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Air America Radio's Bankruptcy

Ezra Klein and Marc Cooper discuss Air America Radio's filing for bankruptcy this week.

Marc thinks AAR will stay on the air until just after the elections. Ezra thinks it failed because it tried to copy the conservative framework.

I don't know anything about radio, and just a little about corporations that do debt restructuring in bankruptcy to stay alive. Think of all the airlines that have done so. I always thought a company that filed under Chapter 11 restructuring provisions did so because it planned to stay in business and was trying to repay its debts at its own pace as it reduced its costs rather than buckling under to a creditor who wanted money right now. Indeed, the Washington Post says,

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."

As to whether the filing is the result of a poor business plan, lack of listeners or poor hosts and programming, I like this comment from one of Ezra's commenters:

I didn't listen to Air America because if I want lefty commentary, I can get it from blogs. There's more variety, better quality, and frankly, it's just a better medium for it.

Conservatives go in for that voice in the darkness, the angry white male raging against the world. Whatever the slant of the content, that's just not the aesthetic of liberals.

Unless I'm in the back of a taxi cab in another city or a guest on a radio show, I pretty much listen to the radio for music, not talk. For politics, I'd much rather read or watch tv. So, is Air America really doomed? What do you think?

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  • Re: Air America Radio's Bankruptcy (none / 0) (#1)
    by Rich on Sat Oct 14, 2006 at 04:27:40 PM EST
    There's an audience for npr, which still draws a lot of lefties. In the past, local radio supported talk shows across the political spectrum. So, I think there's a potential market of decent size. Unfortunately, I'm not part of it. Unless there's an important news story developing, I dislike listening to chatter on the radio; I'd rather hear music. The alienated person who wants someone to reflect their voice is a big part of the wingnut audeince, which also skews rather old. A good question si whether the demographics of Right Wing radio can support it in the future.

    Re: Air America Radio's Bankruptcy (none / 0) (#2)
    by Talkleft Visitor on Sat Oct 14, 2006 at 04:27:40 PM EST
    I think the only part that Marc ($200,000 is a low middle class salary - Pajamahadeen) Cooper got right is that Air America's programming was top down when it should have been bottom up. They made almost no attempt to survey listeners and find out what listeners wanted. I will grant that Cooper has more knowledge than I do of the radio biz, but bankruptcy does not mean closing the doors. It means going to a judge and getting past agreements and bills remade to the benefit of all. Air America says that the problem is one creditor that will not renegotiate. If so, it should be easy for them to get a judge to redo the contract with the one creditor. I have long been curious about the economics of AM radio. I don't like listening to ANYONE for 3 hours -- I felt the shows on AAR were much too long and would have been better presented in a one hour format. I like AAR a great deal, but I felt a better AAR would have been one to two hours for the "screechers", and one to two hours for a Terri Gross or Mike Papantonio. If you live in a town with a good NPR affiliate (San Francisco, Los Angeles, Boston) then life is good. If you're in Phoenix where the NPR affiliate could not be worse, than what you hope for from AAR is for a far more listenable to Pacifica. Good information and news, and motivating screeching when it is called for. Any reporter or organization that tries to claim they are objective and refuses to acknowledge their or their reporters biases are just playing a their audiences and themselves for fools, and that is really what NPR's problem is.

