BET Founder Robert Johnson Aims to Help Others With Good Ideas

BET Founder Robert Johnson Aims to Help Others With Good Ideas
Robert L. Johnson (Submitted photo)

Robert L. Johnson had only one real fear during the 2008-2009 financial crisis. And for that, he could blame an Arkansan.

As founder of Black Entertainment Television and America's first African-American billionaire, he figured he could weather the storm, he recalled in a humor-filled talk Friday at the annual meeting of the Little Rock Regional Chamber.

"In a crisis, if you have no money, then you're in trouble," said Johnson, whose RLJ Cos. have multibillion-dollar holdings in hotels, real estate, private equity and many other enterprises. "As Warren Buffett said, when the tide goes out, you find out who's swimming naked."

But he did have one concern, and that involved Mack McLarty, the childhood confidant of Bill Clinton: McLarty had talked Johnson into dealing cars. 

"The only time I was scared was when I remembered Mack had got me into the car business [as a partner in RML Automotive]," Johnson said as the chamber members and guests roared. "I asked Mack, 'How are we doing?' "

McLarty replied that Chrysler was in some trouble, so Johnson asked what RML's brand mix was. 

"He said, Bob, we've got a lot of Chrysler." After another big laugh, Johnson let McLarty off the hook. "We kept buying through that time, and everything worked out."

It was just one tale from a charmed business career Johnson fondly related in a discussion with Franklin McLarty, Mack McLarty's son and an officer with McLarty Capital Partners and RML Automotive.

Franklin McLarty called Johnson's life an embodiment of the American dream: From the University of Illinois to Princeton for graduate school and then to Washington as a congressional aide and cable TV lobbyist, Johnson set the stage for his first big venture, BET. The cable channel catering to black viewers became a reality in 1980.

Johnson said he drew inspiration from another Arkansas native, John H. Johnson (no relation), who became a millionaire as publisher of Ebony and Jet magazines. John Johnson, who was born in Arkansas City in 1918 and died in 2005, saw "an opportunity to chronicle the rise of the black community in the American middle class," Robert Johnson said. "He started telling those stories, and he attracted advertisers."

He recounted a story John Johnson had told him about overcoming store owners' opposition to stocking his magazines. 

"They didn't want to put African-American publications on their news racks. So John went down one day with about 20 or 30 magazines and just put them on the rack without telling anybody. Then he told all his friends to go down there and buy a magazine. People started buying the magazines, and picking up toothpaste and soap and everything else." 

Pretty soon the store owners "were telling John to bring some more of those Ebony and Jet magazines. It was an example of an entrepreneur seeing an opportunity."

The key to getting BET off the ground, Johnson said, was first having the vision, then having a business contact who could help make it a reality.

For him, that was John C. Malone, the longtime CEO of TCI and another multibillionaire. 

"As cable started growing into urban markets, the cable operators knew that they needed to have content in their proposed channel lineup that could get the votes of urban city council members and mayors. So I saw a parallel between what Ebony magazine had done and what Black Enterprise magazine had done and from that came my idea for Black Entertainment Television... My vision was that there should be a channel targeting African-Americans that would join all the other cable channels and be something that would benefit the cable TV operator, provide content and information to a black audience, and also make me a little bit of money, which is not a bad thing."

Hearing the idea, Malone promptly offered Johnson a deal. 

"He asked how much it would take to start this company. I told him, John, it'll take $500,000. This was back in 1980. John said I'm going to buy 20 percent of your company for $180,000, and I'm gonna loan you $320,000. You'll be the 80 percent owner, and I'll be 20. Is that a deal?

"I said, John, that's a deal. What John didn't know, was that if he'd reversed the numbers and said he'd be 80 and I'd be 20, I still would have said, 'John, that's a deal.' "

So Johnson, a 31-year-old business novice born in Mississippi and raised in Freeport, Illinois, left with a $500,000 check in hand. "That $500,000 probably represented the GDP of every African-American in Freeport."

The deal worked out well for both men. When BET sold to Viacom for some $3 billion in 2001, Malone's $180,000 stake was worth $700 million. "So he did OK and I did OK," quipped Johnson, who stayed on as CEO through 2006.

After the sale, Johnson took up a mission of helping other African-Americans create wealth. He started RLJ Development with Tom Baltimore, a former Hilton Hotels official, and purchased six hotels, creating the largest black-owned hotel company in America. Johnson had long known Mack McLarty through Clinton, whom McLarty had served as White House chief of staff, but he didn't know what McLarty did for a living. "I knew that he dressed well and was good in conversation..."

He discovered McLarty owned car dealerships, and soon he had a 60 percent stake in RLJ McLarty Landers Automotive Holdings, the parent company of RML Automotive.

Johnson said that as a businessman with capital, he feels a responsibility to help other African-Americans with good ideas. 

"To have someone like John Malone back me, I felt that if I could translate that into helping others, that would be positive. As an African American, if you attain a level of visibility, you tend to get more opportunities. You meet people like Mack McLarty and David Rubenstein of the Carlyle Group, and you get on the board of Hilton Hotels. This shows you what can happen when minority business people and majority business people come together for the betterment of the whole community."

Johnson's talk was the featured event at the chamber's annual meeting, which included the national anthem sung by the Philander Smith Collegiate Choir directed by Karliss D. Chapple, as well as a performance by the Arkansas Symphony Orchestra's Rockefeller Quartet and addresses by childhood friends Jeff Hathaway, the outgoing chamber board chairman, and John Riggs IV, the incoming chairman. Closing remarks came from Hugh McDonald.