BREAKING NEWS: AAR Has Just Declared Chapter 11 - Staying On Air-Will Reorganize

[fred flintstone]

Note these reports come -after- the announcement. I speculated about the same thing, but when I do it I say I am guessing... I don't say "sources said" or "exclusive." His "exclusives" consist of regurgitating bits from the bankruptcy papers. What was especially ironic is that on Thursday, he was telling his readers he was never at fault for the incorrect speculation that Air America was imminently declaring bankruptcy (although he spent the last month reporting it).

It's hysterical. His entire "inside" report today is 100% guesswork... again!

Agreed, he is guilty of excessive self-promoting hype - even by somewhat lax standards of radio in that department.

But give the devil his due, sometimes he "guesses" right. And his stuff is not entirely guess work. He appears to start with a kernel of substance and bloviates out of control.

 

[lilburncommunityradio]

I second the statement, "We will continue to broadcast our popular programs?"
If so popular then why this? Air America is Finshed ! It was joke to begin with,
The only two on the network, as angry as they are, Mike(Im so pissed off Malloy)
and Randi Rhodes were the only two worth the risk as far as Lib talkers go, Franken
Oh god please! AA is done! Atlanta booted them, just look at the ratings.. Its over go and find something else to do with your time...

 

[fred flintstone]

Bankruptcy:

FOR IMMEDIATE RELEASE

NEW YORK-October, 13, 2006-Piquant, LLC, which does business as Air America
Radio, announced today that it has filed for Chapter 11 protection in the United States
Bankruptcy Court for the Southern District of New York. This regrettable action became
necessary only recently when good faith efforts to resolve outstanding debt with a
creditor from the company's earliest days broke down.

The bankruptcy filing will allow the company to continue offering its complete line-up of
programming while it deals with its creditors in the reorganization proceeding. To ensure
the company's continued operation without interruption, a credit facility will be provided
by Democracy Allies LLC. The Management and the Board of Directors of Piquant
remain fully committed to broadcasting our popular programs and championing the
progressive cause during what we are confident will be a very brief restructuring period.

In recent months, the company has been seeking additional investment to finance its
continued growth, and it expects to continue and complete discussions for new financing
during the Chapter 11.

The Board of Directors has named Vice President Scott Elberg as the Company's Chief
Executive Officer. "Nobody likes filing for bankruptcy, however, this move will enable
us to concentrate on informing and entertaining our audience during the coming months,"
said Elberg. "Staying on the air is crucial for the Network's primary ratings period as
well as for the country which is facing its most important mid-term election in recent
history."

Air America, headquartered in New York City, currently produces 19 hours of
original programming a day and is heard on 92 affiliates reaching 58 percent of the
country. Air America affiliates reach 2.4 million listeners per week, Mon-Sun 6a12m.

Piquant is represented in the Chapter 11 case by Tracy L. Klestadt and Sean C. Southard
of the law firm of Klestadt & Winters, LLP, 292 Madison Avenue, 17th Floor, New
York, NY 10017, telephone (212) 972-3000.

 

[kaufcom]

The copy of the court filing is a shocker. It looks like they have not been paying their bills for some time - maybe since Day 1.

That's an understatement. Here's the laundry list from Smokin Gun at reported by AllAccess.com

The network's filing indicates assets of $4,331,265.30 and debts of $20,266,056.23. REAL NETWORKS' ROB GLASER is the largest single creditor, with $9.82 million in secured debt and $475,000. in unsecured debt.

Among other notable creditors, AL FRANKEN is owed $360,749.98 in a priority claim, while his producer BILLY KIMBALL is owed $84,893.04. and PUBLIC ENEMY's CHUCK D., a weekend host and former weekday host at the network, is owed $10,749.99 (disputed). Former CEO DANNY GOLDBERG is owed $133,333.32 (disputed), while CLEAR CHANNEL VP GABE HOBBS' consulting firm is owed $7,500. and former President GARY KRANTZ is owed $245,641.06 (disputed).

