Open Exchange: Beyond the Boardroom with Jonathan Tisch

Bethany Beach, Delaware
Season 2, Episode 1

GUEST: Robert Johnson, Founder, BET
HOST: Jonathan Tisch

JONATHAN TISCH: Bob, you own a beautiful beach here in Delaware, but your journey started in Hickory, Mississippi. You are the ninth of ten children. What was it like growing up in the south?

ROBERT JOHNSON: Well I don't remember- remember much about the south, because uh... when I left uh... Mississippi, my parents uh... moved to Freeport, Illinois when I was probably four or five years old. And I pieced together parts of it when we would go back when I was young, but uh... mainly, most of my memories are of growing up in Freeport, Illinois.

TISCH: But you talk about having ten kids around the house, and you say that when there were a plate of cookies out, you had to move fast, or else one of your siblings was going to beat you.

JOHNSON: Absolutely, there was nothing ever sort of stored in the house, because you know, you got ten kids, you know, you got 12 cookies, automatically, ten of them were gone. So you got them early or you didnt get them.

TISCH: And then you went on to the University of Illinois. Was that a school that your family had sent some of your siblings to, or were you the first in your family?

JOHNSON: Yeah, I was the first kid from my family to go to college. And the reason I went to the University of Illinois, because a buddy of mine, a guy who uh... grew up in Freeport, a guy named Preston Pierson, who later on went on to play with the Pittsburgh Steelers and Dallas Cowboys. So I started uh... thinking about going to the University of Illinois, because he's the only one I knew had gone to that school, and uh... I ultimately ended up uh... going there-- going there for undergraduate.

TISCH: Any sense of the entertainment industry when you were an undergrad? I know then you went on to Princeton and went to the Woodrow Wilson School.

JOHNSON: Yeah, not at all. I mean my- my uh... interest at the time I was at Illinois was to-- uh... you know, I was going to get a degree in teaching. I knew that. But I became so fascinated with history, particularly European diplomatic history that I wanted to go to the Foreign Service. My junior year, I had two alternatives for the summer; one was to uh... go in something called the American Friends Service Exchange Program, or to go to Washington and be part of a program uh... that the Ford Foundation was sponsoring to interest minorities in the Foreign Service, and I chose to go to D.C. and be in the Ford Foundation program. And that sort of directed me to go into uh... graduate school in international affairs.

TISCH: And then you hit Washington D.C.

JOHNSON: Yep, came to Washington D.C. after graduate school, uhm... again, you know, thinking about going into government. And so when I got to Washington, I uh... went through a connection at Princeton. He introduced me to Lady Bird Johnson's press secretary. And I'll never forget this. One day we were-- I went-- I met with her and she was saying, "Well what do you want to do?" And I said, "Well you know, I- I like politics. I might like working on Capital Hill. I'm interested in- in the Foreign Service kind of stuff like that." She said, "Well who do you want to work for?" and I said, "What about Kennedy?" And she said, "Well Kennedy doesn't pay anything." (laugh) I said, "Well what about Mondale?" She said, "Yeah, yeah, Mondale would be a good one for you to work with," you know. So she-- this- this all happened in one day. She picked up the phone, called Walter Mondale's office. Uh... I talked to his press secretary and he told me, he said, "You know-- you know you've got a great resume, but uh... we're not looking for anybody right now," the press secretary said, "but a friend of mine works for the Corporation for Public Broadcasting and they were looking for an information officer. Why don't you call him?" So I called his- his friend and that very day, I was offered a job as working for CPB. I mean it just happened just like that.

TISCH: And then the next step was working for the National Cable and Telecommunications Association, which I guess was a major step for you to learn about your future, as it turns out, the cable TV industry.

JOHNSON: Yeah. No, I- I got in the cable business sort of by luck. I had been working-- after I worked for CPB for a while; I got a job as a press secretary on Capital Hill. And uh... you know, I decided that I'd worked in public information, I'd done something in- in politics, and-- but I didn't have a business sort of stripe, so to speak. So uhm... it was just pure luck. I was at a party at a next door neighbor's house in south- uh... southwest D.C. and I met this young woman and we got to talking. And she said, "You know, you'd make a good lobbyist for the cable industry. And I said, "I don't know anything about cable". She said, "Don't worry. I didn't know anything else about it either, when I got into it."

