June 21, 2004

Air America and the Lying Liars Who Ran It ... Into the Ground

TODAY'S WALL STREET JOURNAL covers the debacle of the Liberal/Left Radio experiment "Air America" in excrutiating detail. In a front page story, Inside Air America's Troubles: Optimism and Shaky Finances (Subscription Required), the outline of the "network's" start up days is notable for the long sequence of lies that began at the top and percolated down through the entire organization.

Of course, Air America's "million-dollar-a-year-man," Al Franken doesn't really see the sordid history of vapor cash at the company as a collection of lies. Franken explains them as: "In a startup, says Mr. Franken, people often exaggerate what they have. Mr. Cohen, he says, "did just that, and somehow got us on the air. For that, I guess I owe him some gratitude." We imagine that Mr. Franken has learned, over the years, how lies can result in profits for himself. Except in this case it would seem Franken himself was shortchanged:

" Mr. Franken had negotiated a pay package valued at more than $1 million a year, according to a copy of the contract viewed by The Wall Street Journal. On the evening of April 26, Mr. Goodfriend says he was asked by Mr. Cohen to show Mr. Franken a deposit slip that would prove he'd been paid a portion of his salary. Mr. Cohen says he only asked Mr. Goodfriend to negotiate with Mr. Franken.

"The next day, Mr. Goodfriend went to Mr. Franken's Manhattan apartment to meet Mr. Franken's wife, who manages her husband's finances. Over the Frankens' kitchen table, the two tore open an envelope sent over by Mr. Cohen that they thought was going to contain proof of the payment. All they found was a stack of irrelevant documents. "

Ooops, no pay slip. One would think that Mr. Franken would have noticed the deposit of a portion of one million dollars into his bank account. Evidently not. Nevertheless, the pattern of one party claiming one thing at Air America and another party denying it seems to be a normal way of doing business. That and short-changing junior staff or just, in the end, stiffing them:
"On March 30, the night before Air America went on the air, the liberal radio network threw itself a $70,000 party at Manhattan's hip Maritime Hotel....

"Today several employees say they still haven't been reimbursed for the costs of attending the New York launch. "It was a fun party, until I knew I was paying for it," says Bob Visotcky, Air America's former Los Angeles market manager, who hasn't been reimbursed for his hotel room and flight."

The primary forces behind the launch of Air America were "Guam-based entrepreneurs Evan M. Cohen and Rex Sorensen." Why, if liberal talk radio was such a hot idea, those wealthy liberals promoting it had to go to a couple of guys from Guam to get it rolling, isn't really clear.

What is clear is that, for all the talk heard from around the liberal cantons, there weren't really all that many of them ready to open their wallets:

"Messrs. Walsh and Saade say Mr. Cohen told them that TV producer Norman Lear had given Air America $2 million and pledged another $2 million. They also say Mr. Cohen told them that Laurie David, wife of comedian Larry David, had invested $2 million and pledged another $4 million.

"Buoyed by the good news, Mr. Walsh told reporters on a March 11 conference call that the network was "well on our way" to raising "upward of $30 million" by its planned March 31 launch.

In fact, Mr. Lear and Ms. David were approached by Mr. Cohen but didn't invest, their spokespeople say."

This pattern of claiming investments from wealthy liberal investors was, evidently, part of Cohen and Sorensen's stock and trade. As was stiffing people they had agreed to pay from the small to the large, starting with the couple that had the "big idea" that a liberal radio network was just what the leftist Doctors of America ordered:
"Air America was conceived by a wealthy Chicago couple, Anita and Sheldon Drobny. Mr. Drobny is a venture capitalist and liberal activist who writes an occasional column for a Web site that has compared Republican control of Congress and the White House to the Nazis' rise to power in Germany. ....

Mr. Cohen teamed up with Mr. Sorensen, 58, a business partner and the founder of Sorensen Pacific Broadcasting Inc., a network of five radio stations in Guam and Saipan. The two men agreed to buy the concept from the Drobnys for about $1 million, according to four people familiar with the transaction. The Drobnys haven't yet been paid. Messrs. Cohen and Sorensen say payment was based on performance milestones that haven't been met. "

Performance milestones which, if they existed, now seem never to be met. Still, seeing a turkey coming down the street for miles did not dissuade Cohen and Sorensen from continuing to pretend the glass was half-full when the glass had never even been a quarter full:
"Many of Air America's investors and executives say they thought the network had raised more than $30 million, based on assurances from its owners, Guam-based entrepreneurs Evan M. Cohen and Rex Sorensen. In fact, Air America had raised only $6 million, Mr. Cohen concedes. Within six weeks of the launch, those funds had been spent and the company owed creditors more than $2 million.