Former programming VP JON SINTON is owed a disputed $4,174.48, former host MIKE MALLOY is owed $114,678.64, DEMOCRACY RADIO founder and AIR AMERICA SYNDICATION head TOM ATHANS is owed $11,951.96, RANDY MICHAELS' SOTR LLC/RADIOACTIVE is owed $37,500., and the network's new YOUNG TURKS morning show is owed $6,923.10.

Among unsecured claims, AFTRA's Health and Retirement Fund is owed $42,293.84 (disputed), ARBITRON is owed $161,345.26, CLEAR CHANNEL's KTLK-A/LOS ANGELES is owed $558,333.33 and CLEAR CHANNEL corporate is owed a disputed $3,389.77, former affiliate DIAMOND BROADCASTING/SACRAMENTO is owed $500,000. (disputed), ENVISION RADIO NETWORKS is owed $100,000., HARRIS CORP. is owed $14,994.01, ICBC (owner of former flagship WLIB-A/NEW YORK) is owed a disputed $293,385.51, JONES MEDIAAMERICA is owed $62,283.38, weekender MIKE PAPANTONIO is owed $100,000., MULTICULTURAL RADIO BROADCASTING is owed a disputed $500,000. stemming from the parties' earlier settled dispute over the short-lived lease agreement for affiliates in NEW YORK, LOS ANGELES, and CHICAGO, and TALKERS MAGAZINE is owed $3,600.

 

[evnlee]

Smoking Gun
http://www.thesmokinggun.com/archive/1013062airamerica1.html

Liberal network lists $20.2 million in debts, assets of $4.3 million

(They owe Al Franken $360,000. Rob Glaser of Real Networks is owed nearly $10 million.)

wasnt' there some post awhile ago about how Err America isn't like Enron/ not going to 'screw the little guy' ?

Look like a whole buncha people are gonna get the shaft.

Priceless. :

cut the music for all the AAR apologists ....

" ....so you had a bad day....."

 

[Johnny Morgan]

Gloria Wise is lucky to have gotten their money back; others are not so lucky.

Not if it was paid within the last 90 days.

 

[RBA]

His name is George W. Bush, pal...and if AAR ran the country we'd REALLY be in debt. Last time I looked around the Dow was doing just fine and there's low unemployment. Gas prices low. Will your local AAR affiliate "stay the course" or will they change to something that actually makes money?

Maybe we'll have the government pay off AAR's debt...just like how they subsidize NPR.

When Clinton was in office, the Dow was breaking records everyday. When you adjust the Dow for inflation, it's actually way down today.(It hasn't recovered from the Bush losses yet) Low Unemployment? I guess you don't actually read the number and take the Bush spin instead. Gas prices are still a lot higher since a Democrat was President.

Stay the course? over 1/2 million dead in Iraq. Afghanistan is having a Taliban revival. N. Korea has nukes. America's standing the world has never been lower. Airman and sailors are being put in jobs outside their specialites in Iraq. The Air Force is downsizing and the Army/Marines can't maintain the rotations too much longer.

But stay the course. :

 

[FightingIrish]

Gloria Wise is lucky to have gotten their money back; others are not so lucky.

Not if it was paid within the last 90 days.

The Gloria Wise money was not in the company's funds. When word leaked out of the scandal, Piquant put the disputed money in escrow, as advised by the authorities. Therefore, the money did not figure in to Piquant's operating assets.

 

[evnlee]

I'm sure this announcement comes as a disappoint to those who believed AAR's earlier statements, and based on that defended AAR. Once again, AAR management shows a lack of integrity in its dealings with the industry, the public and most of all, it's fans.

