Text 25838, 193 rader
Skriven 2006-12-18 06:00:00 av Jeff Binkley (1:226/600)
Ärende: Air America
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Rats leaving a sinking ship...

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http://www.nytimes.com/2006/12/18/business/media/18air.html?ex=1324098000&en=45
e004064f38630e&ei=5090&partner=rssuserland&emc=rss

After Bankruptcy Filing, Recriminations Fly at Air America

By ELIZABETH JENSEN and LIA MILLER
Published: December 18, 2006
In its search for a new chief executive this past summer, Air America Radio
interviewed seasoned media executives in an effort to revive the faltering
network. One interview took a bizarre turn, however, when the executive got
into a political argument with Randi Rhodes, one of the networks on-air hosts.

I laughed and said, You sound like Republican talking points,  Ms. Rhodes
recalled.

At Air America, business and politics always mixed, and that was the problem,
critics contend. Begun with an onslaught of publicity in spring 2004 as an
alternative to right-wing talk radio, the network is given some of the credit
by its supporters for having helped achieve the Democrats Congressional
election victory in November.

Detractors label the liberal networks programming as combative, one-note and
emotional. At least its business dealings seem to fit that last description.
Even before Air America and its corporate parent, Piquant L.L.C., sought
bankruptcy protection on Oct. 13, its management was engulfed in a series of
financial crises. The search for new investors and managers has been marred by
infighting among those who want the network to succeed, according to people in
the organization.

In recent weeks, Air America, which has its headquarters in New York and
reaches about 2.4 million listeners weekly, has suffered the defection of a
handful of its more than 80 affiliated stations and soon faces the likely
departure of its most visible host, Al Franken, even as it cobbles together a
plan to emerge from Chapter 11.

A possible solution surfaced on Friday. Douglas Kreeger, an initial investor
and former chief executive who stabilized the network in its early months, said
in a telephone interview that there is a signed letter of intent for a new
group to take over the network and that he is likely to be a part. The lead
equity position would be taken by Terence F. Kelly, of Madison, Wis., also an
Air America investor from the beginning and a former board chairman.

Mr. Kelly said in a separate interview that the investor group included a new
strategic media partner he declined to name, and both men would not predict
when a deal might come to fruition.

Any number of things can happen, Mr. Kreeger said.

This is only the latest twist in the short but contentious history of Air
America. At the root of its problems, some critics and competitors say, has
been an inability to negotiate a middle path between its political mission and
its business.

Its my feeling that they really put this together without broadcasters, said
Stuart Krane, a former ABC Radio executive who is the president of Product
First, which owns the program of a liberal talk-show host, Ed Schultz. If you
have a healthy business, then your agenda will be put forth.

Air America ran into financial trouble within days of its appearance on March
31, 2004, when it turned out that its original chairman, Evan Cohen, did not
have the backing he said he did. Weeks later, Mr. Kelly, a former owner of
Midwest radio and television stations, stepped in to take charge of the board.
At the end of 2004, he ceded the chairmanship to a new investor, Rob Glaser,
chief executive of RealNetworks.

Some people at Air America assert that, under Mr. Glaser and the team he put in
place, the network was top-heavy with management, inept at selling ads,
unwilling to make program compromises that veered from the liberal message and
overstaffed with more than 100 employees when two dozen would have sufficed.

What they did for $45 million they could have done for $10 million, said
Sheldon Drobny, an investor with a contentious relationship with the network.
Mr. Drobny and his wife, Anita, longtime Democratic activists, are credited
with the idea for Air America.

The network has run through a stream of operational executives. Danny Goldberg,
a music executive who served as chief for about a year before leaving in April
2006, said the problem was a big gap between the ambitions of the company and
the funding available to accomplish those ambitions.

There was no way to manage around that gap, he said. Either lower your
expectations or raise more money. No one wanted to change the ambitions.

Faced with constant money woes, the board considered a takeover by the
Democracy Alliance, a loose group of moneyed progressives, including George
Soros, who had pooled resources to support projects they considered worthy. But
the group ultimately rejected the appeal, because Air America needed to do
certain things to make it a more attractive business, Mr. Kreeger said.

Mr. Kelly said he was disappointed that rich Democrats did not step up to
support the networks political goals. On fund-raising calls, he said, he was
often turned down because the business plan was too risky.

