[Vision2020] Air America's Current state of affairs

[Tim Lohrmann]

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Interesting NY Times read on Air America's "growing?" pains.  
TL
 May 31, 2004Office Politics Give Liberal Radio a Rocky StartBy JACQUES STEINBERG

ven by the chaotic standards of a new media company, Air America Radio's first two months of broadcasting have been convulsive.

The fledgling talk-radio network has replaced five top executives, been taken off the air in two of its top three markets and lost several crucial producers. By late April, current and former executives said last week, the company was perilously close to running out of money. It has since received an infusion of cash, though it has not disclosed how much or from whom.

The roiling in Air America's front office has undercut its continuing assurances that it has the financing and leadership to survive past the presidential election in November, in pursuit of its goal of establishing a permanent liberal counterpart to Rush Limbaugh and his radio cohort on the right. 

In a sign that the privately held company's financial woes have not fully abated, Al Franken, the network's best-known star, said in an interview last week that he had agreed not to draw a salary, however temporarily, making him "an involuntary investor.''

"We had some bad management,'' Mr. Franken said. "Then we got some good management.''

Still, Mr. Franken, his tongue only partly in cheek, added, "It's a little fuzzy to me exactly who's in charge.''

The turmoil has shed light on the network's corporate culture, laying bare a mismatched collection of managers and investors, including Democratic Party fund-raisers, Internet entrepreneurs and radio veterans who, as it turned out, did not get along especially well. Even as the network was finding an audience with its blend of humor and commentary, many of the principals' business relationships were dissolving in a flurry of charges and countercharges. The most serious concerned how much money Air America actually had on hand when it went on the air on March 31.

In early March, the network's chief executive, Mark Walsh, said that the company had raised more than $20 million, enough to keep it broadcasting for months, if not years, before making a profit. At the time, Mr. Walsh said that the network's primary backers included Evan M. Cohen, a venture capitalist who was the network's chairman, and Rex Sorensen, a business partner of Mr. Cohen's who was the chairman of Progress Media, the parent company of Air America.

But in an interview on Friday, Mr. Walsh said: "I was misled about that number.'' Mr. Walsh refused to say who had misled him, but he said that he had resigned in April because "the company wasn't transparent'' and "I was unable to decipher how it was being operated.''

Less than a month later, Mr. Cohen and Mr. Sorensen, who had previously operated radio stations together in Guam and Saipan, resigned under pressure from the company's other investors. David Goodfriend, who served as general counsel and later as acting chief operating officer of Air America, resigned about a week ago, having done his best, he said, to hold the company together in the wake of the departures of Mr. Cohen, Mr. Sorensen and Mr. Walsh. (Separately, Dave Logan, executive vice president for programming, also left, in late April.)

Jon Sinton, the president of Air America and one of the few top executives who remains from the day it went on the air, underscored Mr. Walsh's comments by saying, in a separate interview, that he, too, had been misled about the company's resources and that a cash crunch had ensued as a result. 

"Financing wasn't as available for operational issues as we'd thought it was,'' he said. Reached on Friday, Mr. Cohen declined to comment on the state of the company's finances under his watch.

Despite the intrigue concerning its management - and the abrupt pulling of its programming last month from stations in Chicago and Los Angeles, in a contract dispute - there are early indications that, where it can be heard, Air America is actually drawing listeners. WLIB-AM in New York City, one of 13 stations that carry at least part of Air America's 16 hours of original programming each day, even appears to be holding its own with WABC-AM, the New York City station and talk radio powerhouse that is Mr. Limbaugh's flagship.

For example, among listeners from 25 and 54, whom advertisers covet, the network estimates it drew an average listener share (roughly a percentage of listeners) of 3.4 on WLIB in April, from 10 a.m. and 3 p.m. on weekdays, according to the company's extrapolation of figures provided by Arbitron for the three months ended in April. (Arbitron, which does not provide ratings in monthly increments, said the network's methodology appeared sound, although such figures were too raw to translate to numbers of listeners.) 

By contrast, according to Air America's figures, WABC-AM drew an average share of 3.2 during the same period in April for the same age group. That time period includes the three hours in which Mr. Limbaugh was pitted head to head against Mr. Franken. 