I don't know if you can say this. They told the truth a few weeks ago when they said they were not declaring bankruptcy at the time.As far as Baloney goes, all you need to know is that he was wrong back then and he had no clue about today's announcement, so it's just more proof he guesses more than he knows.

here's a cute little post from a month ago:

"Yaba-daba-spam. Yup... we've got at least a half dozen threads now open covering the exact same topic. The moderator here should start merging threads together to discourage this practice. Otherwise, I could start a topic an hour entitled:

1:00pm - AAR Still Not in Bankruptcy
2:00pm - AAR Still Not in Bankruptcy"

 

[fred flintstone]

The AP is reporting that Real Networks CEO Robert Glaser resigned from AAR's board of directors this morning. Glaser, along with two others, has been providing new financing through Piquant investor group Democracy Allies LLC. AAR says it will seek court permission to obtain up to $3 million of financing from Democracy Allies LLC so that it may operate while under Chapter 11. The AP says Glaser owns 36.7 per cent of AAR.

The AP also reports bankruptcy court documents show that AAR lost $9.1 million in 2004, $19.6 million in 2005 and $13.1 million so far in 2006.

Reuters says that in September, MultiCultural Radio Broadcasting Inc., which AAR owes $550,000, blocked Air America from drawing needed cash from its bank accounts.

 

[FightingIrish]

Here's what I've compiled so far on my site:

Air America Radio, a liberal news and talk radio network, on Friday filed for Chapter 11 bankruptcy protection after consistently losing money for more than two years.

They also sought bankruptcy court protection because of a breakdown in talks with a creditor.

In a filing with the U.S. bankruptcy court in Manhattan, Air America said it has lost about $40.9 million since the spring of 2004. The Associated Press reports that the company lost $9.1 million in 2004, $19.6 million in 2005 and $13.1 million so far in 2006. The company plans to keep operating as usual while it reorganizes.

The company said it has 4 million listeners. Its on-air personalities also include Robert Kennedy Jr. and Randi Rhodes. In addition, Air America syndicates a radio show from television host Jerry Springer.

Scott Elberg, who became chief executive on Monday, said in an affidavit that Air America's backers advised the company last month that they would no longer subsidize its operating losses.

Elberg, a former general manager of the radio station WLIB in New York, has been with the network since May of last year.

Air America will keep broadcasting as it negotiates with creditors, according to an e-mailed statement from Piquant LLC, which operates under the network's name. Piquant said it filed a Chapter 11 bankruptcy petition in a New York court.

"This regrettable action became necessary only recently when good faith efforts to resolve outstanding debt with a creditor from the company's earliest days broke down,'' the New York-based company said in the statement.

Last month, creditor Multicultural Radio Broadcasting Inc., blocked the company from drawing on its bank accounts, leaving it without money to operate. The bankruptcy filing will allow Air America to tap these accounts, he said.

Air America said it will seek court permission to obtain up to $3 million of financing from an entity known as Democracy Allies, LLC so that it may operate while under Chapter 11.

None of today's actions relate in any way to the Gloria Wise controversy. WRC-TV in Washington, DC reports that the loan has already been repaid.

And Air America also disclosed in the court documents that two directors departed in the last two months, Douglas Kreeger and Tom Embrescia. Gary Krantz also departed as president in June, and executive vice president Tom Athans and chief operating officer Carl Ginsburg both left in July.


http://ltradio.blogspot.com/2006/10/air-america-radio-files-chapter-11.html

 

[LITTLEBOYBLUE]

So one assumes if they do Chapter 11 .... any no-competes would be invalidated?

If that happens...would it make sense for Westwood One (or someone similar, Premiere, etc.) to pick up the Air America hosts and syndicate? Then only real overhead is the talent fees ... probably offset with existing station affiliations (or maybe not?). But seems both Infinity and Cheap Channel found enough validation in the programming concept to maybe make it available.

I'm not the world's BRIGHTEST man, but I suspect Salem has already said "no thank you"!!!

 

[e-menace]

Didn't want anyone to miss that.

