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Wired for success.

The windows of Don Barden's 10th-floor corner office display a panoramic view of Detroit. More than 100 feet below the tastefully appointed room, 2,200 miles of coaxial cable fan out to 120,000 homes across the city. Each household line carries 78 television channels fed to it by Barden Cablevision Inc., a subsidiary of Detroit-based Barden Communications Inc. (BCI).

Don Barden, BCI's 48-year-old CEO doesn't pretend to understand all the intricacies of the system he controls. His expertise lies elsewhere.

"I'm not an engineer," he says. "I'am an entrepreneur. An entrepreneur recognizes an opportunity, and he pursues it."

And catches it. Since founding BCI in 1981, the Detroit native has pumped up his creation's total revenues from $600,000 to $91.2 million last year. And now the 332-employee company, which includes Barden Cablevision, two FM radio stations in other cities and a cable-linked merchandise incentive program is gearing up to expand into several new areas of telecommunications.

None of this surprises people who know Barden. "His success is not accidental. It's the result of a willingness to take risks," says Karl Gregory, a management professor at Detroit's Oakland University School of Business Administration and a Barden Cablevision board member.

Barden still takes risks. He is investing millions in two experimental types of technology, which may allow him to compete with the telephone company in providing personal communication services. But cable television is his foundation. It offers Barden and fellow operators the greatest return. Last April, Adweek magazine reported that Americans spent $18.2 billion on cable subscription revenue in 1991. By contrast, only $4.5 billion was spent on movie attendance and $11 billion on videocassette rental. also, cable's share of prime time audience in fourth quarter 1991 was 21%, a point more than ABC's.

Of course, big profits attract big critics and big competitors. Cable television critics in consumer groups and in Congress are arguing that the federal government should reregulate what they call an overpriced and insensitive industry. Cable operators are concerned but they see a bigger hreat looming. The nation's telephone companies plan to replace their copper phone lines with fiber-optic cable. Then, in theory, they will be able to transmit hundreds of video channels, data and conversations simultaneously and cheaply.

If Barden is worried, the former high school quarterback doesn't show it. He says since founding his first business in 1981, profit and power have never been his only goals. His real intention has been trying to build businesses that could thrive after him. "I was looking for something with stability and longevity," he says.

That may be an understatement. The Detroit native has multiple business interests. His first financial love, real estate development, takes a large portion of his time. But his wealth and civic and political influence stem from his success in the television cable franchise industry.

He reached the top in this area by taking calculated steps. These included: setting up small cable franchises to learn the business; selecting the right major city to expand into; preparing a winning proposal; and finding a well-connected, capital-rich partner who would assist him but not try to take over.

His achievements are recognized. Last February, Cablevision magazine, an industry trade journal, ranked Barden Cablevision as the nation's 63rd-largest multiple channel cable operator.

BCI also posted 6.5% sales growth in a weak year for the industries where his core businesses are located: cable television and real estate.

For those reasons, Barden Communications Inc., ranked No. 5 on the BE INDUSTRIAL/SERVICE LIST with 1991 revenues of $91.2 million has been chosen co-honoree of the title BE Company of the Year.

The Entrepreneurial Track

Donnie Herbert Barden is complex. He is an entrepreneur, cable czar, real estate developer, new technology investor and a potential force in Detroit politics. Last February, Corporate Detroit magazine also called him an enigma. Maybe so, but his friends say he has a successful track record and ahistory of using every legal opportunity to springboard to his next venture. This acumen has earned him the respect of much of Detroit's business and political establishment. Of course, he has critics. Some who prefer not to be named, claim his real talent is not business, but making political connections.

Such accusations rankle Barden. But not for long. A more common source of irritation may be that he has more projects underway than hours in the day.

The drive to work hard at more than one task comes from Barden's father, Milton. While growing up in the then-rural Detroit suburb of Inkster, Don, the ninth of 13 children, saw his dad do many jobs. These included working at a Chrysler plant, raising crops and farm animals, building two homes and running a shade tree auto repair shop. "I always had a job," Barden says.

