Radio One Buys Blackplanet.Com

$38 million deal includes other ethnic community Websites

With its acquisition of Community Connect Inc. for $38 million, Lanham, Maryland-based Radio One Inc. is expanding its Internet reach by adding BlackPlanet.com to its arsenal of media properties. In addition to BlackPlanet.com, CCI owns and operates several social networking brands under its umbrella including MiGente.com and AsianAve.com.

“Radio One has been interested in expanding in the online space for years,” says Tom Newman, president and COO of the company’s interactive unit.

With more than 18 million members, BlackPlanet.com was rated the most popular social networking site targeting a multicultural group in 2007 and the fourth most popular social networking site overall by New York-based market research firm Hitwise.

Had the merger not happened, “BlackPlanet would still continue to grow, but we felt like we could jump-start and take it to another level by leveraging the cross-platform assets that Radio One brings to the table,” says Ben Sun, CEO of CCI.

Omar Wasow, the co-founder of Black- Planet.com agrees: “Radio One is a great home for BlackPlanet.com because it has the marketing muscle that Community Connect lacks.”

The acquisition of CCI comes at a time in which Radio One (Nasdaq: ROIA) has been selling radio stations to reduce its debt load. Its losses swelled to $386 million last quarter.

The company, which also owns BlackAmericaWeb.com, wants to expand its interactive efforts, but some analysts question the strategy. “We are disappointed that it chose to purchase interests in noncore assets instead of paying down debt,” says Marci Ryvicker, an analyst with Wachovia Capital Markets L.L.C.

Radio One executives, however, see the acquisition as an avenue to increase advertising revenues.

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  • Mega

    I wonder what the earnings multiple was on this acquisition. How long will it take to cash flow?