If nothing else, BET founder Bob Johnson has earned himself the reputation of being a straight shooter. On the eve of his departure from cable we found Johnson as direct as ever—ready, willing and able to challenge the industry on diversity issues, talk up BET’s potential and put capital in the hands of African-American businesses. With a $15,000 bank loan and the power of his conviction, Johnson launched Black Entertainment Television in 1980 as the first cable network tailored to African-Americans. When he sold it to Viacom in 2001 for $3 billion, Johnson had built an empire boasting one of the strongest brands in the African-American community, and cemented his place as the wealthiest black media mogul in history. BET now reaches more than 80 million homes and its BET Awards ’05 was the most-watched program by African-Americans in cable history. Though it began with a heavy slate of music videos, the network has slowly segued into more diverse programming. Certainly he has received praise and criticism, yet few would debate Johnson’s stature as a tireless and groundbreaking entrepreneur. He became the first African-American to own a business trading on the NYSE in 1991 when he took BET public. And he was the first African-American to own a major sports franchise when he bought the NBA expansion team the Charlotte Bobcats in 2002. Now Johnson plans to bestow a first on the financial community, doing for the investment sector what BET did for cable: putting decision-making power in the hands of an African-American executive team. His RLJ Companies recently announced partnerships with the Carlyle Group to seek investment opportunities and execute private equity deals. With the asset management arm of Deutsche Bank, RLJ will focus on hedge funds. As the curtain rises on his self-described "second act," Johnson reminisces about BET, explains how the cable industry can better address diversity and hints at another venture he may have in store for Hollywood. CableWORLD: I’d like to diverge from the normal procedure of recapping BET’s early years and instead start with an issue that’s important to you. What parts of the cable industry get good marks for diversity, and where is it falling short? Bob Johnson: I’d say the industry is below a C in diversity. CW: That’s pretty low. Johnson: It’s particularly low when you look at the fact that African-Americans as a percentage of the population are the largest subscribers of cable. We buy more basic cable. We buy more pay TV. But there’s only one African-American channel of any significance and just one trying to emerge—that’s TV One. There are no African-American-targeted pay TV channels, no African-American 24-hour news channels. CW: How would you change things? Johnson: If I were getting into the cable business tomorrow I would launch a black health channel and I would insist, from a political standpoint, that the cable operators join in launching [it]. Look, if you ask all the cable programming channels: "Who are your top African-American decision-makers?" They would have to say, "Nobody." So BET is basically it. Take a look to see who is in the pipeline to be the head of a major MSO or a senior executive at an MSO. There’s no one. CW: Is cable different from other industries on diversity? Johnson: No, I’m not saying the cable industry is much different than the rest of America. Look, I had a tremendous opportunity and I owe a lot to the cable industry. The problem is corporate America has really not smashed that glass ceiling of diversity. The fact is that there are 32 million-plus African-Americans in the U.S. and let’s say there are 9 million African-American cable homes. African-Americans are spending billions of dollars on cable and there’s not very much in terms of content being transmitted back. CW: It sounds like a concrete step would be hiring more African-American executives. Johnson: Yeah, that’s the thing. We got Reginald Hudlin, and we were fortunate to get him. But why was Reginald Hudlin on the sidelines for so long and not offered a job as head of programming at a major cable channel? I’m not saying the industry leaders aren’t committed, but the execution is not there. The follow-through is not there. BET’s Evolving Brand CW: Where do you see the BET brand going over the next five years? Johnson: BET probably has more growth upside than any cable company within the Viacom family because it’s a brand that’s totally penetrated the African-American psyche and even beyond that. Second, it’s a brand that represents one of the most preeminent cultural influences in this country, and that’s African-American culture. I see BET taking advantage of new technologies—whether it’s wireless, video on demand, expanded digital cable, global programming opportunities. The Jazz Channel is probably one of the products that can travel globally better than anything we have, and nobody has fully exploited gospel. CW: And how about you? Do you see a role for yourself in any of the emerging areas you just mentioned? Johnson: No, my strategy is set. The movement of capital is going to be one of the key businesses emerging as markets become accessible from wherever you are in the world. CW: So you are not looking specifically for roles in video, television or film? Johnson: There is one more desire I have. There’s a need for a low-budget African-American-targeted movie studio and I think I’m going to put an exclamation point on my career by doing that if somebody doesn’t beat me to it. I’ve got the money to do it, I’ve got the strategy to do it and I can bring in the strategic partners to make it happen. BET’s Early Years and Dr. Malone CW: Twenty-five years ago, with a bank loan and a whole lot of moxie, you set out to create a cable network for African-Americans. What were you thinking? Johnson: I had the good fortune of being in the cable industry when leaders were pioneering cable channels and the guys running cable systems were looking for programming opportunities. So my thing was that clearly there was a need for programming that would appeal on a consistent basis to African-American viewing interests. Cable operators were interested in programming that would appeal to consumers in urban markets and I had the good fortune of knowing people like John Malone and Bob Rosencrans, when he ran USA Networks…BET was a good thing to put in your franchise proposal because in many cities the city council had two or three black members or maybe a black mayor. When John put the first half million dollars in BET he was basically saying, "I believe there’s a need for this kind of diversity and I think you have the potential to make it happen." If anybody is owed credit for BET’s success, it’s John Malone. CW: Is that when you realized you were really on to something, when Dr. Malone made that commitment? Johnson: You’ve got to keep in mind, going back 25 years, John was—and still is to a lot of guys in the business—the Good Housekeeping seal. If John was going to back you, you had a pretty darn good shot of being successful because Malone was known as a visionary. Whenever I would talk to people about carrying BET, when I went to get my first loan from the Bank of New York, they’d ask me, "Bob, who’s in this deal?" And I’d say "Malone," and you could just hear that Good Housekeeping seal coming down. I remember sitting down with John after we did the deal and I said, "John, I’ve never run a business. What advice can you give me?" He said, "Bob, all I can tell you is get your revenue up and keep your costs down." And that was it. And he stayed in the business as a member of the board of directors for the entire time the company existed, never sold a single share of BET. So when we sold it to Viacom, he walked away with a ton of money. BET’s High Points CW: Take us through some of the best moments for you and BET. Johnson: You’ve obviously got to go back to when the network launched on the back of USA Networks, with two hours of programming on a Friday and Saturday night, thanks to Bob Rosencrans. The second thing was when we expanded to 24 hours in 1984-85. Then you have to come back to the interview we got with O.J. Simpson, which was a major exclusive for us. Every major broadcast network station was trying to get it, every cable network was trying to get it—and that put us on the map in terms of programming and identity. You go through to the launch of the BET Awards show and extending our programming into jazz. We went public, and in October 1991 BET becomes the first African-American company traded on the New York Stock Exchange, which was a major development for BET and psychologically for African-American businesses. Then there was the sale of the company to Viacom in 2001. CW: Looking back, what would you have done differently? Johnson: There are only a couple things. One is, we were a little bit risk averse in terms of investing in original content, mainly because I just didn’t see it working in the kind of economic model we had. The music video model worked so well. It’s kind of hard to turn down a business where you’ve got 60%-plus margins. The big one is I had a chance to acquire radio assets early on, and had I invested in that radio opportunity we probably would have been not only the dominant African-American cable programming channel, we would have been the dominant African-American radio station ownership company. So that was one that got away.