by China N. Okasi
Even if you haven’t caught up on TV One shows, or spent hours cruising HelloBeautiful.com, chances are you’ve experienced Tom Joyner’s flagship radio show, or flipped through the pages of GIANT magazine—all because of one powerful businesswoman, Cathy Hughes. Hughes’ Radio One conglomerate comprises print, online, television and radio properties that would impress any aspiring entrepreneur. After all, the self-made mogul came from meager ends.
At 32, she bought a puny AM radio station, WOL, using a loan she received after begging 32 banks (the 33rd lender finally gave in). She then grew her little radio station into Radio One, a communications powerhouse that now controls 53 radio stations (including controlling stake in the Tom Joyner Morning Show) reaching between 18 and 20 million listeners per week. Today, Radio One is one of only three publicly-traded companies in the United States that is owned by an African-American.
Yet, as powerful as Hughes and Radio One appear, they, like any marriage, have faced their share of criticism and struggle. For example, TheRoot.com writer, Natalie Hopkinson, harshly denounced Cathy Hughes as leading a “one-woman boycott” against the ‘Performance Rights Act,’ not because Hughes cared ‘oh-so-much’ about her black listeners, according to Hopkinson, but because the bill would require all radio stations, including Hughes’, to pay royalties to musicians—and Hughes didn’t like that idea. In other words, Hughes had selfish motives, according to Hopkinson. To add insult to injury, when Hughes considered a reverse stock split move in the interest of her company a few months ago, analysts tore into her decision, and The Washington Post described the company’s financial finagling as “puzzling.”
With all the banter centered around the Maryland-headquartered Radio One, The Atlanta Post decided to speak to Hughes herself to tell her side of the story. In her own words, she offered the following.
Hughes on why black radio plays an important role:
“We average between 18 and 20 million listeners a week. Black radio is as critical a communications vehicle now as it has ever been. Katrina hit. Haiti, the earthquake, hit. My phones were so jammed that you couldn’t get a call through. Black radio was there [when all those crises in our community happened]. People may have had CNN on, but the TV volumes were turned down, so they could listen to black radio stations. [Black radio] provides the same type of social relationship with its listening audience that the black church does, only without the religious aspect.”
Hughes on how she started in the radio business:
“I’ve always wanted to be in radio. I created the “quiet storm,” which went on to become the number one format in the history of radio. At one time, there were 489 radio stations airing my radio format—which is why I left Howard University, because I tried to get them to license [quiet storm] and they wouldn’t, so they literally blew billions of dollars because they didn’t license it. Even white stations were doing a form of the quiet storm.
My first acquisition [as a radio businessperson] was a radio station called WOL in Washington D.C. It’s our flagship station, and it had a price tag of $1 million…I had one little obstacle to overcome before I could buy it, and that was that I was about $999,000 dollars short. So, I put together a business plan and pitched 32 banks, all of whom said no. But, my 33rd lender was a woman from Chemical Bank of NY, first week on the job and she said yes!”
Hughes on how Radio One is performing currently:
“We’re holding on. We’re not thriving now. No radio corporation is thriving. Some have filed bankruptcy. The auto industry was our number one source of advertising. When the auto industry tanked, when Detroit went bankrupt, it trickled down to radio, in particular black radio.”
Hughes on why Radio One considered the reverse stock split option:
“It hasn’t occurred! We never took that option. If the stock market got crazy again, we wanted to be able to [have that option]. Stock analysts who [talked about us considering that option] are like [all] people–everyone has an opinion. What happened was, we simply asked for permission [to take a reverse stock split option] at our annual shareholders meeting, and subsequently received permission, should we care to do that. Our stock now is going back up close to $4. It was much lower before.
We just wanted to make certain we had a safety net should the market [face difficulties] again, because those are situations beyond our control. But, I understand, some people are not happy that we’re surviving. Only two [radio companies] in the whole industry were not in financial trouble [during the recession] and folks are not happy that one of those two is a black company. That’s the name of the game.”
On her crusade against the ‘Performance Rights Act’:
{Editorial Note: the Performance Rights Act (HR 848) is a bill that would require radio stations to pay royalties to artists whose music they play on the radio}.
“Music companies are very wealthy corporations that have historically beaten artists out of their money. When the [Performance Rights Act first was introduced], we agreed that artists should be paid back. We came up with a proposal that would put together a $20 million fund that would go back to the artists exclusively. The [music industry] said no, because none of the money would go back to the record industry. Yet, that industry is already sitting on top of $100 million from the performance tax that satellite and new media pay through Sound Exchange. You know, [Sound Exchange] was created by Congress, and all of their filings are public information. [I discovered that] at the end of 2008, they had [millions of] dollars in the bank that they claimed they couldn’t find artists to distribute to. Now, what motivation would you have to give away $100 million, if [there’s a legal provision] that after 3 years, you could keep it? After 3 years, if they can’t “find” an artist, Sound Exchange can keep that artist’s royalties.
Aretha Franklin called me and said girl, I cannot believe that these idiots are claiming that they can’t “find” me. I said “they’re not idiots, the legislation was flawed and so [Sound Exchange] gets to keep the money after 3 years if artists don’t show up to claim their money].”
I’m [against the Performance Rights Act, because] I already spend $14 million a year paying the writers and the publishers. It’s a record company’s job to pay the performers. I don’t even know a performer exists until a record company brings me a finished product! It’s like having to pay child support for a baby that’s not yours. I agree the baby should be supported, but I ain’t the mama! Those artists should definitely be paid by the record companies that are ripping me off. We don’t know even know that Rihanna exists—we don’t even know the girl is born—until the record company walks in and says here is the new release by a new artist named Rihanna.
Plus, our radio stations already give up billions of dollars of free advertising. The reason satellite and Internet radio pay a fee to Sound Exchange is because they charge for their services. We are free radio. We don’t charge for our services. They were foolish not to fight it. Satellite radio was going through that big merger, and they didn’t want to stir up the waters. They’re trying to back out of it now…and it’s a big mess for satellite radio. And, with Internet radio, people are very much into piracy.”
