The Millionaire’s Media Megaphone — Part Three
Liberal talk radio struggles for stability — and influence
BY Caitlin Ginley AND Taylor Rausch | September 04, 2008
It was just days after Air America’s March 2004 launch and already things looked grim. The highly anticipated liberal talk radio network, launched only eight months before Democrat John Kerry was to face President Bush at the polls, had been on Chicago’s affiliate station WNTD-950 AM for only two weeks when station owner Arthur Liu complained about a bounced check. Air America, he claimed, owed him more than $1 million, and he dropped its programming.
That lasted less than 48 hours. Air America won a temporary court order against the Chicago affiliate and was back on the air. Chairman Evan Cohen rejoiced, “Arthur Liu received a clear message: Temper tantrums are not the way to conduct business.”
But about a week later, with its financial difficulties continuing, Air America settled its dispute with Liu out of court and was off the air in Chicago again. This time it stayed off through the rest of the election cycle. (In 2005, the network made something of a Windy City comeback, airing on WCPT-AM 820, albeit a station with a significantly less powerful signal, where some of its programs can be heard today.)
In a way, Air America’s story in Chicago characterizes its very existence — from its wobbly beginning, to its comeback, to its struggle to survive in its mission to offset conservative talk radio’s powerful impact on American politics. As the 2008 presidential election bears down on us, at least some of Air America’s programming can be heard broadcast in fewer than 70 markets, and it’s up against the blanket coverage (on over 600 stations nationwide) of the No. 1 talk radio host, Rush Limbaugh, not to mention the array of other conservative commentators all over the radio dial — and not to mention television, especially a Fox News Channel awash in conservative hosts and commentators.
Air America’s owners differ from conservative counterparts like Rupert Murdoch of Fox in that they acknowledge their political motive and say openly that they want to steer America’s politics toward candidates and ideologies they support. Their aim is to fight back against what their allies among liberal bloggers like to call the domestic propaganda war. The wealthy on both sides pour millions into their ventures. At the extreme sits the perpetual money hemorrhage called The Washington Times, published by the Reverend Sun Myung Moon as an alternative to the dominant Washington newspaper that conservatives love to hate, The Post. Moon is thought to have spent more than $2 billion over the past 25 years subsidizing the Times.
An ever-rising flood of political money flows to campaign coffers in the quadrennial bazaar that’s come to be known as “the buying of the president” — and this cycle is projected to set a record this year with total spending easily exceeding $1 billion. But people who invest millions in media ventures in the hope of influencing elections stand apart from those who merely make campaign contributions; if their ventures are sustainable, either profitable or not ruinously expensive, they can continuously influence the political culture, not just an election.
---------------------
The first liberal players in this modern drama were the Chicago venture capitalists Sheldon and Anita Drobny. Weary of the platform given to George W. Bush by popular conservative commentators including Rush Limbaugh and Sean Hannity, in February 2003 the Drobnys announced their vision for a liberal-leaning radio network. They set out to establish for liberals what conservatives have provided so effectively for their own candidates and issues, and to do it in time to have an impact on the 2004 election, when President Bush would be seeking reelection. The Drobnys had reportedly already raised $10 million and continued to solicit investments from friends and other progressive pockets. One such schmooze event was hosted by commentator and website entrepreneur Arianna Huffington and by television producer Norman Lear.
In the fall, the Drobnys recruited the Guam-based venture capitalists Evan Cohen and Rex Sorenson. The duo agreed to buy out the Drobnys, and the venture soon became Progress Media LLC, with Mark Walsh, a former America Online executive and chief technology adviser to the Democratic National Committee, as its new CEO. Cohen and Sorenson told investors that they were putting in $12 million of their own money and had raised $18 million more from other individuals, according to investors and company officers who heard their presentations and later spoke to The Wall Street Journal.
Progress Media’s Air America venture moved forward with a plan to rent air time from low-performing stations and air their shows. The new venture seemed to be “an interesting experiment,” Brooke Gladstone of National Public Radio’s On the Media told the Center.
Less than three months after signing Al Franken as Air America’s headliner host for $1 million per year, the team celebrated their March 31, 2004, launch with a $70,000-plus New York gala. Cohen forgot the check to pay the bill and paid with a charge card. Two weeks later, the Chicago and Los Angeles affiliates had endured enough of the company’s misguided management and money problems, and were ready to bail out. The experiment was on shaky ground.
But for many fans of talk radio, Air America was welcome voice. A 2004 study by Democracy Radio found that nearly 90 percent of all talk radio programming was conservative, but that 61 percent of talk radio listeners did not label themselves as politically conservative.
Now a Democratic candidate for U.S. Senate in Minnesota, Al Franken kicked off Air America Radio in 2004 with his The O’Franken Factor program. (Credit: Al Franken for Senate)Host Rachel Maddow, who has been with AAR since the beginning and who in September starts hosting her own show on MSNBC, told the Center that the initial response to the network was overwhelming and fan response was huge. Thanks to a sweeping PR campaign and media frenzy, anticipation for Air America skyrocketed before the network even hit the airwaves.
