The Radio Equalizer: Brian Maloney

14 October 2006

Democracy Allies LLC, Air America Radio, Delaware


Just Who's Propping Up Air America Radio?

*** Check Here For Updates ***

How is a company that was registered just a few days ago already in a position to bail out the newly- bankrupt Air America Radio network? From the whirlwind of news developments on this front yesterday, that one jumped right off the page.

Why? For one thing, Air America has a history of employing shell game- like tactics to keep the money moving around at all times. As with a street- corner hustler's game, you're never quite sure of the ball's location, as it slides from one position to the next. Just make sure you keep one hand on your wallet.

Word that a new entity called Democracy Allies LLC (registered in Delaware so recently that touching the documents is likely to smudge your fingers) would keep Air America broadcasting, instantly rang alarm bells here at the Radio Equalizer.

Who are these people and why would they prop up a company that has already lost so much money?

From their Delaware filing, here's what we have so far:

File Number: 4232391 Incorporation Date / Formation Date: 10/10/2006 (mm/dd/yyyy)

Entity Type: GENERAL
Residency: DOMESTIC
State: DE
State: DE
Postal Code: 19801
Phone: (302)658-7581

While most news reports glossed over this important point, the New York Times included this:

Air America said that a company called Democracy Allies L.L.C. will provide it with the necessary financing to stay on the air. The company’s statement gave no information about that entity, but The Associated Press reported that it was an investor group set up by a former chairman of Piquant, Robert Glaser, who still owns more than one-third of the company.

And here's the AP's afternoon update:

According to documents filed with U.S. Bankruptcy Court for the Southern District of New York, Air America owes Franken $360,750 and $9.8 million to RealNetworks Inc. CEO Robert Glaser, who owns 36.7 percent of the company and had previously served as its chairman.

Tracy Klestadt an attorney for Air America's parent company, Piquant LLC, said Rob Glaser had resigned as a director as of Friday morning. Glaser, along with two others, is providing new financing through Piquant investor group Democracy Allies LLC.

And a Friday late evening update:

Judge Robert Drain of the U.S. Bankruptcy Court in New York approved motions at a hearing Friday afternoon that allow Air America to continue paying its wages and maintain its financial accounts.

The judge also approved interim debtor-in-possession financing of $900,000 from Democracy Allies LLC, an entity formed by Glaser and two other former board members, Terry Kelly and Kreeger. The full amount of the proposed loan, $2.6 million, would be considered at an Oct. 31 hearing.

To MSM types who haven't been closely following this story until now, none of what's in that last paragraph would necessarily seem odd. But to the Radio Equalizer, it's downright bizarre.

After losing millions in Air America so far, with little hope of recovering much of anything, Rob Glaser, Terry Kelly and Doug Kreeger (shown in photo) are going to pour more into it? Especially since all three had already walked away from this effort in utter frustration, it just seems impossible to believe they would return just to do it all over again.

Of all of Air America's key players over the past three years, these guys have been burned as badly as anyone.

How do we know the money is really coming from them? Could a third party be involved? Is George Soros still lurking in the shadows behind all of this?

Stay tuned.

UPDATE: At the Huffington Post, Sheldon Drobny confirms our earlier report regarding his attempted purchase of the network. He's ticked off about the bankruptcy!

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  • I think I may have answered why AAR's old investors are now AAR's new investors last month when looking at the earlier, retracted report of the company filing bankruptcy (apologies for the long excerpt):

    3. If the network cannot achieve operational profitability, can it convince its current or new investors to provide more capital to keep it afloat?

    Air America Radio is entering bankruptcy proceedings specifically because its "white knights," RealNetwork's Rob Glaser and financier George Soros, who had previously kept the money flowing freely, are likely not interested in continuing to write blank checks to a failing enterprise with a bloated cost structure. Then again, that's been true of Air America Radio for some time - so, why should they stop now?

    The Future of "Progressive" Talk Radio

    The lack of willingness to continue funding AAR's operations doesn't mean that the network's "white knights" are going to stop funneling their money toward local broadcast radio outlets altogether, so much as that it suggests that they've tired of underwriting the liabilities that accompany Air America Radio and its current parent entity, Piquant LLC....

    Meet the new boss, same as the old boss....

    And there's more - although that original post discussed GreenStone Media's potential role in taking over the network, the following would apply to any "new" entity:

    It would appear that the new group may be intended to cleanly take over AAR's functions while washing its hands of its liabilities - a variation of what AAR's management attempted when it transferred Air America Radio from Progress Media to the Piquant LLC, but failed when it was ultimately unable to dispose of the network's Gloria Wise Boys and Girls Club obligation, which is still outstanding.

    Just a quick aside here, as we should note that this obligation is no longer outstanding, and the business' other liabilities are sufficient to force its bankruptcy filing. In looking at its future, we concluded:

    It stands to reason that "progressive" talk radio will continue as the forces behind it are unwilling to give it up. We suspect it will just go forward with a superficial makeover and a cleaner balance sheet.

    Did we call that one, or what?!

    By Blogger Ironman, at 14 October, 2006 10:11  

  • Terry Kelly,

    Fool Me Once, Shame on You...
    Fool Me Twice, Shame on Me....
    Fool Me Thrice, Shame on ???...