    Re: Air America Radio's Bankruptcy (none / 0) (#3)
    by Gabriel Malor on Sat Oct 14, 2006 at 04:27:40 PM EST
    TL, you're right that Chapter 11 filing is an attempt at keeping a business in business rather than shutting down operations, selling everything that's not nailed down and paying off the creditors. As for the difficulties Air America has experienced over the last few years, the Air America spokeswoman gives it away with this ass-backwards statement:
    We had a cost structure that did not support the revenue.
    As a general rule, companies should attempt to establish a cost structure that can be supported by their revenues, not the other way around. What Air America did was take on monumental amounts of debt in the hopes that they would have a breakthrough moment and somehow immediately start achieving the type of revenue seen on conservative talk radio. There were several things wrong with this plan (and though I'm listing them off the top of my head, be assured that others have raised these and similar objections long before now): 1. Conservative talk radio didn't appear overnight; there was no conservative "breakthrough moment." Individual programs achieved their popularity in select markets, giving each program a solid base of dedicated listeners (the irritating Dittoheads not least among them). This happened before people looked up in the mid-90s and realized that conservative talk had cornered the market. 2. Conservative talk radio did not attempt to create its own station and content. Conservative talk programs operated independently of radio stations and then were (in some cases, but not even most) nationally syndicated based on their popularity. The operation of a radio station is enourmously expensive and it is one that conservative talk programs never had to support because they used existing networks. 3. Conservative talk radio hosts got paid based on their popularity. Yeah, Rush Limbaugh can buy small countries because of his radio program, but he didn't start out that way. Paying the extremely high salary of a liberal star that is unconnected with that star's ability to get listeners (and thereby raise revenue) is an extremely bad business plan. Conclusion: All of these points boil down to the fact that Air America is an example of top-down, centralized control. Their plan was: run the stations, run the network, run the hosts. Conservative talk radio has much more in common with the netroots. It's a decentralized scheme (admittedly with some leading lights that help coordinate) that allows for a great deal of flexibility in managing costs. As a business plan, that's why Air America has had trouble. As far as the ability to get and keep listeners through program quality, I don't know if that's had an impact on Air America's success (or failure), not having ever listened to it myself. But I think one of the first things I would have asked myself if I were investing in the company was whether or not there is even a market out there for liberal talk radio. The absolute disaster of a business plan comes second to that, because even if the business scheme were perfect Air America still would depend on having a viable market.

    Re: Air America Radio's Bankruptcy (none / 0) (#4)
    by Talkleft Visitor on Sat Oct 14, 2006 at 04:59:46 PM EST
    Talk radio is too repetitive--never understood why anyone listened, even those angry white males (is that AWM in the personal ads?). Repeated stuff in blogs can't easily be skipped over.

    Re: Air America Radio's Bankruptcy (none / 0) (#5)
    by clayton on Sat Oct 14, 2006 at 04:59:46 PM EST
    I am blind and many blogs are not accessable. Air America keeps me informed, and Stehie Miller, the little trollop, keep me amused, Al Franken keeps me informed, Ed Schultz lets me hear what others (left and right) are thinking! By the way, Lionel just pisses me off! Many elderly do not, or cannot, use the internets (sic). Loss of Air America would be a shame!

    Re: Air America Radio's Bankruptcy (none / 0) (#6)
    by jarober on Sat Oct 14, 2006 at 05:18:41 PM EST
    Air America failed for a simple reason: they simply aren't entertaining. Randy Rhodes is one of the few people on there with radio experience, and she's fairly obnoxious. Whether you agree with Limbaugh or not, he understands how to do radio - and he spent years building an audience. Air America didn't do that - they tried to launch 24x7 programming instead of finding 1 or 2 good hosts and building up organically. It can be done; there are successful liberal hosts on the air. Air America failed the same way that Market Garden failed in WWII - they went "a bridge too far".

    Re: Air America Radio's Bankruptcy (none / 0) (#7)
    by Talkleft Visitor on Sat Oct 14, 2006 at 05:32:04 PM EST
    I like Air America. I get most of my news from blogs, so I don't really listen to it for the news, but I don't listen to it just to hear people agree with me. I really like the humor (mostly just Al Franken and Sam Seder) and and I think they have interesting guests.

    Re: Air America Radio's Bankruptcy (none / 0) (#8)
    by Talkleft Visitor on Sat Oct 14, 2006 at 05:32:04 PM EST
    They made lots of mistakes. Among them, hiring Jerry Springer and not letting Garafalo out of her contract when it became clear she wasn't interested in sticking around, as was done with Chuck D. They didn't work towards syndication. They went exclusive with XM radio when it was becoming clear that Sirius was going to surge ahead, and would be a better home for AAR with an expanded talk and NPR lineup.