 

[FightingIrish]

So one assumes if they do Chapter 11 .... any no-competes would be invalidated?

If that happens...would it make sense for Westwood One (or someone similar, Premiere, etc.) to pick up the Air America hosts and syndicate? Then only real overhead is the talent fees ... probably offset with existing station affiliations (or maybe not?). But seems both Infinity and Cheap Channel found enough validation in the programming concept to maybe make it available.

I'm not the world's BRIGHTEST man, but I suspect Salem has already said "no thank you"!!!

You bring up a good point. Not sure if Ch. 11 would invalidate any current talent contracts.

From what I've seen, Premiere has shown little interest in syndicating liberal talk. They allowed two of their employees, Randi Rhodes and Ed Schultz to seek out other syndicators. And they also passed on Jerry Springer, sending him off to AAR's syndication arm.

Now, of course, they are doing their talent search contest. But it seems as if it's being done by Clear Channel itself rather than Premiere. And Jones Networks is also involved.

Clear Channel already has a pretty strong stable of local talkers, including Jay Marvin and others. But Premiere doesn't seem interested in taking advantage. A rumor I've heard is that Limbaugh has expressly forbidden Premiere from syndicating any significant liberal talk shows.

As for Westwood One, they don't seem to be as much into political talk. Sure, they do O'Reilly and Imus, but WW1 also likes to do stuff that can run on CBS-owned stations. Since many of the CBS talkers in the larger markets are already doing all-news formats, this would rule that out somewhat. The talk programming they seem to prefer is stuff that can run on their 'hot talk' stations (Free FM). Stuff like Loveline, Leykis, Don and Mike and Opie and Anthony.

I do predict that a bigger company will come along and swallow up AAR as a whole. The name has a lot of recognition, and is therefore valuable. The affiliate clearances are also pretty good too. What is preventing that now is the financial issues and the current front office chaos. Once they can get things in order, I can easily see a sale, possibly to a company like Jones (who they already have a sales agreement with) or even Radioactive (Randy Michaels could make a pretty big splash in the industry with this). Of course, this is mere speculation.

 

[evnlee]

So one assumes if they do Chapter 11 .... any no-competes would be invalidated?

If that happens...would it make sense for Westwood One (or someone similar, Premiere, etc.) to pick up the Air America hosts and syndicate? Then only real overhead is the talent fees ... probably offset with existing station affiliations (or maybe not?). But seems both Infinity and Cheap Channel found enough validation in the programming concept to maybe make it available.

I'm not the world's BRIGHTEST man, but I suspect Salem has already said "no thank you"!!!

You bring up a good point. Not sure if Ch. 11 would invalidate any current talent contracts.

From what I've seen, Premiere has shown little interest in syndicating liberal talk. They allowed two of their employees, Randi Rhodes and Ed Schultz to seek out other syndicators. And they also passed on Jerry Springer, sending him off to AAR's syndication arm.

Now, of course, they are doing their talent search contest. But it seems as if it's being done by Clear Channel itself rather than Premiere. And Jones Networks is also involved.

Clear Channel already has a pretty strong stable of local talkers, including Jay Marvin and others. But Premiere doesn't seem interested in taking advantage. A rumor I've heard is that Limbaugh has expressly forbidden Premiere from syndicating any significant liberal talk shows.

As for Westwood One, they don't seem to be as much into political talk. Sure, they do O'Reilly and Imus, but WW1 also likes to do stuff that can run on CBS-owned stations. Since many of the CBS talkers in the larger markets are already doing all-news formats, this would rule that out somewhat. The talk programming they seem to prefer is stuff that can run on their 'hot talk' stations (Free FM). Stuff like Loveline, Leykis, Don and Mike and Opie and Anthony.