    Once a Fool, Always a Fool

    I am just glad these big money donors are sinking cash into this hole.

    One question: Is this their idea of a soaring Enron like retirement fund?

    Another question: Are we taxpayers going to have to bail them out?

    The final question: How much money does Error America burn in a month?

    Yuk, yuk

    By Blogger Boghie, at 14 October, 2006 11:14  

  • Might not b a bad idea for the lefties to keep this garbage scow afloat atleast until after the midterm elections. It's a small investment to be able to continue to communicate to the faithful.

    By Blogger Fryhead, at 14 October, 2006 12:12  

  • This just in:

    Hugo Chavez will be supplying Air America with free heating oil this winter.

    By Blogger Brett, at 14 October, 2006 13:38  

  • You'd think that these Demwits would be able to recognize an Economic Quagmire by now.

    By Blogger ter0, at 14 October, 2006 15:47  

  • I'm not sure the board has been properly cleansed, as of yet.

    By Blogger hashfanatic, at 14 October, 2006 21:03  

  • Okay, I'm neither a lawyer nor an accountant, but my father was an accountant, and I've filed a business bankruptcy before, so I know a little about bankruptcy law. When Glaser et al. file bankruptcy as Piquant LLC, they throw Air America in a state of flux and shut out all the outsiders wanting in -- thus ending the "management turmoil" that's plagued Air America. But as managment they can't take over the company either -- they're as shut out as everyone else.

    So immediately (as in, hours afterward) the bankruptcy filing, they resign as management and initiate NEW loans to the company to provide "operating expenses" -- thus making them a Primary Creditor to the network, and allowing them first choice of all assets of the bankruptcy. Even employees, usually the first ones paid from any proceeds of a bankruptcy, aren't guaranteed the return on their monies due that the new Primary Creditors are.

    I'm actually astonished the judge allowed this to happen -- it's only barely legal, and smacks of fraud.

    By the way, Al Franken's $360,749.98 is about 19% of his $2 million dollar annual salary, or about 65 days worth -- which is just about as long as he's been complaining he hasn't been paid. Guess he didn't get paid up front after all.


    By Blogger John D. Long, at 14 October, 2006 21:10  

  • Air America doesn't exist to make a profit. It exists in order to exist and serve a particular politcal purpose.

    If these people want to throw their money away on this more power to them, it's their dough.

    I just don't see why if their pockets are that deep they can't pay back that boys & girls center.

    The really funny thing is this. This demonstrates how smart the people who are actually drawing paychecks for the place are. They have basically found idological sugar dadies who will pay them fail or no.

    The true believers which more dough than they know what to do with will keep shelling it out even if the onair "talent" makes unreasonable demands.

    It's all about the gravy train.

    By Blogger Peter, at 15 October, 2006 15:15  

  • Notice how GLASER'S name is the only one not linked above??

    By Blogger hashfanatic, at 15 October, 2006 16:51  

  • What, hash, is Glaser one of those eeeevill neo-KKKon Zionazi Joooooooos! you keep yammering on about?

    Does he kick puppies and urinate in the church picnic punch as well?

    By Blogger JD, at 15 October, 2006 21:05  

  • It's creepy how anti-semitism seems to go hand-in-hand with far too many on the left these days. I don't think that was the case until recently.

    By Blogger Brian Maloney, at 15 October, 2006 21:30  

  • Where do you see anti-semitism on "the left", anyway? If neocons privately kick up their heels cackling at Rapture Right evangelicals, yet are willing to exploit their usefulness at the polls, what makes you think they feel any more charitably toward supporters of the AIPAC lobby?

    Vastly amusing, and hopelessly naive.

    By Blogger hashfanatic, at 15 October, 2006 22:27  

  • You're all engaged in one big right-wing nut-job circle jerk. What are you afraid of. Al Franken provides the most civil talk show format on the radio dial, engaging guest from both the left *and* the right in intelligent conversation. Could it be that intelligent is where he loses you. While you rant about how Air America is financed, you fail to recall how Fox Lies were financed by Rupert Murdoch to well over $100 million dollars before it started churning any profit. While you repeat your venomous bile against thoughtful debate of issues in America, it's the wealthy elite which will exploit equally any party in power to give you the big reach around. We're all wearing the blue dress now folks. Wake up!

    By Blogger Schroeder, at 16 October, 2006 00:06  

  • We wouldn't want to mention how Limpbowel was pimped by Mr. Ailes, would we?

    By Blogger hashfanatic, at 16 October, 2006 00:50  

  • JD, your observations are interesting.

    I was wondering, would it seem unusual for a bankruptcy attorney to make $200,000 in one month, administering to such an action?

    By Blogger hashfanatic, at 16 October, 2006 01:00  

  • I guess my question regarding GLASER'S name not being linked above shall remain unanswered, (happily) so that even the most casual reader may draw the desired conclusions.

    By Blogger hashfanatic, at 16 October, 2006 15:13  

  • Mr. Ailes you mean a sucsessful media guy something AAR does not no anything about.

    By Blogger PF1, at 17 October, 2006 01:07  

  • You really need to proofread your posts. English is the language we prefer here in America, PrettyFUBAR'd1...

    By Blogger hashfanatic, at 17 October, 2006 01:57  

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