BET Founder on to Next Business Challenge
RENEE MONTAGNE, Host:
On Fridays, the business segment focuses on your money. Today, an African American entertainment tycoon tries his hand at consumer banking. Robert Johnson made a fortune as the founder of Black Entertainment Television. He sold the company six years ago for $3 billion, and has since been working on what he's called his second act.
So far, that's included investments in hotels, a leverage buy-out fund, and financial services for wealthy customers. Now he's purchased a Florida savings and loan, which he plans to transform into a large financial services company that will cater to black customers. Bob Johnson joins us now in our studios in Washington. Good morning.
ROBERT JOHNSON: Good morning, Renee. How are you?
MONTAGNE: Fine, thank you very much. You are calling, as I understand it, this new financial institution, the Urban Trust.
JOHNSON: Yeah, absolutely. We think urban represents the target demographic that we're going after, and it includes African Americans, it includes Hispanic, it includes white Americans, who live the urban lifestyle and want a bank that caters to their particular needs and financial requirements. And we think Urban Trust can do that, no only in Florida and Washington, but around the country.
MONTAGNE: Meaning you plan to get, or hope to get, much bigger.
JOHNSON: We plan to get much bigger. We're obviously going to focus on the two regions that we're currently going to be located in. Florida, for example, has no African American owned bank at all. And, of course, Washington D.C. and the surrounding suburbs, they're one of the fastest growing markets, economically, for African Americans, and also the economics of this region is expanding dramatically, and it's fairly recession-resistant because of the government being based here.
MONTAGNE: So it sounds like you, it appears that you believe the wealth of black Americans has grown to the point where this is quite a promising financial venture, and also, I guess, investment for you?
JOHNSON: Well Renee, I think you hit on the point as to why Urban Trust is necessary. When you look at the wealth of white Americans and black Americans, white Americans probably have a net worth ten times that of the average African American.
So there's a lot of gap that has to be closed, and closing that gap means having access to financial service that will help you get the one fact that determines your net worth, and that's home ownership. So if African Americans can close the home ownership gap over the next ten to 15 years, the net worth ratio between white and black families is going to decline.
MONTAGNE: So give us some example of what it is that you can offer a black customer that's, as you put it, special, special needs, that you have a particular understanding, to get that person away from the institutions that they're banking with already.
JOHNSON: Well, for example, I think if you look at black households, almost 50 percent of black households are headed by females. And if you find a situation where an African American woman, where she had before a two family earning situation, she gets a divorce, and now she has a one family earning situation, many banks may not understand that this particular woman still has a college degree, has a great job, and tremendous potential.
And if they don't look deeper behind the scene and understand this is an issue confronting this particular market or this particular person, I think they're not going to be as sensitive to her financial situation. We think we will understand that because many of the people who will be involved with us come from those very same situations.
MONTAGNE: One other aspect of mortgages and problems that African Americans have with mortgages is, you know, either traditionally they've been denied them, or pushed more recently into higher mortgages that they can't afford or don't understand the terms. Are you going to do even more, that is, take special steps to educate them more thoroughly? Those are, you know...
JOHNSON: Renee, Renee, that's exactly what we plan to do. You know, for example, when I started out and bought my first home, I had to borrow money from a friend because my family didn't have the money to give me a down payment. We've got to figure out ways to get African Americans into home ownership with minimal down payment, structure their payment schedule, structure their budget allocation, work with them, not just when they close on the home, but throughout their entire ownership period and their lifestyle to help them understand their finances, because without that, without understanding that maintaining a good financial record is critical to your financial well being, we're going to have problems.
MONTAGNE: Now, this all sounds a bit like doing well by doing good, but let me just say, this will be something that you will have heard before during your time at Black Entertainment Television. You were criticized on a regular basis for not providing, say, strong news programming and focusing on the bottom line. So some would have wondered how you'd operate in the banking business, whether you really do feel a social responsibility for these customers.
JOHNSON: Well, I look at it in a completely different way. I'm very proud of what we accomplished at BET; BET created more African American multi-millionaires than any company, black or white, in America. BET demonstrated to African American businesses the value of a black business, selling for $3 billion dollars, more than any other black company has ever sold before. BET provided a training ground for hundreds of African Americans who are now running major businesses and networks and entertainment across the country, as well as talent that's on television across the country.
So BET achieved exactly what I set out to do with it, and so my argument would be to anybody who's looking to be involved in Urban Trust, as a customer or doing business, my argument would be, if Bob Johnson sets his mind on doing something that's going to create value, you probably ought to take his word for it and get involved with it.
MONTAGNE: Robert Johnson, he's the founder of Black Entertainment Television. He's creating a new African American financial services company, called the Urban Trust.
This is MORNING EDITION from NPR News. I'm Renee Montagne.