STATIC AIRWAVES CASH-STRAPPED AIR AMERICA GOES BANKRUPT
By JANET WHITMAN
Al FrankenOctober 14, 2006 -- Air America filed for bankruptcy protection yesterday, leaving the cash-strapped lefty network on the airwaves only because an investor group came to its rescue with an emergency $3 million cash infusion.
Its stumble into Chapter 11 comes a month after investors in the ratings-challenged radio network - which has bled money consistently since its March 2004 debut - snapped their wallets shut, prompting bankruptcy rumors to swirl.
Air America had hoped to avoid bankruptcy and yesterday blamed the "regrettable action" on a breakdown in negotiations with a creditor from the company's "earliest days."
The creditor, a disgruntled station owner that had clashed with Air America when it was first getting off the ground, last month managed to freeze the radio network's bank accounts, leaving it without funds to operate.
The station owner, Multicultural Radio Broadcasting, claims it is owed more than $550,000, an amount that is in dispute, according to bankruptcy documents filed yesterday.
To keep its stream of liberal talk show hosts on the air while it attempts to reorganize, Air America secured a $3 million loan from Democracy Allies, an investor group that includes Rob Glaser, the RealNetworks founder who rescued the troubled network from its first financial crisis.
Glaser, a former Air America chairman with a nearly 37 percent stake in the company, is owed $9.8 million.
Also among those owed money is Air America star Al Franken, who hasn't been paid more than $360,000 in wages and other compensation.
Air America, whose executive suite has been a revolving door, earlier this week named vice president Scott Elberg as its new chief executive. He replaces radio industry entrepreneur Danny Goldberg, who stepped down at the end of March.
Air America has had a bumpy ride since its launch two-and-a-half years ago as what it called an "antidote" to conservative talk radio.
From May 2004 through December 2004, the network's losses totaled $8.6 million, then accelerated to $19.2 million in 2005. So far this year, it's out about $13.1 million.
In a bid to cut costs, Air America laid off six people in early September and shuffled its on-air lineup.
When its investors turned off the money spigot a month ago, Air America immediately began to consider selling or liquidating its assets.
The company yesterday said it expects to complete talks to obtain new financing while it's under bankruptcy protection.
janet.whitman@nypost.com |
