Wednesday, January 10, 2007

Rob Glaser and Air America: A costly flight

Seattle Weekly has an article about local resident and RealNetworks CEO Rob Glaser, known by many as the former chairman of Air America Radio. The paper is not too optimistic about the company's future, and it looks like they did get way too much of their information from mainstream media reports and the wingnut blogs. But it's still a good article. For those of you following the story, here it is in a nutshell.

Glaser, a noted donor to many left-leaning political candidates and causes, undertook his biggest-ever political investment in 2004 when he handed over $10 million via his investment group, Piquant LLC, to prop up Air America Radio, giving him 36.7 percent ownership.

In the wake of Air America's bankruptcy filing in October, Glaser has surrendered his chairmanship of the company and will likely lose his investment share, listed at $9.8 million, in addition to $475,000 that he loaned the company. This is all small change to Glaser, who's personal worth is estimated to be close to $1 billion.

Air America spokesperson Jaime Horn says a new network buyer has signed a letter of intent and a deal will be completed "any day now," likely allowing Air America to exit bankruptcy. The rumored purchaser is Terry Kelly, who helped found the network and served as its board chair until he was replaced by Glaser, though he stayed on as a partner in Piquant.

The rought times aren't over yet. Besides the bankruptcy action, Air America faces a half-dozen other lawsuits, mostly by ex-employees or affiliates over contractual and employment issues. Among them is an $11 million defamation suit by CACI International, a government contractor that helped operate Abu Ghraib prison. At issue is whether on-air personality Randi Rhodes was fair and accurate when in 2005 she accused CACI employees of raping and murdering Iraqi civilians at the prison, which the company denies. The bankruptcy court just ruled the suit can proceed.

The article, and their interview with Michael Hood of Blatherwatch, a blog devoted to talk radio in the Northwest, claime that Glaser's interests in liberal talk radio were politically motivated, and that he neglected to see Air America as "an entertainment business".

The roots of Air America could be traced back to 1993, when Glaser launched RealNetworks, then dubbed Progressive Networks. The idea was to deliver some sort of "socially conscious" content, as he called it, over the internet. As customers became more interested in the company's technology, that took a backseat as Glaser's company became a huge success. In November, Real announced record third-quarter revenue of $94 million and profit of $42 million.

According to the article, some affiliates are somewhat nervous about the goings-on at Air America, but Seattle affiliate KPTK does have a backup plan in play, and is not worried about the fate of Air America. "Fortunately, the way we operate at 1090, we're not really dependent on their success or failure," says Dave McDonald, the station's senior vice president. He cites Jones Radio's Stephanie Miller and Ed Schultz, who "has tied or beat Limbaugh in the ratings," according to McDonald. They also have a seperate deal with Thom Hartmann, who has won his timeslot in past ratings. "So we're not sitting here on the edge of our seats, wondering what Air America will do," says McDonald.

Under Glaser's watch, the network became management-heavy and scarred by infighting as it mixed politics with business, some current and former employees have said publicly. Air America also got caught up in the kind of scandal more familiar to Republican capitalists — having quietly floated a "loan" of $875,000 from a nonprofit New York boys and girls club that was funded in part by taxpayers. According to a 2005 New York state investigation, the questionable transaction had been arranged by former chair Evan Cohen, under Air America's previous ownership group. Cohen was bounced quickly from the ownership group after it was discovered that he was not being up-front about his finances, causing checks to bounce. Glaser, though feeling that Cohen bore the responsibility of repaying the money, did so himself. The article does not point out that the funds were held in escrow, per legal advice, but merely that it took a year to pay them back.

All in all, an informative read, inaccuracies and generalizations aside, as is usually the case with newspaper articles about the radio industry. You can read the entire article in the Seattle Weekly.


NYLefty said...

Since the article is full of inaccuracies I have to wonder why you would want to recommend it. Example: the bankruptcy court did NOT say that the suit against Air America and Randi Rhodes could proceed. It said that the plaintiffs could APPEAL the decision of a district court judge to throw out the case. Since appeals courts usually affirm the decisions of district courts, the appeals court will probably say the district court was right and that the suit has no merit.

ltr said...

With any newspaper article, you take out the good, chuck the rest. After reading what many newspaper reporters have written about the radio industry, I learned this a long time ago. They always get things wrong, so I guess I've learned to overlook that.

Granted, it sounds like this writer got way too much of his information from sensationalistic blog posts and lazy journalists, but it does give more insight into Rob Glaser's involvement in AAR than anything I've read recently. It seems like the board room dramas at AAR are shrouded in more secrecy than the Illuminati. And I've said in the past that AAR is a very good idea, but chock full of flaws. Nonetheless, I recommend the article for people following the whole situation, but not to buy every word of it. And I even attempted to correct a few (like the info about the Gloria Wise thing, which contains a few inaccuracies), without trying to sound too kiss-ass over AAR. I'm not afraid to be critical, but not in a petty way.

I have no idea why the media makes so much out of Glaser losing $10 million on his investment. Show me a tycoon who hasn't lost that kind of money at one time or another! For someone like Glaser, that's walking-around money. Or cash to spend on stupid stuff like a yacht. At least he's trying to do something he sees as creative with it. Hell, CBS has pissed away much more than Piquant on failed radio ideas ("Free FM", anyone?). Unfortunately, there are reasons AAR had problems. First, it needed involvement by managers with a radio background and second, being a political bully pulpit should have been a lower priority. Let that take care of itself. And finally, if you invest that kind of money in a business, make sure you know who your other investors are. They're only as strong as their weakest link (see Evan Cohen).

And you're spot-on about the CACI thing. The 'proceed' claim here is a bit fuzzy, but the lawsuit is still in play, and hasn't been thrown out (as it really should, IMO), so I guess it's 'proceeding'. As I said earlier, I'd love to see that in court. I'd like to see CACI try and prove Randi Rhodes was wrong. Perhaps we'll learn some things they're hiding from us, provided they themselves don't plead the fifth. Trying to sue a radio talk show host in a high-profile trial appears to be pretty ballsy. And they're not hurting for the money either. I wonder if there's an alterior motive, and wonder if this thing will actually make it to trial before CACI pulls out. It does seem like it's all show, though, since so many of these government contractors are so sneaky and covert about their business practices. Hell, Haliburton is all whitewash and no picket fence. They're a PR machine!

If there were any merit to this lawsuit, then perhaps George Soros should start suing RW talk show hosts like Bill O'Reilly and Sean Hannity for all the lies they've been spreading about him.

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