After making a name for itself in radio and cable television, Lanham-based Radio One Inc. said yesterday that it is extending its reach into the media world by agreeing to acquire a majority interest in Reach Media Inc., a Texas media company owned by popular radio personality Tom Joyner.
Radio One will pay $56.1 million in cash and stock in a deal that will give it ownership rights to Joyner's syndicated radio show, which reaches 8 million listeners on 115 stations.
The purchase also gives Radio One control of www.Black- AmericaWeb.com, an Internet site that has about 800,000 members, and an important foothold toward Radio One's goal of developing a lead Internet portal for news and advertising geared to an African-American audience.
Radio One, started in a trailer by Catherine L. Hughes 25 years ago, is already known for being the largest radio company targeting black listeners, reaching 13 million people on 69 stations. In January, Radio One and partner Comcast Corp. launched TV One, a cable station that caters to the same audience.
Radio One CEO Alfred C. Liggins III, Hughes' son, had said for months that the company's next step would be to enter the Internet business.
"We feel we can help them grow their platform on the Internet, and we feel they can help us become even more of a national platform and to get advertisers we normally wouldn't get to," Liggins said in a conference call yesterday with analysts.
Liggins pointed out that Joyner was able to broker a multimillion-dollar advertising deal with Procter & Gamble, a company that doesn't normally do radio advertising.
Analysts said the acquisition is a winning deal for both companies. Radio One can build off the recognizable Joyner name while Joyner will have access to the capital and resources that comes with being owned by a large public company.
"The advantage there is that Joyner already has a big following," said Jack Messmer, executive editor of Radio and Television Business Report, an industry publication. "You have a personality that advertisers are familiar with and they can build on that."
Radio One airs the Tom Joyner Morning Show on 15 of its stations and said it hopes to put him on more as contracts with competitors expire. Liggins said that when they wooed the popular host from rival stations in Washington and Charlotte, N.C., the Radio One stations became the most-listened-to morning shows. For now, in some markets, Joyner's show could compete with Radio One stations.
"Our visions are the same," Joyner said. "Both companies are trying to reach African- Americans through media. With those goals, I thought it was natural that we come together."
As subscription-based satellite radio offers more competition to traditional radio, Liggins said, Radio One will be helped by personalities such as Joyner's with large, loyal followings.
Although a smaller part of the deal, the purchase of www.Black AmericaWeb.com helps fulfill Radio One's goal of having an Internet presence. The company hopes to use the Internet to cross-advertise with its radio and cable stations.
Some Internet experts said it is a good time for Radio One to enter the market because there is room for growth among African-American users. About 43 percent to 48 percent of African-Americans now use the Internet, up from 35 percent in June 2000, according to the Pew Internet and American Life Project, which studies the social impact of the Internet. About 66 percent of whites use the Internet.
"There's plenty of room for growth," said Lee Rainie, Pew's director. "One of the reasons why this certainly isn't a stupid move by Radio One is because as people gain experience online, they'll become more comfortable and will tend to settle down [on] a few select sites. If you have a loyal number of users they'll keep coming back to aspects they like about your site."
Five major Internet portals - Web sites that offer an array of services and other Internet sources - primarily target African-Americans now, according to comScore Media Metrix. The largest, BlackPlanet.com, reached about 2.9 million people in October. BET.com, owned by Black Entertainment Television, reached 1.7 million, America Online's BlackVoices.com reached 770,000, BlackAmericaWeb.com 539,000 and Africana.com 110,000.
"Because they've got unbelievable marketing and promotions in their radio stations, they will absolutely be able to drive people to the site," Omar Wasow, executive director of BlackPlanet.com, said of Radio One's new Internet effort. "The big question is will they be able to keep them?"
Liggins said yesterday he's not sure how the Web site will change at this point.
The acquisition is expected to close in January. Joyner and David Kantor, Reach chief executive officer, have signed 10-year contracts with the new entity. Reach will still operate as its own company.
"In that respect, nothing has changed," Liggins said. "They just got a bigger parent company to give them more resources."
At a glance
Radio One Inc.
Headquarters: Lanham CEO: Alfred C. Liggins III Businesses: 69 radio stations, TV One cable station, programmer for XM Satellite Radio Founder: Catherine L. Hughes
Reach Media Inc.
Headquarters: Dallas CEO: David Kantor Businesses: Tom Joyner Sky Show, Tom Joyner Family Reunion,
www.blackamericaweb.com Founders: Tom Joyner, David Kantor