Air America: Can it survive?

Through a bit of intelligence gathering from the network's launch (3/31 RBR Daily Epaper #63) to the most recent news that CEO Mark Walsh has resigned (4/28 RBR Daily Epaper #83) and shortly thereafter Chairman Evan Cohen, Vice-Chairman/investor Rex Sorensen (5/7 RBR Daily Epaper #90) and now EVP/Sales and Marketing Jacqui Rossinsky, RBR is starting to learn more about why Air America Radio has had problems from the get-go. Of course, the first problem was to launch the liberal radio net with only four affiliates. The next problem is if you're on the air in Chicago and LA, you'd like to keep those markets. Here was the most publicized launch in radio history. The fact that they debuted in the top three markets was radio history in and of itself. And within a week, Air America was in spin control over why they've been thrown off markets #2 and #3 (4/15 RBR Daily Epaper #74).

You'd think they would try and protect clearances in those markets more than anything. Instead, they aired their dirty laundry in public. They challenged Arthur Liu and then called him "Arthur Loser" on air and suggested that someone should stick a tire iron to his head. When you're renting from someone, you're nice to the landlord. Some day you're going to need him to fix the boiler. You don't go around and piss on his new carpet in the living room and say, "Hey, it stinks in here."

Liu's Multicultural Broadcasting owns more big market time-brokered stations than anyone. Air America's business plan is dependent on time brokering in big markets. Yet, Air America's management picked a public fight with Liu just weeks into its existence - - jeopardizing that existence in the process.

They've also blown some opportunities. To launch with two million hits on your webstream in the first week, to launch with the kind of tsunami of press that they had and to have hardly any affiliates lined up in advance was unconscionable. As we reported, just weeks before going on the air, Air America was turning away calls from would-be affiliates because its management had placed such a low priority on putting an affiliate sales team in place (3/31 RBR Daily Epaper #63).

Landing Rossinsky was a coup, but we doubt that the top managers of Air America appreciated how she, based on her reputation, not theirs, was able to hustle up big name advertisers on short notice for the launch. Before she got there, Air America hadn't even hired a national rep, a shortcoming that wasn't rectified until a week after launch (4/2 RBR Daily Epaper #65).

There's an infrastructure issue as well with Air America. The company is funded by the two lead investors Cohen and Sorensen. Some say the top brass have been so caught up with being interviewed on CNBC that they were more concerned about getting their name in the press than being a success. Air America doesn't have its own studios, they don't have their own offices - - they're separated in temporary offices. There's one copy machine for 90 people, there's one IT person for 90 people, and they do not have a Chief Engineer. These are things that you would think a seasoned broadcast professional would have handled well before launch. Word has it they didn't have the automation system in until two weeks before going on the air. Now, there were professional people on hand who knew what to do, but some may have been more interested in the Hollywood aspect, a la, "Hey, isn't this cool - - we got on CNBC...by the way, do we have enough computers for people to work on?" The fact that it's run more like a campaign than a radio business is indicative of the challenge Air America staffers' face.

Yes, this was also the most media-saturated launch in the history of radio, but what they're capable of doing with it from here should be judged on how they function as radio operators. They're great at getting their names in the press, but, as we've said, the question is how well they manage product. Here's where there's an agenda disconnect. The talent only seems interested in being Bush-bashers. And that's fine, if it's great radio. Howard Stern knows how to turn that sentiment into great radio. Air America was supposed to be a mixture of political satire and factual discussion of the issues, and it's become is this endless diatribe against Bush without any of the levity that was supposed to balance that out.

Look, we're not trying to be hypocritical here by doing the same and continually bashing Air America. It's not easy to start a new network - - especially a liberal one in a radio dial full of conservatives. And there's room for these guys - - really. But now that payroll checks are late/nonexistent, a lot of people haven't been paid - - vendors, contractors, independent contractors (according to sources) and resignations are everywhere, time has just about run out to get the product under control, get the infrastructure under control and get the affiliate base solid.

Money is a constant problem. Air America was under-funded for what it was attempting to do, even if it actually had the $30 million that its founders claimed. We doubt, though, that even that much was ever actually put into the company's coffers, given how quickly it ran into financial problems.

RBR hears what President Jon Sinton and a number other investors, like Sheldon and Anita Drobny (AnShell, the original parent company), are repositioning themselves, putting in a bit more money, trying to pick up the pieces from these guys, getting a consensus and trying to get a handle on what's left behind. They need to get their arms around the issues right now, and those issues begin with acknowledging that these guys were not good managers. We hear everything isn't up in smoke yet, and the remaining staff have every intention of moving forward. There is a massive amount of housekeeping and collective reorganization that needs to be done. This week, we should hear some of those details.

Sinton tells RBR: "I think that we've got the right people involved...[but] the last thing this thing needs is another reorg. What it has really needed all along is radio people running it, and that's where we are [now]. I think the objective going forward is to continue to grow the network. We're knocked out by the audience response by some of the research our affiliates have shared with us. This thing has quintupled. Web streaming was 3.5M last week [week before last]. So the goal is to try to fulfill the expectations of this huge audience."

Perhaps the best way to monetize the audience is to focus on the web stream for now. On the radio side, they're at 17 affiliates last we heard, with the latest being KSQR-AM Sacramento. If they can get back on in Chicago and LA - - and keep the affiliations - - that would be a good sign. But bottom line - - potential affiliates and agencies who have little confidence in a network's ability to remain in business are going to run the other direction when approached (especially when the main sales contact has resigned!). The big leg up, the big push from the media is long over. Now's the time to get down to the basics of how radio is run and Air America may still have a chance. And remember, if all else fails, they still have a NYC facility in WLIB-AM (via an LMA with Inner City), so there should be a way to at least monetize that as well as the web.