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With its acquisition of Community Connect Inc. (CCI) for $38 million, Lanham, Maryland-based Radio One Inc. is expanding its Internet reach by adding the popular community networking Website BlackPlanet.com to its arsenal of media properties. In addition to BlackPlanet.com, CCI owns and operates a number of social-networking brands under its umbrella including MiGente.com and AsianAve.com.
“Radio One has been interested in expanding in the online space for a number of years,” says Tom Newman, president and COO of the company’s interactive unit. “We’re a leader in radio, obviously focused on the urban market place. This immediately puts us number one online in the urban space.”
With more than 18 million members, BlackPlanet.com was rated the most popular social networking site targeting a multicultural group in 2007 and the fourth most popular social networking site overall by New York-based market research firm Hitwise. Company executives hope Radio One’s clout will propel the site even further.
“When the team at Radio One started showing interest in aligning their Internet efforts with ours, it made sense to put the companies together,” says Ben Sun, CEO of CCI. Had the merger not happened, “BlackPlanet would still continue to grow, but we felt like we could jumpstart and take it to another level by leveraging the cross-platform assets that Radio One brings to the table.”
The acquisition of CCI comes at a time in which Radio One (Nasdaq: ROIA) has been selling radio stations to reduce its debt load, most recently unloading KRBV-FM in Los Angeles to Bonneville International for about $137.5 million. Its losses swelled to $386 million last quarter.
The company, which also owns the Internet site BlackAmericaWeb.com, wants to expand its interactive efforts, but it is a strategy some analysts question. “We believe that [Radio One] completed this acquisition to further its digital media initiatives,” says Marci Ryvicker, an analyst with Wachovia Capital Markets, LLC. “However, we are disappointed that it chose to purchase interests in non-core assets instead of paying down debt.”
Radio One executives, however, see the CCI acquisition as an avenue to strengthen the company by increasing advertising revenue. “It’s an opportunity to allow our marketers to reach customers in a way that Radio One may have never been able to reach,” Newman says. Cross-platform advertising campaigns that encompass the Internet and radio are among the initiatives the company will pursue, Sun adds.
CCI’s BlackPlanet.com targets the African American online community, MiGente.com targets the Latino community, and AsianAve.com is a site for Asian Americans. In addition to its 53 radio stations in 16 urban markets, Radio One owns cable network TV One and the print magazine Giant, putting it in a position to be reach urban markets across all media.
“Radio One is not looking at BlackPlanet to be the only piece in the puzzle,” Sun says. “They’re looking at a number of efforts online combined with BlackPlanet that would just make us that much more important to African American urban media consumers. It’s a really great alignment to show value to consumers and take a