August 19, 2005,
EDITOR'S NOTE: This piece appears in the August 29, 2005, issue of National Review.
Until a few weeks ago, the biggest worry for executives at Air America was what to do about the liberal radio network's alarmingly low ratings. Launched amid much hype on March 31, 2004, Air America, with Al Franken, Janeane Garofalo, Randi Rhodes, and a host of other anti-Bush personalities at the microphone, has, with the exception of a few cities, had great difficulty finding an audience. Even in New York, where the network's true-blue message should be welcome, its daily average ratings are actually lower than those of the Caribbean talk-and-music station it replaced a year and a half ago.
That would be bad enough. But now Air America finds itself fielding questions not only about its ratings but about its connection to a Bronx-based children's charity known as the Gloria Wise Boys & Girls Club. In early July, a little-noticed local online journal, the Gotham Gazette, reported that New York City's Department of Investigation (DOI) was looking into the diversion of "hundreds of thousands of dollars" from the Gloria Wise club to Air America. The first figure was around $450,000, but it now appears that $875,000 was transferred from the taxpayer-and-contribution-supported Gloria Wise club to the struggling radio network.
It apparently happened during Air America's chaotic first few weeks of existence, when it was financed by an investor named Evan Cohen, who gained control of the network by saying he would invest enough money to keep Air America going for at least three years when in fact he barely had enough to keep it going more than a few weeks. That became abundantly clear when, in Air America's second month of existence, its payroll checks bounced. Cohen had a connection to Gloria Wise and somehow convinced the charity to give Air America a desperately needed cash infusion. (The club's top officer has since left, and the club is now under investigation.)
Even with the money, the network almost went under; it was saved only when Cohen made a hasty departure and some of Air America's original investors, who had been forced out upon Cohen's arrival, returned to the project and brought money anew. Air America survived, and executives thought that they had weathered the Evan Cohen storm. But now it is back, in the form of the Gloria Wise probe.
Air America quickly blamed the scandal on Cohen and the old management, which was known as Progress Media. "The current owners of Air America Radio have no obligation to Progress Media's business activities," the company wrote in a press release. "We are very disturbed that Air America Radio's good name could be associated with a reduction in services for young people, which is why we agreed months ago to fully compensate the Gloria Wise Boys & Girls Club as a result of this transaction."
But as much as Air America might want to attribute all its troubles to one bad guy, there are serious questions about how the current network management has handled the situation. Two questions seem particularly urgent: First, when did Air America learn about the $875,000? And second, will it fully repay the money?
Recently National Review asked Air America president Jon Sinton the only network executive who has been with Air America for its entire life, including the Cohen period whether he knew about the Gloria Wise matter at the time it was happening. The answer wasn't entirely clear.
"It was hard to know what was happening," Sinton said. "Did you see the HBO special?" Sinton was referring to Left of the Dial, a documentary made during Air America's turbulent first months. Intended to be an admiring account of the new network, it ended up a chronicle of Cohen's shenanigans. "Only he knew what he was doing," Sinton said of Cohen. "The way he represented things was that it was all his money, so we were all quite surprised on April 28  when suddenly we didn't have any payroll. . . . Every day after he left, it was kind of Cracker Jack there was a surprise in every box."
But when, exactly, did Sinton find out about the Gloria Wise matter? "I would have to say that it probably came on our legal radar in the fourth quarter of last year," he answered. Sinton explained that, just to be safe, Air America conducted a "forensic accounting" during the last quarter of 2004. It was during that self-examination that the transactions with Gloria Wise were discovered.
But representatives of Gloria Wise tell a different story. Spokesman Jim Grossman told National Review that Gloria Wise officials realized that the money was gone in May 2004, which was several months before Air America says it learned about Cohen's deal. Did Gloria Wise officials, upon discovering that there was a problem, then get in touch with Air America? "They notified Air America right away," Grossman said. "The next day, or the day after: There was no delay."
Well, which was it? Told about the Gloria Wise statement, Sinton called back and said, "I had my timing wrong." The forensic accounting actually took place in May 2004, he said, during the second quarter of the year, rather than the fourth quarter that is, it occurred immediately after Cohen left. "I'm trying to remember if I knew about this before the forensic report came out," Sinton added. "The combination of 14-hour days and 7-day weeks has taken its toll on me." But he stressed that Air America is being straight: "Our edict around here is to tell the truth, and I don't want anybody to get the sense that we're fast and loose with it."