TISCH: At this point, I guess not a lot of people knew about cable.

JOHNSON: No. This is-- this is 19-- this is 19-- early 19-- the late 1970's,1 980 before cable was really into the big cities. And so she got to talking and she said, "I'd like to introduce you to the head of the Trade Association." So I met this guy, Bob Schmidt and he said, "Look, you know, cable is coming. It's going to be big in the urban cities and we need somebody to help lobby for deregulation, and would you be interested?" And I said, "Sure," you know, and so I got the job uh... as a lobbyist. The- the title was Vice-president for Government Relations for Pay Television. This was long before HBO, Showtime, Cinemax and any other programs.

TISCH: You probably had to explain that all this information was coming through a coaxial cable.

JOHNSON: Oh, no. It was-- it was you had to diagram the whole ______.

TISCH: You're going to Capital Hill and-

JOHNSON: You had to start off with, "...there's this thing called a satellite." And they'll say, "And what's a satellite?" "Well a satellite circles the globe and there's a transponder that transmits it to the ground. And then there's a hadean[ph?] and the hadean runs it along the wires, and the wires take it along the-- you know, into the house." And- and it was a whole cable 101.

TISCH: And one person that you came across and eventually became close to, and I think you might even say that he became a mentor was John Malone.

JOHNSON: Oh no. He absolutely became a mentor and a very close personal friend, and he still is today. And- and uh... I was uh... as I said, a lobbyist for the industry. John was on the board. He was working at a company called TCI Telecommunications, Inc. At that time, it was about the third largest cable company in the country. And I remember one day uh... I was talking with John and he said, "Bob, if you ever have any ideas about what you want to do, why don't you come talk to me." So when I started uh... thinking about BET, the first person I picked up the phone and called was John Malone. And John is one of those guys that, if you know him, he is a terrific visionary. He believes in hard work ethics. He doesn't believe in anything of- of government support or government subsidy, but a total supporter of entrepreneurship. So when I went to John back in 1980 with this idea of BET, he said, "Bob, how much do you need to start this company?" I said, "I need a half a million dollars." He called his lawyer in and he said, "Bob, I'll tell you what I'm going to do. I'm going to loan you $380,000 and I'll invest $120,000 in your business." And he said, "And I'll be 20 percent and you'll be 80 percent. Is that a deal?" I said, "John, that's a deal." Now if Malone had reversed the numbers and said, "I'll be 80 and you'll be 20", I would have said, "John, that's a deal." But you know he never did, but he put his uh... $120,000 in the business and uh... the $380,000 loan. And at that same time, within 30 minutes, as I said, wrote me out a check for a half a million dollars. And with that, I- I felt at that moment, a tremendous amount of responsibility to make sure that I lived up to everything John wanted in this-- in- in this investment. Not that he was look- looking for a huge return; he never even looked at it that way. But I just felt that he had showed a confidence in me that if I could do anything at all to make sure he got his uh... confidence returned and- and repaid, that was what I was going to do, and so I was focused after that point.

(music plays)

TISCH: Was Black Entertainment Television your first idea, or did you look at other niche markets that could have been started back in the early '80's?

JOHNSON: Well, Black Entertainment Television really sort of was part of a movement that many African/Americans had when cable was sort of being talked about. There were-- Carnegie Commission did a report on what cable could do for diversity, and- and niche channels and specialized programming. But BET really got its- its start through a- a chance meeting I had when I was lobbying for the industry with a guy who was trying to start a channel for the elderly. And he had this concept of a channel aimed at elderly people based on their demographics, based on their buying habits, based on their viewing habits. So when I looked at his report, I said, "Gee, you know, this is interesting. Can I borrow this concept?" He said, "Sure." So everywhere he had elderly, I crossed out and put black. (laugh) Black people have certain black habits, black people watch certain-- and that was a basis of BET. And it was black entertainment television, because I wanted to focus on entertainment, because that was the strongest content component that all African/Americans and even white Americans understood that if you took creative black talent, it would appeal across all uh... in- interest groups.

TISCH: Somebody had to start BET and you just felt that the time was right. You had John Malone behind you. It was going to start eventually, I assume.