Phil Boyce, the program director of WABC , cautioned against drawing conclusions from preliminary data. "If they end up doing that well when the final number is out, which is two more months, I'll give them a congratulations," Mr. Boyce said.

While the network is awaiting the release of similar figures from Arbitron for other cities, KPOJ-AM, the Clear Channel station that carries its programming in Portland, Ore., informed Air America executives by an e-mail message in late April that its ratings appeared to have tripled last month, according to the station's informal survey. (A station executive, Mary Lou Gunn, did not return a telephone message left at her office on Friday.)

The network, which is also carried on the satellite radio providers XM and Sirius, has found an audience on the Internet. In its first week, listeners clicked on the audio programming on the Air America Web site more than two million times, according to RealNetworks, the digital media provider.

"It's clear the audience is there,'' Mr. Franken said. 

The conventional wisdom in the radio industry had been that, unlike the conservatives who dominate commercial talk radio, liberals could not entice and hold listeners.

"This shows there's an appetite out there,'' said Tom Taylor, editor of Inside Radio, an industry newsletter whose publisher is owned by Clear Channel. "There's a good chance they'll right the ship businesswise and keep going forward.'' 

In addition to Mr. Franken, the Air America lineup includes Janeane Garofalo, an actress and comedian, and Lizz Winstead, a former head writer of "The Daily Show'' on Comedy Central.

Air America's stumble outside the studio in its early weeks was partly a function of the ambitious task it had assigned itself. While Mr. Limbaugh quickly found a niche on AM radio beginning in the late 1980's - he is now heard on more than 600 stations - he began syndicating his program at a time when AM radio was thought to be dying, thus presenting him little competition.

Now, in an era of media consolidation, AM and FM stations alike are thriving. Few are for sale (Air America had initially hoped to buy five, but has yet to buy one), and few have enough air time available for lease or barter to accommodate Air America's block of programming.

But interviews with more than a dozen people currently or formerly affiliated with Air America made clear that the network had been hobbled by the failure of its early principals - some of whom had been drawn to the venture by ideology, others for business reasons - to forge common ground. 

The idea for a liberal talk-radio network was first hatched by Sheldon and Anita Drobny, venture capitalists from the Chicago area who had a lot of experience raising money for the Democratic Party but no real radio expertise. They were led to Mr. Sinton, who has 30 years experience in the radio business, and Mr. Franken, who has made a cottage industry of writing best-selling books that skewer the right. 

In Air America's current incarnation, Mr. Sinton, the president, reports to the network's new chief executive, Doug Kreeger, an early investor whose entrepreneurial efforts have included founding a chain of outerwear stores (Kreeger & Sons) and investing in a New York restaurant (City Bakery). 

For chief operating officer, the company has selected Carl Ginsburg, a former news producer at NBC and CBS. Ms. Drobny is its chairwoman, Mr. Sinton said.

Mr. Sinton said that the company was seeking to expand the number of stations carrying its programming - which includes Burlington, Vt.; West Palm Beach, Fla.; and Sacramento - to new markets in Colorado Springs, Santa Cruz, Calif., and Reno, Nev. It is also seeking new outlets in Chicago and Los Angeles, having settled its contractual dispute with the owner of the stations where it had first leased air time.

Mr. Sinton and Mr. Franken refused to say how much money the network had now, but said they had received assurances that the network would have no problem staying on the air through November, and beyond.

"No one is promising things they can't promise,'' Mr. Franken said. "But it appears to me that from the other people that are stepping up, the financing will be in place.'' He added: "Imagine how we're going to do when we know what we're doing.''

