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Entrepreneur Robert Johnson sees venture prospects even in recession

The man who became the first black billionaire in the U.S. after selling cable TV's BET has dealings in many industries.

February 17, 2009|Thomas Heath | Heath writes for the Washington Post.

WASHINGTON — Robert L. Johnson's rise to riches is one of those oft-told success tales in entrepreneurial circles.

He was a lobbyist for the cable TV industry in the late 1970s when he persuaded communications mogul John Malone to invest in his idea for a television network targeted at African Americans. Thus was born Black Entertainment Television.

Johnson sold BET to Viacom Inc. in 2000 for $3 billion, becoming the nation's first black billionaire. You'd think he would kick back, buy an island or a vineyard and pursue a well-earned life of leisure.

Nope.

Johnson is hunting for opportunities. He sees lots of them in this down market. He networks like mad, partnering with others -- and often their money -- to turn his ideas into businesses. He was hobnobbing at the NBA All-Star Game this last weekend in Phoenix (after all, he is the lead owner of the NBA Charlotte Bobcats). With a recognized name, you can imagine he receives lots of pitches from other entrepreneurs. His friendship with former President Clinton and newly appointed Secretary of State Hillary Rodham Clinton hasn't hurt, either. It helps "deal flow."

And he's got a lot flowing.

Johnson's latest venture is bringing video gambling machines to the Caribbean and Latin America, promising governments there a lucrative new revenue stream and a means to drive out less-scrupulous gambling operators.

But that's hardly his only preoccupation. A hotel owner, he is building a $12-million, 78-room resort in Liberia, on the west coast of Africa, which opens next month. (Liberia's president personally asked him to build a hotel and gave Johnson a favorable, long-term lease on the land.)

He's been active with an auto dealership venture he formed with former Clinton Chief of Staff Thomas "Mack" McLarty, recently buying a bankrupt Chevrolet dealership for $3 million in Huntsville, Ala.

He owns RolloverSystems Inc. in Charlotte, N.C., which helps people manage retirement accounts when they move to a new job. He is busy expanding his Urban Trust Bank. And he has invested in a $30-million private equity fund with Overseas Private Investment Corp. in Africa.

Johnson said he has something in the works involving personal finance. He also plans to bid on the franchise to run the D.C. Lottery.

"The entrepreneur philosophy is that there's always opportunities out there if you can identify it at the right time, bring in the right strategic resources, whether it's capital or partners, and build a team that knows how to create value," Johnson said. "I believe there are tremendous opportunities to create value right now because money has no place to go to get higher returns. . . . You can be an entrepreneur in distressed debts."

Johnson says he is worth about $1 billion, even after the economic earthquake. Quietly, he has moved out of the Washington area and now resides full time in Palm Beach, Fla. He still owns about $100 million in Viacom stock.

RLJ Development, his $3-billion private equity fund that runs about 126 hotels, has been slowed a bit by the recession. But it still has more than $1 billion ready for the right investment.

Johnson says the empire is making money, but as is the case for any entrepreneur, not every investment has paid off. He laughs when asked whether his Bobcats are profitable. He said the profit would come when he sold the team. Urban Trust Bank has 16 branches (14 in Wal-Marts, mostly in Florida) and $300 million in deposits but has yet to make money. Johnson said it would become profitable in the next quarter.

"If you can get there first, with the right resources, you can create tremendous upside value when other people are sitting on the sidelines," Johnson said.

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