By Election Day 2004, AAR could be heard on twice as many stations as only 3 months earlier.
Initial ratings also looked promising: In San Diego, ratings were up 75 percent compared to previous programming; in Denver, they jumped 300 percent; in Portland, Oregon, ratings soared 800 percent.
Much of Air America’s initial appeal to liberal listeners was its anti-George W. Bush rhetoric. In the months leading up to the election, Air America hosts geared up for what they hoped would be a Democratic victory. Al Franken said his show would be “a total failure” if Bush won a second term. “We are going to stick it to Bush,” he said before AAR launched. “Bush is going down in November, and then we’re putting it to the rest of the right-wing media.”
“I’m doing this because I want to use my energies to get Bush unelected,” Franken told The New York Times Magazine in March 2004. “I’d be happy if the election of a Democrat ended the show.” Today Franken is a Democratic candidate for the U.S. Senate in Minnesota.
Throughout the 2004 race, Franken and the network’s other program hosts talked up John Kerry, lampooned the Bush administration, and encouraged listeners to get involved in the campaign. But it seemed the political dream of AAR had squelched the business model. Its owners were banking on a Democrat in the White House, but didn’t have anything to bank.
---------------------
“They barely had a chance to get off the ground before they ran into financial problems,” NPR’s Brooke Gladstone said.
CEO Walsh quit on April 12, 2004, complaining that he was kept in the dark about the company’s finances. The reported $30 million in original investments turned out to be $7 million. Terry Kelly, one of Air America’s original investors, stepped in as CEO and after combing through finances, it became clear that AAR was facing a $2.5 million bill to creditors. In May 2004, investor Mark Glaser became the third CEO and the fumbling enterprise was transferred from Progress Media to the newly formed Piquant LLC. Piquant would go on to raise $19.2 million in private equity to save the network.
“It certainly affected morale,” Maddow said of the initial financial problems. “I mean, we went through rounds of layoffs, lots of turnover. There was a lot of uncertainty as to the future of the network.”
Also affecting morale was John Kerry’s loss in November.
On Election Day 2004, the Air America newsroom was already planning Kerry’s inaugural parade. Reporting from Palm Beach, Randi Rhodes touted, “Do you realize that when Kerry wins tonight — and he will — that starting January 20, we get to change the world? Do you understand that’s the power we will then have?”
Later, host Janeane Garafolo reported the Bush camp’s rising electoral votes: “I know John Kerry will win, but having to sit through this is like having to sit through — I don’t know — a metaphor for something that is hard to sit through.” As an emotional Randi Rhodes put it: “I refuse to believe that this country reelected that man. It’s not possible.”
A few days after Election Day, Air America began referring to the aftermath as a “pro-Kerry political hangover” and an “electoral disaster.” A section on its website entitled, “You Are Not Alone. . .” listed other reactions in the media ranging from Slate’s disappointment in Kerry’s concession (“There are still votes to be counted!”) to Harpers’ guide to becoming an expatriate.
“We would have preferred it come out the other way,” Jon Sinton, Air America’s president, said one month after the election. “But from a business perspective, this outcome is probably better for us. It certainly gives us a lot of talk about the next four years.”
For a while, the new management seemed to put things back in their place. AAR continued to grow, and in spring 2005 its audience had, compared to six months earlier, more than doubled to 3.1 million strong.
But, the therapeutic Bush bashing that carried it into 2005 could not change the fact that Air America failed to accomplish its political objective — to give Democrats a well-funded boost to get them elected. As Bush bounded into his second term, Air America limped through its second year. Philadelphia’s WHAT-AM dropped AAR in September 2005 due to disappointing ratings. WLTQ in Charleston, South Carolina, dropped AAR the same month, citing low ratings and ad sales.
In Providence, Rhode Island, affiliate station WHJJ switched from live and local programming to Air America in October 2004. Bill George, the station’s program director, said the decision marked a pretty substantial change — and resulted in an immediate decline in the ratings. By September 2005, WHJJ had unplugged Air America.
The overwhelmingly Democratic Rhode Island capital seemed an ideal setting for Air America. But, George told the Center, the programming lacked quality, and shows like Jerry Springer’s and Al Franken’s had trouble competing with what was up against them. “It was a worthwhile experiment for us, a good gamble,” he said of the decision to broadcast Air America. “But we learned that talk radio was about more than political ideology.”
Advertising, George pointed out, was another obstacle for Air America. Syndicated programs are tougher to sell, as was Air America’s distinctly liberal message to business owners with more conservative views.
Former Public Advocate for the City of New York Mark Green and his brother Stephen bought Air America in 2007, for $4.25 million. (Credit: Mark Green for Mayor)The lack of money pouring in — and the lack of money to begin with — would continue to cause major problems. Compared to other successful news networks, AAR simply did not have the financial resources to get it off the ground. A crucial factor in a network’s success is landing stations with powerful signals, noted Maddow. “That’s an expensive proposition,” she said, “and it’s hard to start from zero unless you’re Rupert Murdoch — somebody with an incredibly deep pocket, willing to lose money for awhile, maybe even for a long while, in order to position you so well so that ultimately you can start making money. This is a pioneering thing, and it requires investment.”