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<DIV>
<DIV>
<H5>Interesting NY Times read on Air America's "growing?" pains.&nbsp; </H5>
<P>TL</P>
<H5>&nbsp;</H5>
<H5>May 31, 2004</H5><NYT_HEADLINE type=" " version="1.0">
<H2>Office Politics Give Liberal Radio a Rocky Start</H2></NYT_HEADLINE><NYT_BYLINE type=" " version="1.0"><FONT size=-1><STRONG>By JACQUES STEINBERG</STRONG></FONT><BR></NYT_BYLINE>
<TABLE cellSpacing=0 cellPadding=0 align=right border=0>
<TBODY>
<TR>
<TD></TD></TR></TBODY></TABLE><NYT_TEXT>
<P><IMG height=33 alt=E src="http://graphics7.nytimes.com/images/dropcap/e.gif" width=25 align=left border=0>ven by the chaotic standards of a new media company, Air America Radio's first two months of broadcasting have been convulsive.</P>
<P>The fledgling talk-radio network has replaced five top executives, been taken off the air in two of its top three markets and lost several crucial producers. By late April, current and former executives said last week, the company was perilously close to running out of money. It has since received an infusion of cash, though it has not disclosed how much or from whom.</P>
<P>The roiling in Air America's front office has undercut its continuing assurances that it has the financing and leadership to survive past the presidential election in November, in pursuit of its goal of establishing a permanent liberal counterpart to Rush Limbaugh and his radio cohort on the right. </P>
<P>In a sign that the privately held company's financial woes have not fully abated, Al Franken, the network's best-known star, said in an interview last week that he had agreed not to draw a salary, however temporarily, making him "an involuntary investor.''</P>
<P>"We had some bad management,'' Mr. Franken said. "Then we got some good management.''</P>
<P>Still, Mr. Franken, his tongue only partly in cheek, added, "It's a little fuzzy to me exactly who's in charge.''</P>
<P>The turmoil has shed light on the network's corporate culture, laying bare a mismatched collection of managers and investors, including Democratic Party fund-raisers, Internet entrepreneurs and radio veterans who, as it turned out, did not get along especially well. Even as the network was finding an audience with its blend of humor and commentary, many of the principals' business relationships were dissolving in a flurry of charges and countercharges. The most serious concerned how much money Air America actually had on hand when it went on the air on March 31.</P>
<P>In early March, the network's chief executive, Mark Walsh, said that the company had raised more than $20 million, enough to keep it broadcasting for months, if not years, before making a profit. At the time, Mr. Walsh said that the network's primary backers included Evan M. Cohen, a venture capitalist who was the network's chairman, and Rex Sorensen, a business partner of Mr. Cohen's who was the chairman of Progress Media, the parent company of Air America.</P>
<P>But in an interview on Friday, Mr. Walsh said: "I was misled about that number.'' Mr. Walsh refused to say who had misled him, but he said that he had resigned in April because "the company wasn't transparent'' and "I was unable to decipher how it was being operated.''</P>
<P>Less than a month later, Mr. Cohen and Mr. Sorensen, who had previously operated radio stations together in Guam and Saipan, resigned under pressure from the company's other investors. David Goodfriend, who served as general counsel and later as acting chief operating officer of Air America, resigned about a week ago, having done his best, he said, to hold the company together in the wake of the departures of Mr. Cohen, Mr. Sorensen and Mr. Walsh. (Separately, Dave Logan, executive vice president for programming, also left, in late April.)</P>
<P>Jon Sinton, the president of Air America and one of the few top executives who remains from the day it went on the air, underscored Mr. Walsh's comments by saying, in a separate interview, that he, too, had been misled about the company's resources and that a cash crunch had ensued as a result. </P>
<P>"Financing wasn't as available for operational issues as we'd thought it was,'' he said. Reached on Friday, Mr. Cohen declined to comment on the state of the company's finances under his watch.</P>
<P>Despite the intrigue concerning its management - and the abrupt pulling of its programming last month from stations in Chicago and Los Angeles, in a contract dispute - there are early indications that, where it can be heard, Air America is actually drawing listeners. WLIB-AM in New York City, one of 13 stations that carry at least part of Air America's 16 hours of original programming each day, even appears to be holding its own with WABC-AM, the New York City station and talk radio powerhouse that is Mr. Limbaugh's flagship.</P>
<P>For example, among listeners from 25 and 54, whom advertisers covet, the network estimates it drew an average listener share (roughly a percentage of listeners) of 3.4 on WLIB in April, from 10 a.m. and 3 p.m. on weekdays, according to the company's extrapolation of figures provided by <A href="http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&amp;symb=ARB"><FONT color=#000066>Arbitron</FONT></A> for the three months ended in April. (Arbitron, which does not provide ratings in monthly increments, said the network's methodology appeared sound, although such figures were too raw to translate to numbers of listeners.) </P>