When the problems came to light, "we realized that we had all been duped," says David Goodfriend, the company's acting chief operating officer. Messrs. Cohen and Sorensen say they didn't mislead anyone about the company's finances. They say they planned to invest more over time but didn't because of cultural differences with other managers"

Ah, those "cultural differences," which may mean "We don't want to throw good money after bad," but is more likely to mean that they didn't have any money to throw to begin with. It would seem that the primary funders and raisers for Air America were famous in Guam for what they would become famous for in the United States, stiffing people:
"Joe Calvo, the general manager of Guam's Pacific Telestations Inc., which owns TV and radio stations, says Mr. Cohen's defunct ad agency owes him $20,000. Mark Pangalinan, president of Guam conglomerate M.V. Pangalinan Enterprises, says the same ad company owes his real-estate division four years in rent; it also owes another division several years' worth of employee health-insurance premiums. Mr. Cohen denies owing both companies money. Mr. Goodfriend says he thought Mr. Cohen was a successful businessman and says he was unaware of these disputes. "
But when the chance to stick it to George Bush is dangled in front of some people, it quickly becomes a case of "Fools rush in where fools have been before. Enter Mark Walsh, a 50-year-old former America Online Inc. executive, had run an e-commerce site called Verticalnet Inc., which was briefly one of the highest-flying dot-com stocks with a peak value of $12.4 billion. More recently, Mr. Walsh headed Internet operations for John Kerry's presidential campaign."
Of course, Mr. Walsh did not think of himself as a fool. He was a savvy executive and asked to see some proof of net-worth:
"Mr. Walsh says he asked Mr. Cohen for proof of his assets. The entrepreneur showed Mr. Walsh documents that Mr. Cohen represented as real-estate and cash holdings valued at millions of dollars, Mr. Walsh says. Mr. Cohen denies saying the assets were his alone. He says the documents combined his assets with those of Mr. Sorensen and another business partner, Brooklyn real-estate developer Charles Cara. "
Obviously oblivious to the extent to which a determined person might use copiers and Kinko's to pad their portfolios, Mr. Walsh bought it all. Or perhaps Mr. Walsh, like so many others attached like remora to Air America, just needed to believe in lies and the lying liars who told them.

Be that as it may, the fact that Air America was living in The Land of No Money was increasingly evident to creditors of all shapes and sizes:

"But bills weren't getting paid. Mr. Visotcky, the former Los Angeles market manager, says he discovered in March the company hadn't paid the rent on its office space there. He lost his job later when Air America was kicked off the air in that city. Mr. Cohen says the rent wasn't paid because of a contractual dispute. In April, vendors stopped delivering office supplies because they weren't getting paid and contractors, such as electricians, complained their checks weren't arriving.

One of the network's on-air personalities, Randi Rhodes, formerly of WJNO in West Palm Beach, Fla., opened her own checkbook when her staff wasn't paid. Ms. Rhodes says she found "a group that was running the place that was absolutely not up to it." The New York studio had no air conditioning and some technical equipment didn't work. In its first few days, the network sometimes sputtered off the air.

Mr. Cohen concedes the company should have had tighter financial controls and blames the cash crunch on perks such as car services. "

Ah, yes, those pesky "car services." The last refuge of scoundrels who could not put up or shut up. It wasn't the immense void of advertising interest in Air America that did them in, nor was it the fact that from the moment it was a gleam in the eye of the wealthy but wacky couple from Chicago Air America was stillborn, nor was it the unabashed greed of Al Franken in thinking he could start at one million a year and work up, nor was it a long and now carefully documented tissue of lies, that put Air America on the air with but a wing and a secular prayer. No, it was perks that did them in! The wanton and continuing abuse of 'car services.' Clearly, if Air America really wanted to be a success all it had to do was get the staff to agree to patronize mass transit en masse. After all, that's part of the liberal creed, isn't it?

In the end, those responsible for the limping liftoff of Air America continued to do what all good liars do. They parse the meaning of what is is and keep right on lying:

"[The board] asked Messrs. Cohen and Sorensen to resign and hand over voting control of their shares to Mr. Goodfriend, according to three people familiar with the negotiations.

"After the meeting, Air America executives examined the company's finances. "When we finally gained access to the bank accounts, we realized they were empty," Mr. Saade says. Mr. Cohen denies the bank accounts were empty although he concedes there wasn't much money left."

The bottom line? There never was much bottom line to Air America and it will now continue to exist only by the kindness of liberal strangers willing to dump excess cash into the drain from now until the elections, if then. But will the lies continue? Not at all. What we will see will be, as Mr. Franken parses it, just a little exagerration from time to time.

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Posted by Vanderleun at June 21, 2004 9:47 AM | TrackBack
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