At Fox News, which cost about $140 million to launch, it took four years to record a profit and seven years to reach its current distribution, even as hundreds of millions of dollars fueled the startup each year. And today, Fox News is worth an estimated $10 billion. But while Murdoch pumped his millions into Fox News to build it up during its early growing pains and expand his own electoral influence, financial backers were fleeing Air America Radio.
In the fall of 2006, rumblings of bankruptcy were streaming out of the AAR New York office. Sheldon Drobny stepped in and offered $2.5 million for his original brainchild, but then backed away.
On Friday the 13th, AAR filed for Chapter 11 bankruptcy protection. The $20.2 million they claimed in debts towered over the meager $4.3 million in assets. The October 2006 filing noted that the liberal dream had lost $40.9 million since May 2004. Al Franken was owed over $360,000 in unpaid paychecks, and then-CEO Robert Glaser was out the door with $10.3 million in claims. Glaser and two other investors offered up to $2.6 million in interim financing to keep programming on the air, but other liberal money was not coming in to bail them out.
“I think liberal money isn’t that much different from other money in that it wants to back a winner,” NPR’s Gladstone said. “Air America needs its angels, and then we can see whether or not it can hold a commercial audience and create the kinds of fortunes that Rush Limbaugh is able to.”
Six months later, angels in the form of real estate mogul Stephen Green and brother, Mark, a former New York City elected official and political activist, shoveled out $4.25 million for the drowning AAR operation. And this March, nearly four years after the rocky beginnings and just as another presidential election looms, Vermont venture capitalist Charlie Kireker bought into AAR. Mark Green remains as president, and longtime media industry executive Bennett Zier has been brought on as CEO.
---------------------
Gladstone noted that in light of all of the reorganization and refinancing, perhaps liberals just aren’t drawn to talk radio. AAR, she said, was never geared to be as fiery as a Rush Limbaugh: “I don’t think that they’re comfortable with that kind of saliva spray.” Rather, Gladstone asserted that the web is a better platform for discussion and debate for the passions among the Left. The AAR new hires — Zier and new senior vice president of programming Bill Hess — are hoping to build that web community.
But Air America’s troubles remain. Its flagship station in New York, WLIB, dropped the network in 2006 to become a gospel music station, and the programming moved to the much smaller WWRL. In April this year, WWRL announced that it would cut the AAR’s morning programming from its schedule to make room for two one-hour health infomercials.
And AAR now has its competition, as other progressive talk radio networks are looking for a slot on the dial. Sarah Boyer, an administrator of the independent AAR fan site, Air America Place, reports that the site is discussing a name change to reflect a widening focus that will include other networks. Boyer told the Center that AAR has been “the trailblazer for progressive talk, but they’re not going to be the one that lasts.”
Boyer sees promise in the new progressive ventures like Jones Radio Networks and Nova M Radio, founded by AAR originators Anita and Sheldon Drobny. CEO John Manzo took over Nova M in June 2007 after leaving his post at AAR, where he had been since the launch. “The Drobnys were squeezed out of Air America in the midst of investor infighting,” he told the Center, “but understood the power of progressive talk and opted to put their own money up to build another outlet.” Billed as the “future of progressive talk,” Nova M syndicates former AAR hosts Randi Rhodes and Mike Malloy. Manzo says most of progressive talk radio nowadays is non-Air America content. He blames poor leadership by top investors — what he calls the “vanity of a handful of wealthy individuals” — for AAR’s failure. “Otherwise,” he said, “Air America could have been a profitable enterprise anchored by a successful NYC flagship station within its first 12 to 18 months of operation.”
---------------------
With enough money, political activists on either side can buy a big megaphone to amplify their free speech. But to find a loyal audience and turn that megaphone into a successful business endeavor is harder. Does progressive talk radio have a future? Many would argue yes. Particularly with this year’s election heating up, Maddow believes Air America can benefit from the public’s “increased appetite for political talk.” She has confidence in new owner Charlie Kireker and believes they are set for a successful year.
Kireker, too, is bullish. He sees Bush’s dismally low ratings and the high Democratic turnouts in the primaries this year as a perfect formula for liberal talk radio to flourish. “When one Democratic candidate can attract more voters in South Carolina than all the Republican candidates, that tells you something about the mood of the country,” Krieker said of Democratic nominee Barack Obama. “There’s a thirst for change.”
Indeed, with Obama’s national popularity and widespread dissatisfaction with Republicans in this election season, these should be heady times for Air America. And yet, the network has come nowhere near the level of influence as have conservative media. There may be a thirst for change, but for Air America, that is irrelevant if no one is listening. In the end, the network’s fate may rest less with liberal politics and more with sustainable business models and deep pockets.