Poised to lead only black-owned airline, Johnson creates stir

Some question whether racial politics could clinch the DC Air deal. Johnson scoffs at the idea.

By MARY JACOBY

© St. Petersburg Times, published June 4, 2000

WASHINGTON -- Black Entertainment Television founder Robert L. Johnson is a man of contradictions. He is a union-busting black billionaire who retires to his Virginia hunt country estate while his channel airs music videos of gangsta rappers and half-clad women.

He downplays the role that racial politics has played in his success, although it put him in a position to buy a local cable franchise and now, apparently, an airline.

Johnson offers an alternative explanation: He simply blows people's minds.

"I get what I call the unicorn effect. People have never seen one. Is it a horse? Is it a deer? Is it a zebra? They don't know how to describe it," the 54-year-old entrepreneur said. "As an African-American businessman, when you reach a level of total, absolute financial independence and political influence, it's almost like people say, "I don't know how to define him.' "

As a result of the proposed United Airlines-US Airways merger, Johnson is poised to head the nation's only black-owned airline, a new business operating out of Ronald Reagan Washington National Airport as DC Air.

The new airline is being created to ensure competition in the Washington area, which is dominated by United and US Airways. Johnson has said he will invest hundreds of millions of his own money in DC Air, which would carry an estimated 3-million passengers a year with annual revenues of $500-million. It would operate three daily round trip flights between Tampa International Airport and Washington.

But the deal, which is subject to approval by the Department of Transportation, the Federal Aviation Administration and the Justice Department, has raised eyebrows.

Johnson would run a ready-made airline spun off from existing US Airways and United operations. He would lease aircraft from the carriers, complete with safety and maintenance managers, pilots and flight attendants. He recently hired a US Airways executive to be DC Air's acting president.

The close ties to United and US Airways raise questions about whether DC Air will offer true competition. Justice Department antitrust regulators are expected to scrutinize the deal closely.

"It's unusual. It's so unusual that I have never seen it before," said Darryl Jenkins, an airline economics professor at George Washington University in Washington.

And then there is the more delicate question of why Johnson, who has no experience in aviation other than two years of service on the US Airways board of directors, is being given the opportunity in the first place.

Many observers suggest United may be hoping that antitrust regulators will feel political pressure to approve the deal because it would also create the country's only black-owned airline. "I assume it was done to make this deal politically more acceptable. It's very clever," Jenkins said.

Johnson scoffs at such speculation.

Regulators "are going to make their decision to approve the United-US Airways deal on the merits, and not because I'm African-American or Indian American or white American. They're going to do it on the merits. That answers that question."

In the same breath, though, Johnson credits his friend and associate Stephen Wolf, US Airways chairman, with "recognizing that diversity in every industry is important." Wolf proposed that Johnson head the new airline about two months ago over breakfast at the Four Seasons Hotel in the Georgetown section of Washington, D.C.

Johnson's close ties to the Clinton administration also could tip the balance in his favor. He traveled with the president on a six-nation tour of Africa in 1998 and recently attended a White House state dinner for South African President Thabo Mbeki. Also at the dinner was Transportation Secretary Rodney Slater, who will review the DC Air application. He is the first black to hold that Cabinet post.

Last year Johnson visited Clinton in the Oval Office and asked if there was anything he could do for him. "Yes," he recalled Clinton saying. "You can do everything you can to help me get Al Gore elected president." Johnson's response was to hold a fundraiser in his Northwest Washington home that raised about $100,000 for the vice president's campaign.

With his boyish smile and close-cropped hair hinting of gray, Johnson is comfortable with who he is and says controversy does not bother him.

"I have an expression: Welcome to the NFL. If a guy puts on a helmet and shoulder pads and steps on a football field, he has to expect to be hit. If I don't toe the line with what would be the expectations of an African-American male or African-American businessman, I'm going to get hit."

Johnson has stirred his share of controversy.

In 1992, three female former BET executives sued Johnson, claiming he denied them BET stock he had promised. One of the plaintiffs was his sister; the other said in court papers she had an intimate relationship with the BET chairman. Johnson eventually settled the cases for several million dollars.

In 1993, Johnson crushed plans for a technicians' and engineers' union at BET. The National Labor Relations Board ruled he illegally tried to fire union organizers and retaliate against union supporters. BET gained a reputation for low pay and hostility to labor.

