The Essence Of A Breakup

When Ed Lewis and Clarence Smith cut a deal with AOL Time Warner two years ago, they were offered the promise of fresh capital and new markets for the leading black women's magazine. Little did they know it would mean the split of a 32-year-old business partnership and a fight for the soul of an institution.

sources say Smith’s removal is part of “the slow takeover of Essence” by AOL Time Warner, an action that will be complete within three years when Lewis turns 65 — an age when many CEOs check out. The recent action further compounds the sentiment of a skeptical and protective segment of the black community that believes it will lose yet another institution. There was a similar outcry when Berry Gordy’s Motown was acquired in 1988 by a white investment firm, and when Johnson Products, the legendary Chicago-based haircare products company known for its Afro Sheen and Ultra Sheen brands, was sold to the majority-owned cosmetics and pharmaceuticals conglomerate Ivax Corp. in 1993. After all, it took a decade of mergers and acquisitions for African Americans to cede their dominance of the black haircare market. (See “Bad Hair Days,” November 2000.)

As a media property, Essence, many believe, holds a public trust — one that is responsible for preserving the image and voice of black women. “When these large companies ‘buy’ us, there’s money on the table and perhaps an expansion on the business side, but the community factor is lost,” says Hermene Hartman, publisher of N’Digo, a black lifestyle magazine in Chicago. “That’s just part of the hazard when these large companies buy our companies — they change them. And I’m sure that’s a factor at work here.”

Lewis calls such allegations “poppycock.” Says the soft-spoken chief executive: “Ever since we did the deal, people have been saying that we’ve been acquired and I sold out. Time Inc. made an investment that will help us expand in our space.”

BE interviewed members of Essence’s current management as well as corporate insiders, former employees, and industry observers — some who requested anonymity — to find out the impact the AOL Time Warner-Essence joint venture may have on the management, marketing, and mission of an African American business icon. Smith, however, declined to comment for this article.

Smith’s departure — which the company admits has been in the works “for some time” — ends what was once considered the most successful partnership in black business. Lewis and Smith were recently hailed in BE’s June 2002 issue as “Marathon Men,” chief executives who have run the five companies that have been listed on the BE 100S since its inception 30 years ago.

But sources say the merger further exacerbated conflicts between the two partners on strategic and management issues. For instance, Smith became increasingly resistant to AOL Time Warner’s influence on the organization. The Lewis-Smith split became so nasty it was prominently featured in an item written by popular New York Post gossip columnist Cindy Adams — a rare and inauspicious occasion for black business. She wrote that “bad blood is coagulating at Essence” and that Smith had been “beheaded.” She further alleged that the joint venture “may have been the spark but the triggerman was Lewis.”

Despite the turbulence, Essence Communications Partners remains a BE 100S company. It has retained its 51% black ownership status through Essence Communications Holdings (ECH). African

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