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Viacom lift for Johnson
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November 3, 2000: 6:45 p.m. ET
Johnson, via Viacom, soon to have hands in TV, radio, travel
By Staff Writer Franklin Paul
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NEW YORK (CNNfn) - Eyeing aggressive expansion, Robert Johnson bought back his cable empire from the public in 1998; with today's sale of BET Holdings to Viacom, the mogul may finally get his wish.
Johnson's fortune may expand as much as that of his 20-year-old network, expanding his presence in the radio, TV, publishing, restaurant and, possibly, airline industries.
 With billions in his pocket, a $13 billion conglomerate at his back, and a still-robust entrepreneurial spirit, Johnson's latest move places him in the realm of contemporary media barons such as Ted Turner and Richard Branson.
What's more, it thrusts him into a very small club – black executives wielding senior-level power at leading American companies.
"In the cable industry, there is nobody on the level of Bob Johnson in terms of being able to be named in the same breath as a Sumner Redstone [,Viacom chairman]," said Alfred Edmond, Senior Vice President of Black Enterprise magazine, which chronicles black businesses and executives.
"This deal increases his personal wealth outside of BET, so you are talking about an entrepreneur who still has his irons in the fire to some other things in business," he added.
On Friday, Viacom Inc (VIA.B: Research, Estimates) said it would exchange some $2.3 billion in stock for BET Holdings II Inc., including nearly all of BET, except for certain money-losing movie production units and its restaurant assets, which will be retained by Johnson, BET's chairman and majority owner, and John Malone's Liberty Media Corp., a minority holder.
Johnson, a former lobbyist, and his staff will continue to run the company, which made its debut in 1980 as Black Entertainment Television with just two hours of weekly music programming.
Regained control in 1998 after taking company private
He took the company public as BET Holdings in 1991, making it the first black-owned company on the New York Stock Exchange. But Johnson tired of forgoing innovation in order to satisfy shareholders, who preferred ever-increasing bottom-line returns.
Once the company returned to being a private entity, Johnson set about expanding beyond BET's core network, whose bread and butter is hours of music videos and music-related shows, as well as some news, sports and issue programs aimed at the black audience.
Growing through both independent creation and acquisition, the company now boasts additional segments including film production, book publishing, the BET.com Web site, and a stake in magazine-publishing venture Vanguarde Media.
Its cable operations include a jazz music network and several movie channels. Moreover, after the Viacom deal, Johnson is expected to still own several eateries, including BET SoundStage Club at Walt Disney World in Florida.
The Viacom deal makes Johnson the second-largest individual stockholder at Viacom, leapfrogging fund manager Mario Gabelli, but still far short of the holding of Viacom's Sumner Redstone.
It also gives him more capital with which to pursue other deals. He plans to buy, for $141 million, DC Air, which will be created from assets related to the proposed merger of UAL Corp.'s United and US Airways.
He could also diversify, like British billionaire Richard Branson, who plans to add a mobile telephone and financial services business to his airline and Virgin music company holdings.
The Viacom deal mirrors that of Time Warner's acquisition of Turner Broadcasting, which transformed Ted Turner, one-time billboard-advertiser turned sports, news and media mogul, into the largest individual shareholder at a conglomerate whose roots stretch back to the 1920s.
Like Turner, Johnson brings with him a strong, profitable operation with loyal customers. In return, he gains access to broad distribution channels, marketing might and a wealth of cross-pollination options.
Programming, marketing, distribution options increased
These are the kinds of options that Johnson dreamed of in years past but wasn't able to execute alone. Despite its respected stature and 62 million customers, sales at BET, one of the last remaining independent cable networks, were only about $200 million in 1999.
In September 1999, he proposed taking an equity stake in the UPN Network in exchange for the right to play some of UPN's sitcoms on the BET Network a week or two after their premiere on UPN.
 That deal failed, but the programming option may yet come to pass, since Viacom now owns UPN. That means one might see more of BET's popular rap music programming on UPN or Viacom's MTV. In addition, CBS programming may turn up on BET. Moreover, BET will have access to Viacom's radio assets, which include 27 stations that have large black audiences.
"CBS, UPN, Paramount, all of those assets provide programming potential for BET," Johnson told CNNfn. "[Also] the distribution capability -- we have a jazz channel that could benefit from the tremendous distribution that MTV has been able to gain internationally." (505 WAV, 505 AIFF)
Those kinds of options were outside of his reach in the past, as BET sought to keep costs low, relying on inexpensive, syndicated situation comedies and stand-up comedy programs like "ComicView."
But the company's past, and today's deal, do not come without conflict. Though it was not the biggest, BET is perhaps the best-known black-owned American brand name, whose digestion into one of the nation's largest conglomerates marks the end of an era.
It also throws into question how decisions will be made at BET, which has been criticized for airing music videos of questionable taste, many hours of low-quality infomercials, and failing to program toward more-adult audiences.
Now that BET has Viacom's backing, Edmonds suggests that there will be a stronger call from viewers to upgrade its offerings.
"Now you do have access to some other resources there should be a way to expand and improve so that more people can embrace BET and not feel that they must be as hard with regard the content," he said.
But Johnson said that he has always had the best interest of the community at heart.
"If they look back, they would know that I have been totally committed to serving the black community," he said on a conference call with the press. "Those who know me recognize that our commitment is solid." 
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