<P>By contrast, according to Air America's figures, WABC-AM drew an average share of 3.2 during the same period in April for the same age group. That time period includes the three hours in which Mr. Limbaugh was pitted head to head against Mr. Franken. </P>
<P>Phil Boyce, the program director of WABC , cautioned against drawing conclusions from preliminary data. "If they end up doing that well when the final number is out, which is two more months, I'll give them a congratulations," Mr. Boyce said.</P>
<P>While the network is awaiting the release of similar figures from Arbitron for other cities, KPOJ-AM, the <A href="http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&amp;symb=CCU"><FONT color=#000066>Clear Channel</FONT></A> station that carries its programming in Portland, Ore., informed Air America executives by an e-mail message in late April that its ratings appeared to have tripled last month, according to the station's informal survey. (A station executive, Mary Lou Gunn, did not return a telephone message left at her office on Friday.)</P>
<P>The network, which is also carried on the satellite radio providers XM and Sirius, has found an audience on the Internet. In its first week, listeners clicked on the audio programming on the Air America Web site more than two million times, according to <A href="http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&amp;symb=RNWK"><FONT color=#000066>RealNetworks</FONT></A>, the digital media provider.</P>
<P>"It's clear the audience is there,'' Mr. Franken said. </P>
<P>The conventional wisdom in the radio industry had been that, unlike the conservatives who dominate commercial talk radio, liberals could not entice and hold listeners.</P>
<P>"This shows there's an appetite out there,'' said Tom Taylor, editor of Inside Radio, an industry newsletter whose publisher is owned by Clear Channel. "There's a good chance they'll right the ship businesswise and keep going forward.'' </P>
<P>In addition to Mr. Franken, the Air America lineup includes Janeane Garofalo, an actress and comedian, and Lizz Winstead, a former head writer of "The Daily Show'' on Comedy Central.</P>
<P>Air America's stumble outside the studio in its early weeks was partly a function of the ambitious task it had assigned itself. While Mr. Limbaugh quickly found a niche on AM radio beginning in the late 1980's - he is now heard on more than 600 stations - he began syndicating his program at a time when AM radio was thought to be dying, thus presenting him little competition.</P>
<P>Now, in an era of media consolidation, AM and FM stations alike are thriving. Few are for sale (Air America had initially hoped to buy five, but has yet to buy one), and few have enough air time available for lease or barter to accommodate Air America's block of programming.</P>
<P>But interviews with more than a dozen people currently or formerly affiliated with Air America made clear that the network had been hobbled by the failure of its early principals - some of whom had been drawn to the venture by ideology, others for business reasons - to forge common ground. </P>
<P>The idea for a liberal talk-radio network was first hatched by Sheldon and Anita Drobny, venture capitalists from the Chicago area who had a lot of experience raising money for the Democratic Party but no real radio expertise. They were led to Mr. Sinton, who has 30 years experience in the radio business, and Mr. Franken, who has made a cottage industry of writing best-selling books that skewer the right. </P>
<P>In Air America's current incarnation, Mr. Sinton, the president, reports to the network's new chief executive, Doug Kreeger, an early investor whose entrepreneurial efforts have included founding a chain of outerwear stores (Kreeger &amp; Sons) and investing in a New York restaurant (City Bakery). </P>
<P>For chief operating officer, the company has selected Carl Ginsburg, a former news producer at NBC and CBS. Ms. Drobny is its chairwoman, Mr. Sinton said.</P>
<P>Mr. Sinton said that the company was seeking to expand the number of stations carrying its programming - which includes Burlington, Vt.; West Palm Beach, Fla.; and Sacramento - to new markets in Colorado Springs, Santa Cruz, Calif., and Reno, Nev. It is also seeking new outlets in Chicago and Los Angeles, having settled its contractual dispute with the owner of the stations where it had first leased air time.</P>
<P>Mr. Sinton and Mr. Franken refused to say how much money the network had now, but said they had received assurances that the network would have no problem staying on the air through November, and beyond.</P>
<P>"No one is promising things they can't promise,'' Mr. Franken said. "But it appears to me that from the other people that are stepping up, the financing will be in place.'' He added: "Imagine how we're going to do when we know what we're doing.''</P></NYT_TEXT><BR>
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