45 GREAT MOMENTS IN BLACK BUSINESS – No. 5: BET Sells for $3 Billion Creating America’s First Black Billionaire
BLACK ENTERPRISE celebrates the 45th anniversary of its roster of the nation’s most successful black businesses—The BE 100s. To commemorate the significance of this collective’s widespread impact on black business and economic development as well as American industry over four decades, we have presented 45 milestone moments. As part of this tribute, we continue our yearlong countdown.
2000: Robert Johnson, sells BET for $3 billion to media giant Viacom, making him the nation’s first black billionaire.
In clinching a deal that made him America’s first black billionaire, entrepreneur Robert Johnson led the sale of the nation’s largest black-owned cable channel to media conglomerate Viacom Inc. The transaction came with Viacom’s purchase of BET Holdings II Inc., the owner of Black Entertainment Television. The deal was announced in 2000 and closed a year later, valued at around $3 billion.
The pact made BET Founder Robert Johnson the nation’s richest black man and a household name. An astute executive, entrepreneur, and wealth builder, Bob Johnson made business history in 1991 by taking BET public. It became the first company ever traded on the New York Stock Exchange with majority ownership controlled by African Americans.
Not pleased with BET’s stock market performance, Johnson teamed with Liberty Media Group in 1998 to buy private ownership of the company and reorganized it as BET Holdings II Inc. When Viacom acquired BET Holdings II, it resulted into $2.4 billion in Viacom stock options for Johnson, who accepted a five-year contract with Viacom to continue leading BET. A former cable-industry lobbyist, Johnson and his wife at the time, Sheila, founded BET in 1980, with $500,000 in funding and a $15,000 bank loan.
Viacom was largely attracted to BET because it would allow the media giant to better reach blacks, a population then growing faster than the overall U.S. market and absorbing more media. Viacom also would gain access to some of BET Holdings’ prime properties such as Black Entertainment Television. BET was the only cable-TV network targeting blacks and reaching 62.4 million households.
Plus, BET Holdings owned a jazz network with about 11 million subscribers and Action PPV, with about 8.5 million subscribers. Further, Viacom executives were impressed with BET Holdings’ double-digit revenue and earnings growth potential.
On the BET side, the acquisition meant BET could potentially tap into Viacom’s vast holdings. Johnson pointed out the deal gives BET enormous programming potential and cited CBS, UPN, and Paramount. BET’s Jazz channel could benefit from an affiliation with MTV.
Still, the deal got a lukewarm reception from some black media executives. Radio One Founder Cathy Hughes told The Washington Post at the time she had mixed feelings about a possible BET sale. “It is a great day for Bob Johnson, but it is a significant loss for African American ownership,” she said.
Hughes stated it is “absolutely mind-boggling” to consider that a black-owned company might be sold for so much money.
“I am real happy for Bob, and I’m happy for black commerce,” she said, but she noted that the deal also means that blacks would lose control of a premier media property. “It changes the identity and changes the perspective,” Hughes said.
Currently, Johnson is the founder and chairman of The RLJ Cos., a portfolio of companies with holdings in several industries, including the RLJ McLarty Landers Holdings L.L.C., the highest-earning black-owned auto company with revenues of $1.6 million and ranked No.1 on the 2018 BE Auto 45 list.