Unfortunately, few of these early jobs paid. Consequently, the former high school basketball and football team captain had to drop out of Central State University, in Wilberforce, Ohio, after his freshman year. He couldn't afford the tuition.

In 1963, he moved to Lorain, Ohio, to live with an older brother. During the next three years, he worked as a mover, a plumbing and heating company laborer, ran a cafeteria and held a variety of positions at a shipbuilding company.

But he says "I wanted to control my own destiny. I said to myself 'I am going to take risks.'" So, in 1966, he quit his job, withdrew his $500 savings and opened a record store in Lorain. It led quickly to promoting bands and concerts for artists. As a spinoff, Barden started a record label. "I was making enough to survive but barely," he says.

In 1968, he sold the record store and opened a public relations office. That was when fortune led him into his first real estate deal. The public relations office was opposite a military recruiting station. One day, Barden found out that they were moving and needed a more attractive location. He immediately called the local U.S. General Service Administration office, which was handling the search. "They said, 'Do you have a building,' I said, 'No, I don't, but I think I can find one to accommodate you.'"

Within a week, he says he had options on several likely buildings. One was selected. Now he needed a down payment. That came from Lorain National Bank. Since the government was committed to renting the building, the bank agreed to lend Barden $25,000 to make the purchase. Two years later, he sold the building for $50,000. A short time later, Barden took advantage of his new credit worthiness by borrowing money to buy another building owned by Ohio Edison. He then leased it back.

Barden always knew the value of personalbe business relations. Stanley Pijor, his first banker and now Lorain National Bank CEO says, "our relationship went on for at least 10 years. With Donnie, it was always straightforward. He told me what he was going to use the money for. If he had a problem, he came and told me about it. No matter what Donnie went into, he seemed to do it well."

Well, not always. In 1967, he and a partner started a weekly newspaper. It folded after two issues. Undaunted, Barden started another paper, The Lorain County Times, on his own. It thrived.

Small town journalism led to small town politics when friends urged Barden to run for the Lorain City Council. He lost his first bid but made it in 1971 and served two terms. In 1974, he ran for the Ohio Senate but lost. Throughout these years, he continued to develop real estate. During off hours, he hosted a Cleveland television program.

If Don Barden has a motto, it might be "every position is a springboard for the next." Working at a television station alerted him to the potential of cable television. And in 1980, he used this knowledge and his comunity leader status to negotiate a deal putting a 4% interest in Lorain and nearby Elyria's cable franchises into black hands. Barden bought 2% of each franchise. His stake: $2,000 each. Two years later he sold his interests for $200,000. "That's a once-in-a-lifetime opportunity," he says.

Getting Cable-Ready

This profit, his cable credentials and ambition gave Barden the impetus to get into the calbe franchise business on his terms. In 1981, he filed for rights to build cable systems in seven cities ranging from Seattle and Compton, Calif., to Inkster and Detroit. "My thrust was to try to make bids in as many black communities as possible."

Barden won the right to build a cable system in Inkster because of his community connection. He was given a chance to wire 10,000 homes and did so on time and budget. He then wired the towns of Van Buren Township and Romulus. Then serendipity took its second bow as Detroit announced a year's delay in awarding its franchise. "That gave me time to get more experience," Barden says.

By December 1982 when Detroit was ready to start its award process, he was the only minority competing who had built a cable system. Barden says he spent $500,000 preparing for the award process. The money, which came from personal funds and banks lines, paid for an eight-volume fully designed cable system proposal. In 1983, Detroit's cable commission gave Barden's and two other proposals --one of which came from Inner City Broadcasting Corp., another BE 100s company--to an outside consultant. He evaluated them on a point system and chose Barden. The commission agreed and gave its approval to Mayor Coleman A. Young. He concurred and the Detroit City Council gave their final ok.

Despite this four-step process some critics claim Barden had an inside political track. The unnamed sources cite Barden's contributions to Young's political war chest, as well as his 1988 marriage to Bella Marshall, Detroit's finance director.