JOHNSON: Yeah, somebody was going to start it. I mean my- my concern that the guy who might start it, and perhaps should have started it, was John Johnson at Ebony.

TISCH: And Ebony, you have noted that Ebony was sort of the evolution of the Saturday Evening Post.

JOHNSON: Right.

TISCH: But serving the African/American community.

JOHNSON: Right.

TISCH: And that BET was a similar concept.

JOHNSON: Right. I mean if you-- if you really look at it, John Johnson really created the concept of niche content targeted to the African/American middleclass. Ebony basically chronicled the- the rise of the black middle- middleclass, and using advertisers who wanted to reach their buying power to- to make it a business. And uh... what I did was simply take that same concept, but using in this case, satellite technology and cable technology to do it electronically, so the model was the same. John had subscribers who paid a- a fee for the magazine; I had cable uh... affiliates who paid a fee. John had advertisers; I had advertisers. And we both focused on the African/American consumer market.

TISCH: Now a few people have taken shots saying that BET started with sexy videos and that it really wasn't new entertainment, it wasn't really creative. How do you respond to those kinds of early attacks on BET?

JOHNSON: Some people claimed that we could have done uh... long form programming and everything else, but uh... starting out at BET at the time I started out, the economics just did not dictate going into dramas, going into sitcoms, because the cost was prohibitive. But even if it had not been, my focus was on taking this unique product called music uh... in a video format and- and creating a brand that became and is today the premium African/American brand in this country.

TISCH: Do you think having black in the name of the network held you to a higher standard, put you through scrutiny that maybe a white counterpart network might not have had to endure?

JOHNSON: Well yeah, I always talk to my good buddy, Tom Preston and say, "Tom, you know, nobody's ever asked you if you're a role model for all the poor white kids in- (laugh) in West Virginia and Appalachia, but they always ask me that." The black part of entertainment television was-- and keep- keep in mind, in cable, you want to be identified when you're trying to be out among 60, 30, 40, 50 channels-- uh... you really want to be identified, and so that's what Black Entertainment Television was. What I think the black community uh... had- uh... had uh... difficulty getting their h- hands around what BET meant was because we were the only one, so everybody in the black community who had an idea of what television should be tried to give us that responsibility. And the educational community wanted us to be the educational network. The public affairs community wanted us to be the public affairs community. So everybody wanted us to be something, but there's no way the network could be that and succeed and it was certainly not something I wanted to do, so uh... I focused on where I thought we should be. And so we felt we not only served our audience with the content that they were looking for, but we also served our community in a responsible way, and uh... so I'm completely uh... proud of what BET uh... was, what it is today and what it will be under Debra Lee, the new uh... CEO.

TISCH: And you run it like a business. You ran it like a business. You've sold it since-- and we'll talk about that in a second-- but you run it like a real business.

JOHNSON: Yeah, I approach-- I approached it as a business. It was never approached as a public interest, uh... business or a foundation or a uh... community organization. It was run as a business. I had shareholders, and John Malone was the original investor. Later on, I had uh... Home Box Office, Taft Broadcasting, and in 1991, BET became the first African/American company publicly traded on the New York Stock Exchange. So my focus was always business, always delivering shareholder value and doing that in a way that I think created a- a preeminent and dominant brand.

TISCH: You've been quoted as saying that-- especially as cable was growing in the '80's and the '90's-- that you didn't reinvent the wheel; you just painted it black.

JOHNSON: Absolutely.

TISCH: What impact has BET had on the African/American community in this country?

JOHNSON: I think-- I think there- there are three things that I would point to at BET; one is BET demonstrated first and foremost that you can create tremendous value out of serving the African/American consumer marketplace. When I sold BET to Viacom for $3 billion in Viacom stock, it was the largest trans- transaction for any African/American business in the world, so it proved you can create value by serving this- this consumer market. The second thing is BET created more African/American multimillionaires than any company in the country, because for the first time, African/Americans got in on the ground floor. They got in at the start, at the basis when the company was starting, so as the company appreciated in value, their ownership equity stake in BET appreciated in value. And then the third thing is I think if you look at the music industry today, the African/American music industry and BET were mutually beneficial, so we owe our success to the creative artists, the creative artists that you see today owe their success to BET. And that, again, is an example of a content provider coming into a relationship with a technology and making it all work together.