    Re: Air America Radio's Bankruptcy (none / 0) (#9)
    by Talkleft Visitor on Sat Oct 14, 2006 at 06:10:20 PM EST
    I don't know, I love Air America Radio. I listen almost the entire day while I am at work. It seems I am not alone as the ratings are quite good in many markets. I strongly disagree with the argument that some how NPR is progressive radio for Liberals and that would compete with AAR. I mean I like a few programs on NPR but for the most part it's completely boring and makes me ill. ' Also, It should be pointed out that Bill O'Reilly Made this exact "NPR" argument about why AAR radio would fail. So I am not sure you want to be on Billo's side on this one. One more thing. Did you read why they are going into Bankruptcy? It dates back to the first week AAR was on the air. When their Landlord in LA locked out Air America's employees over a rent dispute. Anyone who has seen the HBO Documentary knows that the Man who was responsible for that dealing was a completely incompetent liar who was fired by AAR. So it seems highly ridiculous to draw any conclusions about the viability of progressive talk based on this situation. And further more AAR has not Failed it is simply restructuring and will continue to broadcast. Keep in mind that FOX NEWS lost some where in the range of $100,000,000 in the first five years of their existence. It takes time to build an ambitious project like I don't know... building a national radio network!

    Re: Air America Radio's Bankruptcy (none / 0) (#10)
    by Talkleft Visitor on Sat Oct 14, 2006 at 07:45:17 PM EST
    Keep in mind that FOX NEWS lost some where in the range of $100,000,000 in the first five years of their existence. It takes time to build an ambitious project like I don't know... building a national radio network!
    Exactly. I think they've got a good foundation to "grow organically" from (I love that phrase). Rhodes can be obnoxious but we all have our blindsides, and Al Franken's wonderful. Here in Dallas, before AA got bumped by a right-wing Catholic network (based in Midland, Tx), Rhodes got knocked to a later time by Ed Schultz. I wish they could get him. There were weak spots, though. I thought Jerry Springer was boring, and I'm afraid Sam Seder can be really shrill. Rachel Maddow kind of gets on my nerves. Remember: corporate America's gone pretty blatantly fascist. It took it years to carefully nurture these sociopaths, and at great costs. They could have never in a million years arisen to this level in a truly free market. As for NPR, it got the cold shoulder from me when it tried to lie about the coup is Venezuela. I haven't trusted it since.

    Re: Air America Radio's Bankruptcy (none / 0) (#11)
    by chemoelectric on Sat Oct 14, 2006 at 07:56:11 PM EST
    There's loads of audience for Air America Radio. It's simple as that. And the chances that AAR would never have to restructure its debt were low to start with. It's an ambitious venture. If it does fail (which it has not, I'm listening to it now), it will be because it is difficult, very difficult to start a business. Trying to read more into it than that tends to give just a listing one's prejudices.

    Re: Air America Radio's Bankruptcy (none / 0) (#12)
    by Talkleft Visitor on Sat Oct 14, 2006 at 08:55:26 PM EST
    I admit I don't listen. I will listen for music and NPR at times. I always thought of talk radio as being frumpy...errr...compared to all the other forms of communication we have. We need to buy a television station.

    Re: Air America Radio's Bankruptcy (none / 0) (#13)
    by Talkleft Visitor on Sat Oct 14, 2006 at 09:22:57 PM EST
    Anyone who's heard AAR knows that Al Franken is entertaining. You know, that's what he's been doing for most of his life. I was sorry to see his female co-host leave the show. I felt that they had great synergy. If you haven't heard Ring of Fire yet, you're really missing out. Mike Papantonio and Bobby Kennedy, Jr. make a great team that regularly exposes corporate corruption. I believe for Air America Radio to be successful, they need to expand on shows like these. NPR is some of the finest radio on the airwaves. It's hardly boring to me. However, although the audience of NPR tends to the left, that doesn't mean that its broadcasts will continue to reflect it. NPR is publically funded and the Bush Administration has been trying hard to alter its content. For this reason, I believe that it is important for Air America to continue to broadcast. There is no guarantee that NPR will continue to tend to the left. Once Air America starts producing programming similar to that on NPR I think that their financial picture will improve dramatically. As far as satellite radio goes, I just purchased an XM unit simply to be able to pick up Air America Radio wherever I can go. Sure, I'll listen to all of the music channels, but I like listening to the news on the radio, too. It highlights certain issues that aren't always found in the common media. Sirius won't be complete until All Things Considered joins the other NPR programming. All Things Considered (and Morning and Weekend Edition) are the flagship programs of the network. I find it pointless to subscribe to a particular public radio service without these invaluable programs. Anyway, the wide swath of NPR coverage on the FM dial in Michigan is more than enough to satisfy my NPR cravings.

