From everything you read and interviews you see, it was in his personality to have it no other way. He did not do customer inquiries because customers have no idea what they wanted until Steve gave it to them one analyst joked. Shareholders knew to be quiet and hold their shares. Neither David Einhorn or Carl Icahn would have had the courage to challenge Steve Jobs. I am not sure really anyone did. Why would you? You do not need to question a man who is considered one of the greatest visionaries of our time. Again, that all works fine so long as you have the key to eternal life. I joked with someone recently even prior to the Beats rumor that what Apple should have done is put Jobs’ brain in an android. This company’s culture is built on having a taskmaster and unfortunately Tim Cook is not that man. Tim Cook is trying to not feel beholden to Steve Jobs’ ghost, but it is as inevitable as the comparisons between LeBron James and Michael Jordan despite the fact they are such different players. It is like the old adage goes comparing apples and oranges. In another company or Apple era further removed from Steve Jobs, Tim Cook might be a great CEO, but at Apple succeeding Jobs is not just hard, it is impossible. Steve’s DNA is too engrained in the company and it simply can not function without his stern hand.

If I were investing in Apple today it would be simply on the strength of the dividend and their cash. This current rumor which if it were not true, then Apple has done a poor job of distancing itself from it. Again, it has not been confirmed, but we all know where there is smoke there is fire. I have yet to find anyone who finds this deal good for Apple – myself included. Richard Branson even went so far as to joke that maybe this was Apple’s way of “giving back” to all the artist it crushed with the advent of ITunes. Aside from the obvious culture clash that seems present with these two companies it highlights more and more that Apple is void of the compass that produced the innovation that changed the paradigm of technology’s impact on the world. Apple is a company that is not even forty years old, but has gone through a lot in its short life on its way to becoming one of the world’s most valuable companies. It is hard to imagine a time when Steve Jobs’ ghost will not loom over this company, but its very survival might hinge on exorcising the ghost of Steve Jobs and laying the culture of what was to rest once and for all.

Disclaimer: There is no ownership of any companies mentioned in this article by myself, my business, or my family as of this article’s publishing.

Report Shows African American Businesses Only Earn 0.4 Percent of All American Business Sales

In all negotiations of difficulty, a man may not look to sow and reap at once; but must prepare business, and so ripen it by degrees. – Francis Bacon

Honestly, when I first looked at the census report I had to go over the calculations at least five times. This was primarily just because of the sheer disbelief that a population that is almost 15 percent of the American population and has 7 percent of America’s businesses does not even generate half of 1 percent of the $30 trillion in sales that all American businesses generate. Given the abhorrent figures I see on African America institutions daily, even I was remiss at just how shocked I was.

If this was a fight, then one would have to wonder just when our “trainer” would throw in the towel and stop the fight. Of the four recorded Diasporas shown, African Americans are not just in last place, they have been lapped at least once by every other group in terms of total sales divided by total firms. A strong sign of capital making its way into communities (or indirectly out of it).

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Total Sales Divided Total Firms = Average Sales Per Firm

  • European Americans ASPF – $453 000
  • Asian Americans ASPF – $327 000
  • Native Americans ASPF – $145 000
  • African Americans ASPF – $71 000

European American firms have over six times the ASPF, Asian Americans firms have almost five times the ASPF, and yes even Native Americans firms have over double the ASPF that African American firms have. This is probably a good place to insert a number of expletives at the dismay any economic strategist would feel about reviewing this kind of report. However, one must ponder exactly why are we here and how do we manage going forward with this information.

First, one of the startling statistics within the graph aforementioned is number of firms with paid employees. Entrepreneurs and companies do not tend to hire until they have reached a threshold that the business is producing enough revenue to bring in additional workers. A company brings in workers if it believes that by doing so it will help the company grow by increasing either efficiency or productivity. If Company A hires a worker for $30 000 a year, then Company A believes that worker can generate at least $30 001 in efficiency or productivity to the revenue of the company’s bottom line. Remember, companies are in it for profit, not charity. A worker producing less in revenue than is being paid is on their way to ensure the company is probably heading out of business. Labor still constitutes the majority of a firm’s cost regardless of industry. Therefore, the percentage of companies with with paid employees is a healthy indicator of a community’s economic strength and growth prospects. On an indirectly related note, this also plays a large role in explaining African American unemployment rates maintaining double digits. No surprise that Asian Americans are above the national average and have the nation’s lowest unemployment rate. Prior to the recession, they also had a higher median net worth than European Americans.