Whatever the case, there is still the other big question: Will Air America fully repay the money? Again, the answer is not clear. Despite the network's claims that it will reimburse Gloria Wise, it has so far declined to write a check for $875,000. Instead, it entered into a long period of negotiations to arrange a schedule in which the money would be repaid over an extended period of time. But paid to whom? With Gloria Wise under investigation, the Department of Investigation advised Air America to put the money into an escrow account instead of giving it directly to Gloria Wise. Air America says it has deposited its first payment into that account.
But not in the way the DOI suggested. When the network said it had made the payment, the DOI released a statement that said: "DOI advised Air America to repay $875,000 into an escrow account from which no money can be disbursed without DOI's approval. Air America has not followed that recommendation. DOI was informed 8/5/05 that Air America's check for $50,000 was deposited into Air America's attorney's escrow account. No provision has been made for DOI to approve disbursements from that account." One doesn't have to read between the lines to see that the Department's statement calls into question Air America's good-faith gesture to reimburse Gloria Wise.
That's where the matter stands now. But even if the Gloria Wise issue is resolved with no further damage to Air America, the network still has those ratings to worry about. And the outlook, while perhaps not disastrous, is not very encouraging.
The ratings have not been kind to Air America's flagship station, WLIB in New York. In spring 2004, when WLIB broadcast a mixture of Caribbean music and talk, it won a 1.3 percent share of the New York audience. In summer 2004, after the much-advertised switch to Air America, WLIB's share rose to 1.4 percent. Then it fell to 1.2 percent in fall 2004, and stayed at that figure in winter 2005. Spring 2005, which ended on June 30, has seen its rating fall further to 1.0 percent significantly below spring 2004.
The situation is similar in a number of other cities, although Air America is on the air only in about 70 markets just a fraction of those reached by conservative radio king Rush Limbaugh. Given its expenses Al Franken, for example, is paid at least $1 million per year Air America almost certainly needs better ratings than it currently attracts if it is to survive.
It is not surprising, then, that network executives are a little sensitive about the ratings. For all the positive coverage they have received in venues like the New York Times, Air America executives feel that the network has not been given a fair shake in a number of articles about the ratings including some in National Review. So NR asked Sinton to list five places where the network is doing well. He was happy to answer. "Portland, Oregon, is a big success," he said. "We are especially happy about Denver. . . Miami is a great success story. . . Phoenix had a nice increase. . . We absolutely love the growth in Los Angeles."
Portland, Oregon perhaps America's most liberal city is indeed a big success for Air America. The station KPOJ had a 3.7 share of the audience in spring 2004, before switching to liberal talk. It rose to 4.0 percent in summer 2004 with Air America. Then, after falling a bit in the next two quarters, it surged to a 4.5 share in spring 2005 a clear improvement over its pre-Air America performance.
Denver is another bright spot. In spring 2004, KKZN had a 0.5 percent audience share. It switched to Air America during the summer 2004 period, and its share rose to 0.9 percent. Then it jumped to 1.6 percent in fall 2004 and then to 2.0 percent in spring 2005.
In Miami, WINZ has gone from a 0.7 percent share to 2.0 percent under Air America. In Phoenix, KXXT went from what was essentially zero percent of the market to a 1.1 percent share. And in Los Angeles, where Air America has been on the air only since February, KTLK has gone from 0.3 percent to 0.8 percent.
As Sinton said, all those numbers indicate growth. But in a number of cases, they indicate growth that began virtually at zero. For example, a recent Air America press release touted "73 percent growth" in one audience segment in Los Angeles. But that growth began at a very, very low baseline almost no audience at all. So Air America could improve greatly on that number double or triple its audience and still not attract enough listeners to make money. And whether this type of increase can sustain the network is an open question.
And now there is the Gloria Wise scandal to contend with. So far, the scandal has attracted attention mainly in the blogosphere (where it owes much of its momentum to radio veteran and sometime-talk-show-host Brian Maloney, who runs a blog called The Radio Equalizer). The story shows no sign of going away, and it seems likely that it will one day find its way into the big newspapers the latest leg of liberal radio's rocky, rocky ride.
Byron York, NR's White House correspondent, is the author of the book The Vast Left Wing Conspiracy: The Untold Story of How Democratic Operatives, Eccentric Billionaires, Liberal Activists, and Assorted Celebrities Tried to Bring Down a President and Why They'll Try Even Harder Next Time.