Mar 3 2007

Self-Inflicted Wounds?

[Note: This piece is a sidebar to The Trials of Air America.]

In addition to the significant political and commercial obstacles facing progressive talk radio, Air America has been plagued by financial troubles from its birth. Just a month after its founding, it had to dismiss top executives for exaggerating the company’s assets, nearly leading to the network’s collapse. Payrolls were not met, and bounced checks resulted in the loss of Los Angeles and Chicago affiliates.

There have also been questions about the ambitious way Air America was set up. Chicago Sun-Times media columnist Robert Feder (12/21/04) described Air America as having a “seriously flawed business plan and unfit top management.”

Beginning as a network with a substantial payroll, a headquarters, a news department and the cost of acquiring affiliates—on which, in some cases, the network had to pay to have its shows aired—was not a shoestring operation. Starting with an unproven product and costs of more than $20 million a year put the network in a precarious position.

Successful conservative talk radio shows do not have to “pay for play,” but earn their keep by either being paid by stations or by agreements with stations to share commercial revenues. One former Air America staffer told Extra! that the network “squandered money by paying too much to air on stations and for some talent.” The former staffer defended paying for air time as a cost of gaining entry into some markets, but said Air America’s arrangements in Los Angeles and San Francisco were too costly.

Air America might have faced fewer financial setbacks had it set its launch sights a little lower. Had it started as an enterprise to develop, syndicate and promote the best talent it could find to established stations, some of which had recently become more open to the idea of scheduling liberal programs, it would have had a smaller overhead and a better chance of thriving.

A former Air America executive told Extra! that the syndication route might have been wiser in hindsight. But he suggested that the network’s big problem was that it was a business in which investors were eager to see profits too quickly, an unlikely possibility in an industry where it takes time to build an audience and win ratings. He explained:

Had Air America been formed as a not-for-profit and relied on listener support and like-minded foundations, it would have been a more successful route. What’s important is to get the word out that the healthcare system is corrupt and the war is wrong. Meanwhile, Air America is mired in a business plan instead of being immersed in progressive activism.