The Catch-22 of Buying Black Media

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“All things being equal, we’d have no problem supporting” black-owned media, said the CMO, but “a lot of the true African-American owned media companies are small and very decentralized. That doesn’t fit our strategy of needing to have a national reach. We have looked at some of the options, but the delivery is so small in relation to cost it doesn’t fit our strategy.”

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Scale affects pricing

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Some of the biggest names in black media today actually are owned by corporate titans. The most notable example is BET, which founder Bob Johnson sold to Viacom for $3 billion in 2000. Then there’s Essence: Time Warner’s publishing arm took full ownership of the legacy brand in January 2005.

But the most dismal rate of media ownership among African-Americans is in TV. Only five African-Americans own full-power commercial TV stations; they collectively own eight out of 1,379 commercials stations nationwide.

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Minority ownership in decline

The minority-ownership rate in TV has plummeted in recent years, falling nearly 70% in the past decade, according to a 2007 Free Press study.

Recent declines in TV ownership are attributed to the bankruptcy in May 2007 of a single company: New York-based Granite Broadcasting, which operated nine stations in seven states. That’s not to say that TV ownership among African-Americans was ever strong.

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But TV is certainly not the only place where black-owned media outlets are in decline. Newspapers historically have been an area of strength for black ownership. Blacks published newspapers as early as the 1820s, and there were 250 newspapers operated by African-Americans by 1950, according to a report by the Minority Media and Telecommunications Council.

No black dailies left

Yet today, there is no longer a daily black-owned newspaper. The last daily black newspaper, the Chicago Defender, cut back to a weekly schedule in February.

And since 2000, the industry’s trade group, the Black Press of America, has seen its membership decline to 189 weekly newspapers from 300. National weekly circulation for its members has dropped to 250,000 from a high of 500,000 in 2000, according to John Smith Sr., chairman of the trade group. Mr. Smith, publisher of The Atlanta Inquirer, a weekly newspaper with a circulation of 42,000 (down from 60,000 two years ago), blames the internet for the circulation declines.

Indeed, with advertisers stampeding toward digital marketing, it’s hard to overlook the fact that not a single legacy black media brand has made a successful transition to the online world. Consider EbonyJet.com: Its traffic is so small it doesn’t register with ComScore or Nielsen. The website aggregating the biggest black audience online is Time Warner’s Black Voices. The second-most popular is BlackPlanet.com—owned by five Asians.

But Eric Blankfein, senior VP-channel insights director at Horizon Media, New York, said advertisers should not just look at traffic figures, noting that there are opportunities to gain more credibility with the audience by buying in outlets owned by African-Americans.

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In 2001, Black Press launched a national network and news portal, BlackPressUSA.com, “to bridge the gap as far as technology is concerned for member newspapers,” Mr. Smith said. Despite the efforts, the site has garnered little traffic and has yet to register with ComScore and Nielsen/NetRatings. Mr. Smith said the site gets about 10,000 hits a week.

Site draws major advertisers

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It’s not limited to newspapers. The legacy magazine brands—Ebony, Jet, Essence and Black Enterprise, all black-owned except Essence—are struggling to gain new readers. Average circulation was essentially flat from 2006 to 2007 for all four, according to the Magazine Publishers of America.

The low rate of media ownership in broadcast has been blamed by some on the policies of the FCC, including David Honig, executive director of the Minority Media and Telecommunications Council. “The relative success of minorities in the weekly-newspaper industry was possible because no federal agency acted as the gatekeeper of newsprint and ink,” Mr. Honig wrote in a recent report. “In broadcasting . . . the FCC’s regulatory policies ensured that media companies could not cross the line from print to broadcasting.”

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That’s not to say ownership rates in radio are stellar today, even if they do surpass that of TV; African-Americans own just 3.4% of the full-power commercial broadcast radio stations nationwide.

The largest black-owned radio company is Radio One, based in Lanham, Md. The company operates 53 radio stations in 17 urban markets but has been struggling of late. On March 23, it announced plans to sell KRBV-FM in Los Angeles for $137.5 million, using some of the proceeds to invest in its internet strategy, according to Chief Content Officer-Interactive Smokey Fontaine. “If we can reach more African-Americans than our competitors at the other big media companies online, we can then offer more reach to advertisers.”

Perceived value

But to some, it’s more than a question of reach. “Media targeted to African-Americans is not valued to the degree that other media is,” said Earl Graves Jr., president-CEO of Black Enterprise, publisher of Black Enterprise magazine, which has a subscription base of 525,000 and an estimated 4 million readers.

Since 1970, the magazine has published an annual list of the top 100 black-owned businesses, including media companies. After the takeover of Essence by Time, Mr. Graves removed the legacy media brand from the list. Despite the magazine’s tough stance on what constitutes a black-media property, Mr. Graves questioned whether efforts such as the NAACP’s survey does black-owned media any favors, especially in reshaping marketer misconceptions of the value of targeting black consumers.

“It’s counterproductive when people feel they are filling it out under duress,” he said, suggesting instead the argument for spending more on black media should be made on economic grounds. “Tell me how this makes sense: 15% to 20% of your business is coming from this market but you spend less than half to one-half percent of your marketing budget on it.”

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