  • National Average of American Firms With Paid Employees – 21.1%
  • Asian American Firms With Paid Employees – 25.6%
  • European American Firms With Paid Employees – 20.5%
  • Native American Firms With Paid Employees – 10%
  • African American Firms With Paid Employees – 5.5%

Secondly, it helps to examine the concentration of where our businesses are in terms of industry. The graph below shows that of our firms with paid employees that almost one-fourth are in the health care/social assistance sector.


Given the boom that is occurring in healthcare, one would assume we would be fairing much better with such a large concentration in that area. However, within that that number we tend to be concentrated in the home health aides business. In comparison, medical and health services within the same sector produces 400 percent higher revenues. A sign that even among our businesses we tend to be at the lower end of the value chain or at the very end of it.

Lack of access to funding and business training tends to be primary issues of why our businesses lack the ability to growth and tend to be in sectors that have minimum start up cost associated with them. This to some degree explains why there are no African American owned airlines, car companies, major integrated energy, and other capital intensive businesses. Business sectors that produce products which have immense sales volumes, we have essentially locked ourselves out of much to our own doing. African American financial institutions like credit unions and bank contain less than one percent of African America’s buying power. This severely limits the lending ability to African American business growth and thereby limits our ability to enter into more lucrative industries.

Sales are more important than buying power to a community. The revenues generated from sales allow for hiring which drops unemployment and raises buying power, wealth creation which can be reinvested into schools and other community services, and ultimately help create self-sufficiency for our communities. Our business portfolio must ultimately diversify into deeper parts of the value chain in all industries, but ultimately in order to do so it must start with strengthening our financial industry to allow for capital to grease our entrepreneurial engine.

Tired Of Poor Media Coverage – An HBCU Alum Makes Plans To Start Buying Ownership Stake In Local TV Station


The year was coming to an end and I was on the phone with the secretary of the managing partner and president of an up and coming investment firm. I was hoping to land an interview after a tip came in that he was starting to establish a stake in a local TV station after being frustrated of their coverage of his alma mater over the past year. His secretary says emphatically to me, “He will meet with you, but only on the condition of anonymity.”

I walked into the cigar shop greeted by a fog of smoke and a moment of silence, quick stares, and boyish grins. It was obvious they do not see women in here often, but it did not take me long to see why he frequents a place like this. It was a laid back atmosphere and with a bit of ear hustling there were business deals and conversations taking place all around me. This was a place for men on a mission. It was not hard for me to spot him, given we were the only two African Americans in the shop.

He walked over and sat down as he introduced himself and got straight to business saying, “The last straw for me was the media coverage of our gradation ceremony. They even managed to somehow spin THAT negative.” I then poked at why he felt the need to keep anonymity on the situation given that it could inspire others. He replied, “Have you ever read Art of War? Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent’s fate.” The issue of publicity stems from his firm being small with limited resources, they are going to have to accumulate their stake in a slow and steady approach. It appears they are going to go out of their way to not have the management try to install any poison pills against a hostile takeover and not to buy too much at once as to drive up the stock price. “Those are always two major concerns in a hostile takeover and make no mistake this is hostile. I just do not want them to know its hostile until its too late”, he said. The coverage of his own alma mater will clearly become more favorable if he is successful, but what of the other colleges and universities in the area that are not HBCUs? What kind of coverage will they receive? He said, “I am not here to be Mother Theresa, I am here to win, I am here to make it more profitable, improve my alma mater’s social capital, and move those profits back into our community.” In other words, all is fair in love and war.

If nothing else is clear, he plans to kill his prey in a way that is almost snake like and squeeze the life out of it slowly but surely. Will the firm succeed? It is hard to objectively say. They are going up against well-seasoned investors’ and deeper pockets, but we could be looking at one of the most important coups in African American media ownership if successful. Even if successful, he made it clear that this would just be the start and they would then turn their eyes toward other local TV station ownership in other HBCU towns. That sound you just heard? The first domino dropping.

Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent’s fate.
Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent’s fate.
Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent’s fate.