TELECOM Digest OnLine - Sorted: Air America Files Bankruptcy

Air America Files Bankruptcy

Paul Fahri (
Sun, 15 Oct 2006 22:32:42 -0500

By Paul Farhi
Washington Post Staff Writer

Air America Radio, which has tried to create a liberal talk and news
network to challenge the dominance of conservatives such as Rush
Limbaugh, yesterday filed for Chapter 11 bankruptcy protection but said
it would remain on the air.

Air America has battled financial turbulence since its launch in early
2004. Despite the star power of Al Franken -- the comedian and
best-selling author who hosts one of its weekday programs -- the
privately owned company has lost almost $42 million since its inception,
including $13.1 million so far this year, according to its bankruptcy
filing. Franken himself is owed some $360,000 on his $2 million annual

The New York-based service has also struggled to get and keep affiliate
stations with strong signals. It was recently dropped by its flagship
station in New York, the nation's largest radio market, which forced Air
America to move to a weaker outlet. It isn't heard at all in Dallas,
Philadelphia and Houston, three of the nation's 10 largest radio markets.

In all, Air America's programs are heard on 92 stations and on
Washington-based XM Satellite Radio. The liberal network says it has
about 4 million listeners.

In the Washington area, several Air America programs, including
Franken's, are carried on WWRC (1260 AM), which has a limited
broadcasting range. During the most recent quarterly ratings period,
"Progressive Talk 1260" didn't attract enough listeners to rank among
the region's top 35 stations.

Dave Pugh, who oversees WWRC and other local stations owned by Clear
Channel Communications, said he expected Air America to continue
broadcasting. "We're committed to the format," he said. "Unless we hear
something different, the network will continue. It's business as usual."

Air America, as well as independent observers, said the bankruptcy
filing -- which enables a company to reorganize its finances while
freezing claims from creditors -- doesn't suggest liberal-oriented talk
can't compete with Limbaugh or other conservatives such as Sean Hannity.

"This has more to do with how [Air America] structured its business,"
said Tom Taylor, the editor of Inside Radio, an industry newsletter.
"They had to invent the business model because no one else had, and they
made some mistakes. ... It's like they say about pioneers -- they're
the ones with arrows in their backs."

Indeed, although conservatives have dominated the talk format for
decades, liberals have made some inroads in recent years and are popular
in many cities around the country. For example, Washington-based Jones
Radio Networks has syndicated talk shows featuring liberal hosts Ed
Schultz, Stephanie Miller and Bill Press, with more than 180 stations
carrying the programs.

"The format is healthy and here to stay," said Amy Bolton, general
manager of news and talk programming for Jones.

Air America said it sought bankruptcy court protection after being
unable to work out an agreement to settle a debt with a creditor it
would not name. People at the company identified the creditor as
MultiCultural Radio Broadcasting, a New York company that had been the
landlord of Air America's studios in Chicago and Los Angeles. In a
dispute over rent payments that erupted soon after Air America began
broadcasting, MultiCultural locked out Air America's employees from the
two studios, giving the fledgling company a public-relations black eye.

"[We] do not think this says anything about the viability of progressive
talk," said Air America spokeswoman Jaime Horn. "We had a cost structure
that did not support the revenue. We are confident that this transition
will enable the business to grow."

Court papers show Air America had $4.3 million in assets and $20.3
million in liabilities, according to Reuters news service.

The bankruptcy filing came with the disclosure by Air America yesterday
of a succession of executive and board defections. Rob Glaser, the
founder of RealNetworks Inc. who owns 37 percent of the company and is
its chief financial backer, resigned as a director yesterday along with
two others. Air America said it has named a new chief executive, Scott
Elberg, who has been with the company since mid-2005. Elberg is the
third person to hold the CEO's job since April, following the
resignation of the former top executive and his replacement by an
interim manager.

Furthermore, Air America said two other board members left in August,
that its president quit in June and that its executive vice president
and chief operating officer departed in July.

In addition to Franken, Air America syndicates shows hosted by Randi
Rhodes and Jerry Springer, among others.

Franken, who was traveling yesterday, was unavailable for comment.

Copyright 2006 The Washington Post Company

NOTE: For more telecom/internet/networking/computer news from the
daily media, check out our feature 'Telecom Digest Extra' each day at . Hundreds of new
articles daily. And, discuss this and other topics in our forum at (or)

For more news and headlines, please go to:

Post Followup Article Use your browser's quoting feature to quote article into reply
Go to Next message: Monty Solomon: "Phony Identification"
Go to Previous message: TELECOM Digest Editor: "A Telephone Magazine from Eighty Years Ago"
TELECOM Digest: Home Page