TISCH: You sold the company in 2001 for, as you mentioned, $3 billion to Viacom. In 2005, you stepped down as the CEO of the company. During that period, there were those that said what you created should have remained in African/American hands, but you sold it to Viacom, which is a huge multi-international corporation. Were you comfortable with your decision to sell it to Viacom, and were you comfortable with your decision to step down from the day-to-day operations?

JOHNSON: Yeah, I was very comfortable with my decision to sell it to Viacom, because when I-- when I decided I was going to exit the deal, it- it occurred to me to exit after uhm... Time Warner and AOL merged, and- and you get this huge value from media properties at that time. No matter what happened to the Time Warner/AOL deal, the fact is that was the high water mark for immediate evaluations. And I had an obligation to my shareholders, like John Malone. He'd been in the business with me for over 20 years and never sold a share. At some point, John was entitled to an exit strategy, so when I decided I would make a sale, I wanted to sell it to a company that I felt would continue to protect the BET brand, the BET focus against the African/American consumer market. And I've known Sumner and Mel for some time, and I remember talking to Sumner uh... about BET and he asked me uh..., "Bob, what do you want BET to be?" and I said, "I want BET to continue to be the preeminent African/American media company in the-- in the country, if not the world." And he said, "Bob, that's exactly what I want it to be." And at that time, I- I put together the fact that here's a company that was comfortable with brands having their own uh... programming philosophy and strategy-- Nickelodeon was different from MTV, MTV was different from VH1, uh... CBS was different from Paramount in that sense, so they were-- they were a company of brands and they allowed the brands to have their own voice, their own uh... independent integrity and content. So uh... as I started talking, I said, This is the place where this brand should be housed. And I- I made it clear to Sumner and Mel. I said, "Look, I- I'll sell you the company, but if you want me to stay and shape it for the future, I gotta have the absolute control to do exactly what I've been doing for the past 20 years."

TISCH: You're talking about Sumner Redstone, who is the CEO of Viacom.

JOHNSON: Right.

TISCH: And Mel Karmazin, who was the boss at that time, has now gone on to Sirius Radio.

JOHNSON: Right.

TISCH: And these are not shrinking violets.

JOHNSON: No, no. And I said you know, "I'll sell it to you. But if you want me to stay, you've gotta-- you can't change a thing." And they said, "We absolutely want you to stay." So I stayed five years and- and groomed the- the person who took it over, Debra Lee. And so right now, I can assure you, and I can assure the uh... African/American viewers around the country that BET's uh... voice and its philosophy is still focused directly on the African/American consumer market; it's not been altered or changed or anything by being part of a huge conglomerate. If anything uh... Viacom is adding more resources, more focus to it, because BET now is a hugely important part of Viacom's valuation.

(music plays)

TISCH: Sports teams, hotels, restaurants, gaming, venture capital, you have gone from starting BET to a whole host of different businesses. What's the motivation now?

JOHNSON: I have always believed that if you see an area that you feel you can be effective in and you can create value for yourself and others, uh& Ive always been just attracted to doing those kinds of deals. So to me, the connection is what Im doing in the financial sector, an area thats under-penetrated by African/American talent, is exactly what I did in cable. Cable was a virgin territory as far as African/American content and African/American managerial involvement, so I said why not do this. So-- and then I said in order to do this, you need an idea, you need a vision and you need a strategic partner. And in cable, my strategic partner was John Malone. In financial services, Im finding those same kinds of John Malone-like strategic partners. So in private equity, I find the Carlisle Group. In hedge fund or funds, I attract Deutsche Bank. And in the hotel business, started out with Hilton Hotels, involved in my first hotel acquisition, and then expanded it and now I'm involved with Marriot in over a 100 hotel portfolio. So all of these things have the same strategic concept; find an- an area, private asset manager, financial manager, hotel thats under-penetrated by African/American talent, bring your resources, bring your vision, find talented people and find strategic partners. So thats the connection between them. Its- its sort of the model that I think is the model for success for me in- in bringing my brand into opportunities with talented people, with financial resources that I provide and with strategic partners.

TISCH: You're doing these because they're good businesses, or because you want to serve the African/American community or both?