Friends and associates say Barden is soft-spoken. He never yells even when angry. But his hazel eyes flash when he dismisses such charges. He says "I didn't know Coleman Young when I bid on the franchise. I didn't get to know him until at least two years after." He says he began dating his wife after the cable award, as well.

Winning the contract didn't mean he could relax. Barden still had to negotiate the 15-year franchise contract and raise more than $100 million to make the city of 375,000 households cable-ready. In late 1984, he moved from Lorain to Detroit and opened an office. It took most of 1985 to ratify all the points on the proposal turned contract.

But Barden still needed capital and a partner. In 1985, he interviewed several companies including: Tele-Communications Inc., the nation's largest cable operator with 12.3 million subscribers; and Tele-Media, has 530,000 subscribers. He settled on Toronto, Canada-based Maclean Hunter Ltd.(MH), a $1.5 billion multinational communications company involved in ventures including magazines, newspapers, cable television and commercial printing. "I wanted to go with the company that gave the least amount of headaches but could provide capital and expertise."

Maclean Hunter's president and CEO of MH cable television J. Barry Gage and Barden connected easily. "Barden was an attractive partner because he had a franchise in a very large city. He needed a substantial partner to build a cable system. We arranged 100% of the financing and guaranteed part but not all of it. The base of the security was the system itself," Gage reflects. "Our negotiation with him was tough, but it was done in good faith. The partnership has progressed really well."

At that time, the Detroit cable franchise had an estimated value of between $15 million and $30 million. Barden sold 49% of the franchise to Maclean Hunter and kept 51%. Gage introduced Barden to Toronto Dominion Bank, which provided BCI with an $80 million line of credit. Maclean Hunter lent another $15 million. Barden says he began paying his debt off in 1991 and hopes to be done paying by 1995.

In 1986, Barden says the "ducks were all in line." The wiring began and BCI started providing cable service. Five years and $120 million later Detroit was wired. At least 100 miles--much of it in downtown Detroit--was laid underground, at a cost $350,000 per mile. The rest, stretched across a network of utility poles, cost $20,000 per mile. Other money was spent buying and setting up the equipment needed to gather 78 television channels from outer space, buildings and personnel. The $25 million above the bank line and Maclean's investment came from BCI's cash flow.

But don't get the idea Barden walks on water. In 1987, he paid $1.5 million for a vacant Southfield, Mich., hotel. He wanted to convert it into a senior citizen's complex. It's still vacant. The same year, he was sucked into the S&L disaster after investing $1 million in First Federal Bancorp of Pontiac. The thrift was taken over by the Resolution Trust Corp.

Perhaps that was an off year. In 1988, he reentered the real estate interest forming Waycor Development Co., which is building a 144-unit Detroit apartment complex. It also recently completed Wayne County's 840-bed, $61.5 million jail. Deputy Wayne County Executive Michael Duggan is delighted. He says it made the lowest bid, completed the job ahead of schedule and $500,000 under budget. "From a taxpayer's standpoint he's a dream to work with," says Duggan.

"Cable" is a word used to describe an entire industry. But, a variety of spheres of influence make up the business. Cable networks, such as MTV, BET, HBO, Showtime, Playboy and Disney send out their programming signal by way of cable lines or sattelite Broadcast networks, such as ABC, CBS, NBC use land lines.

No-fee cable networks make their money differently as well. Basic networks, such as MTV, CNN and ESPN, make money from local and national advertisers. Their advertising rates are a lot more attractive than those for CBS or ABC because cable allows advertisers to target viewers.

Pay-cable networks including HBO, Showtime and Disney charge a separate fee over and above the basic cable rate. Pay-per-view television, the newest arm of cable, includes networks like Request and Viewers Choice. They air one-time only events (rock concerts and prize fights have been their mainstay) and charge a fee for watching that special event.

Barden Cablevision includes a full roster of free, pay and pay-per-view options. In 1991, Barden says $1.5 million in revenues came from pay-per-view. Barden also originates 30 hours of community-directed programming per week. In 1991, local programming costs BCI roughly $1 million. But it provides between 2% and 5% of revenues. In 1992, nationally local cable advertising revenue was a roughly $545 million.