I do predict that a bigger company will come along and swallow up AAR as a whole. The name has a lot of recognition, and is therefore valuable. The affiliate clearances are also pretty good too. What is preventing that now is the financial issues and the current front office chaos. Once they can get things in order, I can easily see a sale, possibly to a company like Jones (who they already have a sales agreement with) or even Radioactive (Randy Michaels could make a pretty big splash in the industry with this). Of course, this is mere speculation.

if there is a voiding of the non-competes, when would Franken and Rhodes be a free agent to look for another home? immediately, or upon filing of chapter 11?

does the new entity that would buy AAR own all previous shows and recordings? if someone wanted to compile a 'best of cd set' from the AAR years, who owns the rights? The hosts or the new owners?

why are certain people in the filing 'disputed'? I saw Chuck D is owed some $$$.

 

[fred flintstone]

All Access:

AIR AMERICA RADIO has filed for Chapter 11 bankruptcy. The network was forced to file when an unnamed creditor did not agree to proposed resolutions of outstanding debt and reportedly moved to seize the network's assets.

_________________________________________________
That is the big question: Will somebody buy AAR or will any marketable talent go make new deals?

I don't know how much of an asset the AAR brand name and "good will" are at this point; they do have a fair amount of bad baggage attached to their name. And the only marketable host under contract is Randi Rhodes. I can see a syndicator - most likely Jones - wanting to pick up Randi, but not the rest of the bunch. Franken still has name recognition but the show is not that good and does not appear to wear well on listeners over time; besides, he still makes noises about running for office next year. The Young Turks are an outside production and show some promise but they can most likely make their own deals. If Jones puts Randi in with Steph and Ed (maybe between Steph and Ed), they'd have something.

It appears AAR has been running a tab with Franken. Maybe his comment about not getting his check wasn't a joke after all. He has increasingly less incentive to hang around and work for free.

Reuters has not said so outright, but it may be that the party who walked away from the negotiating table was Rob Glaser and his investment group (not Sheldon Drobny as Maloney speculated). Glaser is AAR's biggest creditor and he has resigned his place on AAR's board (he was chairman). This would mean AAR's board and management have really succeeded in shooting themselves in the foot. They have already alienated Sheldon Drobny (based on recent comments). Now Glaser may be p___ed off, too. Looks like AAR's two main "angels" have flown and taken their checkbooks with them.

 

[TeeTaw]

I had a post on here this morning was accused of not thinking for myself for mentioning a right wing radio show and for even posting the info on this sight because it was not "local" radio.

Stand by.....

 

[fred flintstone]

Here are some interesting clips from the article for tomorrow's New York Times:

The network, which began broadcasting with much fanfare two years ago, has struggled to attract audiences and financing.
_________________________________________________
While the filing does not put Air America out of business, it does put a large question mark over the network’s future.
_________________________________________________
Despite attracting high-profile celebrities like the actor and writer Al Franken and the comedian Janeane Garafalo as hosts for its talk shows, Air America has not become the counterweight to conservative talk radio that it set out to be.
_________________________________________________
Court documents filed today paint a picture of a business under increasing financial distress.
_________________________________________________

Sounds almost like an obit.

 

[dampier]

here's a cute little post from a month ago:

And? Baloney was wrong then and he was wrong now, writing a quickie piece based on wading through bankruptcy documents. I don't consider this whole story to mean anything other than a reorganization. When conservatives who despise the very existence realize that the shows they hate aren't going off the air, I am sure they'll move on to the Jones' hosts.

 

[Johnny Morgan]

So one assumes if they do Chapter 11 .... any no-competes would be invalidated?

Not at all. Non-competes are contractual covenants, entirely unaffected by bankruptcy. Especially if the operation/contracting party continues (as the reorganization is doing). Non-competes protect the broadcaster from having the good-will and possible commercial relations directly or indirectly attached to an on-air talent heaped upon another station/competitor, plus having any programming philosophy, trade secrets (formats, data, etc.), and the like from unjustly enriching a competitor.

There could be a limited non-compete even if there wasn't money involved (though the reasons for it lessen when it's not a commercial transaction).