Johnson makes no bones about the fact he is in business to make money. And he resists the notion that he has a special obligation to the black community beyond showing other African-Americans what possibilities exist. Conservative commentator Armstrong Williams, who appears on BET's Lead Story public affairs show, said he admires Johnson but confirmed the perception he is a "tough negotiator" over salaries.

Williams said he initially resisted invitations to appear on BET because of disputes over pay. Then Johnson approached Williams at an event and said, "I hear you won't come on BET because of the money."

"Yeah," Williams recalled saying. "It's over money."

But Johnson countered that BET could give Williams something better than cash: exposure among African-Americans and the chance to overcome skepticism about his conservative views. Williams agreed to appear, despite his misgivings about pay. Now, he says, "It's been worth it. My credibility with American blacks has gone up exponentially."

When told about William's disappointment over pay, Johnson laughed and gave a good capitalist's answer: "I can't be responsible for Armstrong not being competitive in the marketplace."

Other black leaders have criticized BET for uninspiring programming that relies too heavily on sexually suggestive music videos. Johnson replies that he is first and foremost in the entertainment business.

"I make no apology for having BET be the voice of music for the African-American community. Music is the quintessential cultural expression for African-Americans, whether it's gospel, jazz, R&B, hip hop," he said. "The black community has one cable channel, and they want us to be a Christmas tree. Well, you can't put everything under the tree."

He spoke to the St. Petersburg Times recently in the office of BET Holdings, the main source of his more than $1-billion in wealth. The building sits on the campus of BET's studios on a hillside in Northeast Washington overlooking railroad tracks and tree tops.

Born one of 10 children in Hickory, Miss., Johnson was a lobbyist for the cable TV industry in 1978 when he came up with the idea for a channel devoted to black entertainment. He persuaded John Malone, a Denver-based owner of cable franchises, to invest in his concept.

Today, Malone heads the powerful Liberty Media Group and remains Johnson's partner and friend. Being a member of the business elite, Johnson says, leads to new opportunities.

"Through that partnership (with Malone) I have been able to gain access and develop relationships with some of the most influential white executives in the telecommunications industry. And because of that, in white America, I've been in front of what they call the deal flow. So when deals are coming down, I'm in the room," Johnson said.

As an example, he cites BET.com, a $35-million venture to create what Johnson hopes will be the dominant Internet portal for African-Americans.

"When we went to launch our BET.com business, I was able to pick up as partners (Microsoft chairman) Bill Gates, (News Corp. founder) Rupert Murdoch, and (USA Networks head) Barry Diller -- three of the most powerful and influential guys in the media. And they want to be in business with me, because they know I am about creating value," he said.

BET Holdings' office decor seems to reflect Johnson's style.

The chintz sofas and plush rugs could have come straight from a Hilton Hotel -- another company on whose board of directors Johnson sits. Yet African-influenced art is integrated subtlely into the surroundings: a sculpture here, a painting there. It is as if the decorating scheme is meant to be non-threatening to whites while self-affirming to blacks. And although Johnson has suffered his share of racial slights, he also has seemed to use race to his advantage in business.

In 1985, for example, a key criterion for awarding Washington's new cable TV franchise was minority ownership. Johnson led a group of predominately black and politically influential investors to win the plum in 1985. But the monopoly cable system, plagued by complaints of bad service, limited channel selection, and financial problems, was sold to John Malone's company in 1996, though Johnson retained an interest.

In 1994, Johnson tried unsuccessfully to buy into the Washington Bullets basketball team, arguing the National Basketball Association franchise should have a black owner to complement its location in a majority-black city and participation in a black-dominated sport.

And now comes DC Air.

The question is, can he run an airline any better than the problem-plagued DC cable franchise? "I'm going to run DC Air the same way I run every business I run, which is to serve the public, provide competitive service and give quality service," Johnson said.

It remains to be seen whether DC Air can do any better than the big airlines in minimizing customer complaints about on-time service, ticketing and baggage handling.

Johnson, after all, is not exactly familiar with the airport experience these days. Asked when he last flew coach on a commercial flight, he grins, clasps his hands, and looks toward the ceiling. "Ah, gee now. Coach," he finally says. "It's a long time."

-- Researchers Cathy Wos and Caryn Baird contributed to this report, which included information from Times wire services.

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