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Taking stock of the BET IPO.

When BET Holdings Inc., parent company of Black Entertainment Television (BET), successfully completed an initial public offering last October, it broke new ground for blacks in the capital market. The 4.2 million shares (21% of the 11-year-old firm) that were sold on Oct. 30, netted $72.3 million for BET President Robert Johnson and his investors. Observers say the offering could influence other black firms to go public as well as spark greater interest in the stock market on the part of individual black investors.

Bear Stearns & Co., Los Angeles, and First Boston Corp. underwrote the offering. BET sold 1.5 million shares, raising $23 million. Johnson says $8 million will be used to reduce debt and the balance will go to improving operations. Cincinnati-based Great American Broadcasting Co. sold its entire stake in the company (2.4 million shares) for $40.9 million. Johnson sold 375,000 of his own shares for $6.4 million.

New York-based Tele-Communications Inc. owns 18.1% and Time Warner Inc. owns 15% of the common stock of BET, which they are not selling. Johnson owns an additional 4.5 million publicly traded shares worth an estimated $104.5 million, and 4.8 million Class C shares that are not traded, but allow him 56% of the voting control of the Washington, D.C.-based firm. Traded under the ticker symbol "BTV," BET is the first black-owned company to be listed on the New York Stock Exchange. The stock was originally traded at $17 per share, but at press time, it was trading at $23 per share.

The stock was considered attractive to investors because it provides a "triple threat" in black media, making it a major force in reaching black consumers. BET is the nation's only black-oriented cable television network. The company also owns YSB (Young Sisters and Brothers), a general-interest magazine for black teens, and controls a 70% stake in Emerge magazine. "There is tremendous market for quality minority companies in the capital markets," says Bernard Dorshow, head of research for The Chapman Co., a Baltimore-based black-owned brokerage firm that helped sell the issue.

Lemuel Daniels, an associate director with Bear Stearns, was unsure if the sale of BET's stock would translate into more public offerings by black companies. However, he did hint that two other black-owned firms were poised to go public, although he declined to identify them. "Initial public offerings by black-owned communications and computer companies would receive the best reception from investors," says Daniels.

In 1969, Baltimore-based Parks Sausage Co., No. 35 on the 1991 Be industrial/service 100, became the first black-owned public company, and was listed on the over-the-counter market. It has since returned to private ownership. Chicago-based Johnson Products Co. has been listed on the American Stock Exchange since 1971. The hair care concern, No. 26 on the 1991 Be industrial/service 100, was one of the fastest-growing stocks in 1991.
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Title Annotation:BET Holdings Inc.'s initial public offering
Author:Williams, Terry
Publication:Black Enterprise
Date:Jan 1, 1992
Words:486
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