    Re: Air America Radio's Bankruptcy (none / 0) (#14)
    by Talkleft Visitor on Sat Oct 14, 2006 at 10:36:58 PM EST
    I listened to Air America faithfully until they started making "business" decisions that screwed their listeners. I invested in Sirius equipment for home and car, and then they cancelled on Sirius. Then, they started messing with the programming line-up. Introducing Jerry Springer was just bizarre. For me, the last straw was the cancellation of Morning Sedition and kicking Marc Maron off the air. They had an authentic morning drive time show that was funny, informative, entertaining. And they replaced it with Rachel Maddow -- so sanctimonious that she makes me want to vote Republican. When I stopped listening to Air America, I didn't miss it at all. I prefer the blogs. And even liberal talk radio oversimplified things too much for my taste. (But I do love Stephanie Miller -- very, very simple, but very liberal . . . with fart jokes.) In these discussions about Air America, it seemed like there is a profound divide between liberals who liked the funny and liberals who hated it. I'm not sure that Air America ever figured out a perfect formula that would appeal to both kinds of listeners. But I think this yet another aspect of what people are calling a centralized, top-down model. I got the impression that they were a bunch of humorless bureaucrats who were trying to create a liberal version of npr. It's not like management was listening to what was bubbling up from below.

    Re: Air America Radio's Bankruptcy (none / 0) (#15)
    by Talkleft Visitor on Sat Oct 14, 2006 at 11:05:33 PM EST
    I will miss it if it goes away. I can't take much NPR, though my wife listens to it all day. I worked on a failed comedy radio network a few years ago and it was the same business model. Hire big names who are not radio savy and hope an audience pours in. Garafalo was grating. Seder is great. I also really like Al Franken and Ed Schulz. Randi Rhodes is not different than Limbaugh - just on the other side of the fence. I can't stand Stephanie Miller. But that's radio. Overall they have some great programming here in LA. It will be interesting to see what happends. You don't need to kick ass in radio if you are in syndication. People like O'Reilly get there asses kicked in every market - but they stay on because overall they are making money with national commercials. Air America is doing well in a lot of markets - if they go off the air it won't be because of ratings - but because of their business model. If that does happen they will be replaced by another liberal network, because the market has shown it can sustain it.

    Re: Air America Radio's Bankruptcy (none / 0) (#16)
    by Talkleft Visitor on Sun Oct 15, 2006 at 08:42:46 AM EST
    I'm sorry to hear that Air America is struggling financially. I think it would be a huge mistake if liberals/progressives allowed the network to fade away. When I first heard about Air America, I thought it was a silly idea. But, over the past six months or so I have listened quite a bit and come to realize the necessity of this format. Air America has in many instances caused thinking people to be bolder in their challenges to the push administration, main stream reporters and politicians alike. I know this because I have listened closely to thmanner in which arguments have been framed by Air America hosts and their guests and later heard the same aruguments spill into the mainstream press (often by the reporters and politicians who had earlier in the day been guest on Air America). The median is not for everyone. But as the right has shown, it is for a lot of people. It is incredibly high minded and naive to think that only people on the right find the format entertaining. The liberal/progressive cause is lost if we intend to concede the A.M. dial to right wingers. I can not state in strong enough terms the importance of progressive/liberals getting our message out continuously and in a format that many people are comfortable with.

    Re: Air America Radio's Bankruptcy (none / 0) (#17)
    by PJHawaii on Sun Oct 15, 2006 at 08:42:46 AM EST
    I'm a criminal defense attorney who spends a lotta time on the road. In Honolulu, we have one liberal talk radio station which programs Air America (Al Franken and Randi Rhoads only) as well as Stephanie Miller, Ed Schulz, and a local union guy. Left talk radio is sweetness to me, it is good, it is fine, it help keeps me sane, and I'm gonna be one melancholy lady if it goes away. It is true that one can obtain suitable news on the blogs, but then one can't read blogs while driving, or while writing briefs and motions. I listen to liberal talk radio all day. Al Franken's approach is wry and he takes pains to be accurate; Randi is solid and funny and outraged; Stephanie Miller is looser with her facts but she's got great sound effects and makes me laugh out loud. Big Ed sounds like a left wing Rush and that is also satisfying. I listen to NPR less and less. It is too precious, too careful, and not nearly political enough for the mostly enraged mood I've been in since Bush stole the elections.