JOHNSON: I'm doing it first of all because they're good businesses. I- I think that the model for African/American businessmen ought to be let's get into business like everybody else. Let's get into business for returning value, creating wealth, creating economic opportunity. And then while doing that; let's make sure that we do everything we possibly can to make this work in the broad entrance of the African/American community. So if I'm successful and I bring along a guy who is with me, like in my hotel group, and he's successful, the word goes out; look guys, we can come together and work together to create value and demonstrate that African/Americans can work together and provide opportunities for other African/Americans. I mean I think the example of- of Michael Jordan getting involved with me in my basketball team is- is exactly what I'm talking about. Never have two African/Americans-- that I remember-- two African/American men of stature, well-accomplished in their own fields have come together like this. I- I know of no other scenario like that.

TISCH: That's interesting, because you're always noted as the first African/American to do this, the first African/American to own a professional sports team, the first African/American to do that. Will we get to a point where we can take away African/American, that Bob Johnson owns the Charlotte Bobcats and he's a smart, bright guy who's done well?

JOHNSON: I think it ultimately will get there. I think we've got a long way to go, because there's just so many places where African/Americans have not penetrated effectively, and part of it is because of discrimination and- and part of it is because of lack of access to uh... capital, which is the result, in some cases, the institutionalized racial discrimination. So you're going to have that first, because you're breaking a barrier, and whenever you break a barrier, somebody's gotta say, "Is this the first time this has ever happened?" But most people don't ask why, and I think that's the question that needs to be asked more. Why am I the first guy to own a basketball team? And the reason is very simple. It's not because David Stern, the commissioner, didn't want to sell a basketball team to an African/American; he loved us. He just couldn't find anybody with the money to buy it. (laugh)

TISCH: Right.

JOHNSON: So I'm the first one to have the money to buy it and-- or maybe the other guys were smarter than I am. They had the money and didn't buy one. (laugh) But it-- whatever the reason, that's what it is. I was the first company to be publicly traded on the New York Stock Exchange. And I don't think the New York Stock Exchange said, "No blacks uh... need apply." I think what happened is African/Americans have not been in a position to create a company that they could go to the public market with, or they didn't want to do it because they felt that would hurt their black ownership quotient and they would no longer be considered black. So a lot of this is a result of changes that have to take place in this society so that we can get away from the first one to go to college, the first one to go in the military to be the first general, the first Secretary of State, the first this, and just say, you know, Colin Powell is the President, rather than Colin Powell is the first black President. But if he were elected tomorrow, that's exactly what they'd say; he's the first African/American President. And it would be true, but it would be said that 200-plus years after uh... this country has been around that we still have this racial hangover that causes us to define ourselves by that, by the color of our skin.

TISCH: Bob, you've made a few dollars. You've created opportunities for so many people. You're now branched off into a bunch of different businesses. Do you ever see yourself running for office?

JOHNSON: No, absolutely, unequivocally no. And if I do, shoot me. (laugh)

TISCH: Why?

JOHNSON: To me, it's- it's a total invasion of everything that you would consider to be your private life, so that- that's the number one. And the other is that- that so much of it is- is politics that what gets lost in the-- uh... in all of that is what you're trying to do to make the peoples' lives who elected you better, so you've got so many trade-offs you have to make. As an executive, if I want to do something, I just make a decision, and it's just _____ right, everybody goes and tries to get it done. Politics is- is the art of compromise, and I'm just not-- if I believe and I'm willing to do something, you know, compromise is not my first approach to it; it's to get it done. And so uh... you know, I- I just couldn't see myself-- uh... I don't think I would serve uh... politics very well. I mean I'd have to be something akin to a benign dictator if I'm going to be in politics. (laugh)

TISCH: Thank you.

JOHNSON: Thank you. To me, being a success is not the accumulation of wealth. It's not the accumulation of articles in the New York Times or the Wall Street Journal. It's really finding something that you love to do and to the extent then that you can bring in other people who benefit from that. That, to me, is a success.

(music plays)

TISCH: You have gone from starting BET to a whole host of different businesses. What's the motivation now?

JOHNSON: BET became the first African/American company publicly traded on the New York Stock Exchange. It was the largest transaction for any African/American business in the world. What I'm doing in the financial sector is exactly what I did in cable.

TISCH: You didn't reinvent the wheel; you just painted it black.

JOHNSON: Absolutely.