He agreed that the network over-spent, out of enthusiasm for what we were
doing. But he said it also inherited so many difficulties not of our own
making.

Saying that Air America reaches millions of listeners and clearly had an impact
on the 2006 elections, Mr Kelly added, I think with a relatively small amount
of money, we have succeeded wildly.

Late in August, the network lost its lease with WLIB in New York and switched
to a weaker station, WWRL 1600. Some liberals blamed Product First, which was
negotiating its own WLIB deal. It later fell through.

We just saw WLIB as something we might own and do very well with, Mr. Krane
said. There was never any nefarious plot here.

Late in September, the Drobnys tried to buy Air America for $2.5 million, but
the deal fell apart because, Mr. Drobny says, the terms were changed. He said
he would have had to put the money into Piquants operating account, where it
could have been tapped by creditors, instead of into a shielded holding
company.

In an e-mail message to the board, Mr. Drobny wrote that one or more of the
board members and attorneys have intentionally taken steps to put the company
into Chapter 11 and have taken actions that are intentionally to the detriment
of the current members and their creditors.

Tracy L. Klestadt, the networks bankruptcy lawyer, termed that absolutely
inaccurate, saying the terms always called for the purchaser to invest in
Piquant L.L.C. and the Drobnys would not agree to it.

As for the bankruptcy filing, which came after a creditor, MultiCultural Radio
Broadcasting, sought to freeze company accounts, Mr. Klestadt said the board
decided a Chapter 11 proceeding would be the best way to maximize the value of
the assets.

Mr. Glaser, who resigned from the board along with Mr. Kreeger and Mr. Kelly at
the time of the filing, declined to comment. He is the networks largest
creditor with $9.8 million in claims.

Since Air America sought bankruptcy protection, 5 to 10 potential buyers have
looked at the books, Mr. Klestadt said. Late Friday, it told affiliates that an
official letter of intent has been signed, but declined to name the prospective
buyer due to the sensitive nature of this deal.

Some affiliates have grown weary. In recent weeks, an affiliate in the Quad
Cities market of western Illinois and eastern Iowa switched its programming to
Christmas music, and stations owned by Clear Channel in Boston, Cincinnati and
Madison announced plans to bail out.

Moreover, Jerry Springer just ended his Air America-syndicated radio show,
which never gained a wide audience. Mr. Franken has been telling associates
that he is likely to run for the Senate from Minnesota.

Mr. Franken, who is on a U.S.O. tour of Iraq and Afghanistan and says he is
owed $360,750 by the network, declined requests for comment. Through Air
Americas spokeswoman, he said, that although I do not know the specific details
about A.A.R.s progress through the Chapter 11 restructuring process, I was
pleased to hear that they had received a letter of intent from a prospective
buyer. He added his hope that the networks ownership situation and financing
difficulties will be resolved while I am away.

When he returns, he faces competition from an unexpected source: Product Firsts
Ed Schultz, who went on the air in January 2004, three months before Air
America. Last week, Mr. Schultzs program moved to a live broadcast against Mr.
Frankens.

Mr. Franken gave visibility to the format, but at the end of the day, youd
better be selling a commercial, Mr. Schultz said. You have to run it like a
business.

Mr. Franken said he was pleased to welcome Ed Shultz as a direct competitor.

Eds success, he added, is proof of the vitality of the progressive talk format.
I consider Ed a friend  unless he starts beating me in the ratings, at which
point I plan to downgrade him to acquaintance.

The Drobnys have started their own network, Nova M Radio, which has two
stations and two talk hosts, Mike Newcomb and a former Air America broadcaster,
Mike Malloy. They are courting other liberal media people to do programs for
the 15 to 20 affiliates they said will soon join them. Mr. Drobny called the
effort, the second coming of Air America. Mr. Kelly said Air America is also in
active discussions with new progressive hosts and hopes to add an investigative
unit if his group is successful.

Mr. Kreeger added that it will be up to us to really create compelling content
and lure affiliates back. Until then, there is an existing deal with XM
Satellite Radio and the networks Web site, which he said had absolute untapped
potential for 24/7 online streaming that has never been effectively monetized.

He disputes the idea that Air America was a vanity project, but acknowledged
that things may be done differently in the future. I have come to understand
very clearly that the radio component of this requires a radio professional, he
said.

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