    Re: Air America Radio's Bankruptcy (none / 0) (#18)
    by Talkleft Visitor on Sun Oct 15, 2006 at 08:42:46 AM EST
    H_C, Having worked at a college station during a transmitter upgrade, leading to a major change in programming, I had to deal with NPR and PRI a few times. They are very possessive about their signature shows. Because we would have been one of 3 stations in a region, we had limitted access to their shows, as they argued that we could hurt the other station's donor numbers. I would bet that that is the same reason that you don't find some NPR shows on satelite. Regardless, AAR made some very bad business decisions, as, I believe, so has XM. Lucky for XM, as a subscriber based service, they are safe until their customers go elsewhere. Terrestrial radio is just a bad place to be right now. Ad dollars are drying up, listeners are going elsewhere, and cars are coming equipped with sat radio.

    Re: Air America Radio's Bankruptcy (none / 0) (#19)
    by Talkleft Visitor on Sun Oct 15, 2006 at 02:25:33 PM EST
    About 21% of the public gets its news from talk radio. AAR and progressive talk show hosts like Stephanie Miller and Ed Shultz should be applauded for attempting to get the progessive agenda onto the airwaves to counter the right wing spin. The fact is that media conglomerates control the airwaves and can effectively block any program they want. In my view AAR's business plan was an attempt to address the media conglomerates lock on radio in order to get the progressive voice out to that 21%. This is important. I listen to AAR and progressive talk, and I am encouraged when some listener comes on and says that they are thankful that progressive talk radio has come in to their market or that a conservative or Republican has come to the light. We need to support all venues -- blogs and talk radio -- in getting our message out to the folks. I hope AAR has a long life and is on the air beyond the 2006 election.

    Re: Air America Radio's Bankruptcy (none / 0) (#20)
    by jimakaPPJ on Sun Oct 15, 2006 at 02:58:04 PM EST
    I think it would be a huge mistake if liberals/progressives allowed the network to fade away. - Chris Nixon
    We need to support all venues -- blogs and talk radio -- in getting our message out to the folks. - Cycling Left
    Chris and Cycling - Thanks for identifying the core of the matter. The Right wingers have big audiences and make money selling ads. The Lefties have small audiences, and don't make money selling ads. Somehow you guys have mistakenly come to the conclusion that Air America is like NPR.
    And further more AAR has not Failed it is simply restructuring and will continue to broadcast. - Evan
    If it does fail (which it has not, I'm listening to it now)-Chemoelectric
    Evan and Chemo - You might want to talk those folks who are losing a ton money. I bet you will find that they think it is a failure.
    Air America is doing well in a lot of markets - if they go off the air it won't be because of ratings - but because of their business model. - DA
    If their ratings were good then they would be selling ads and not going into Chapter 11.

    Re: Air America Radio's Bankruptcy (none / 0) (#21)
    by jimcee on Sun Oct 15, 2006 at 06:23:04 PM EST
    It might also help if their business model didn't 'borrow' money meant for the kids. It was really kind of Air America to accept money that was embezelled from the Gloria Wise Boys and Girls Club just to pay thier bills. As far as the NPR model that is a problem. Firstly, NPR gets federal funds, secondly it has some of the finest programming available on the radio. Me? I love Ira Glass' This American Life as it is some of the finest radio ever produced. I actually pledged some money today for thier 'drive'. Conservative Yakkers discovered the much discounted AM radio bands when most in the radio industry were ready to give up on them because the quality of the signal was relativly poor compared to FM (mid 80s). Those who held licenses to AM stations were offered shows like Limbaugh's for nothing more than giving up advertising minutes in return for programming that only involved an engineer and use of thier equipment which was required by thier FCC licensing agreements. The station owners no longer had to hire radio personalities to fill airtime so they could save money by not paying "Rockin' Rick Roller" to play the oldies. Eventually people began to listen to AM radio because they could get something besides oldies or religious stuff. Either way it was a bottom up construction that was successful. A rather creative use of the 'obsolete' which also increased the value of the owner's license from squat to gold. The failure of Air America will be the same as the failure of most of the Leftist agenda and that is the idea that they are are smarter than everyone else and can tell them how they should think and behave. There is a certain conceit that thinks that thier side can buy an audience by buying the medium without appealing to the market and thus drawing revenue raising advertisers. I guess that's why they had to accept pilfered cash that was destined to help the underpriviledged before Air America pissed it away.