Barden spent $3 million to set up the Detroit studio and to purchase a mobile van. When Pope John Paul II came to Detroit, Barden's investment paid off. He says Barden Cablevision was the source for both network and worldwide coverage of the visit.

Meanwhile, Barden Cablevision is getting up to speed. Its 120,000 subscribers are 35% of its potential base. Cablevision magazine says this is average market-penetration rate for major cities. The suburban rate is much higher, up to 60%

Part of the problem is that city dwellers tend to have lower incomes. Barden says this fact increases his "churn factor"--the number of customers who fail to pay their bills or cancel the service because they can't afford it. His monthly charge for its basic package of 50 channels is $18.50.

Barden frets that a cable company in economically depressed Detroit may not live up to its highest profit potential. "Our business is good now," he says, "I'm concerned about the future, concerned about people having the money to buy cable."

Planning Detroit's Future

It was this concern and self-interest that may have led Barden to convene five "economic peace summits" last year. The meetings brought together business and political leaders to think and act on about ways to assist Detroit's effort to stem crime, polish its image and boost economic development. The groups are now breaking into task forces of specific interests.

Such high-profile civic activities, combined with formidable political connections, have inevitably spawned rumors. Coleman Young, the major, is 74-years-old and may not run for reelection next year. Is Barden positioning himself for a mayoral bid?

He denies any interest. "I have not made that decision. I don't have a strong desire to do so. For me to run for mayor would be an extreme sacrifice, actually, because I'd be foregoing my business career while I'm in my prime."

Barden is certainly busy enough. He also has his wife and three children to consider and the regular games of golf. Somehow, he even finds time for books--he is currently plowing through two volumes on computers, as well as Andrew Hacker's analysis of race relations, Two Nations: Black and White, Separate, Hostile, Unequal.

But always there is business. One BCI venture working is called Cable Cheque. It will offer cable viewers discounts on their monthly bills when they purchase selected products. Another is the installation of a new fiber-optic network to link the eight hubs of his cable franchise system. The goal is twofold. He wants to tap into a new technology and install his system before the phone companies can replace their copper lines with multi-channel fiber-optic cables.

Barden also plans to attack the phone companies on their turf. Last April, BCI received an experimental license to test "personal communication services." These are low-power, noncellular pocket-size phones, which proponents say may cost less than $100, yet be able to provide high-quality transmissions.

Barden says he hopes to begin testing the system by year-end. Toward that end, he is allocating a start-up budget of up to $1 million. He also delights in the notion that this new product could slice into the phone companies' market share. "I hope to give the phone companies some of their own business," he says.

Besides these ventures, Barden is trying to juggle several other domestic and international ideas. Recently, he bought two FM radio stations in the Illinois cities of Ottawa and Coal City. He is even dabbling with the idea of reentering the recording business. Barden and Keenan, his 25-year-old son from a previous marriage, have started Barden Records. The label has signed three groups, but the former record store owner doesn' expect any hits on the Billboard charts for quite a while. It's kind of a research and development effort, says Barden. "We'll try to develop them over the next two years on a very methodical basis and see how it works."

On a more serious note, Barden's success has attracted government interest in southern Africa. Last year, a representative of the newly independent republic of Namibia approached him to see if he would be interested in helping it build a privately held radio station, which could reach listeners in the neighboring states of Botswana and South Africa. Barden says he hasn't decided whether he will accept the offer.

It is clear that Barden can afford to take these risks. He is no longer the anxious striver from Inkster. He has made it and now he can focus on his dream--to build a business that will last.
COPYRIGHT 1992 Earl G. Graves Publishing Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Title Annotation:B.E. 100s Company of the Year; Barden Cablevision Inc.
Author:Bray, Hiawatha
Publication:Black Enterprise
Article Type:Cover Story
Date:Jun 1, 1992
Words:3226
Previous Article:Overview: thriving under pressure.
Next Article:109 years and going strong.
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