Monday, June 13, 2016

Clarification: The ESB rent problem.

Thank you, Ed Manfredonia, for the following submission. 

I would appreciate it if you would print this explanation as a separate post on your blog. I possess an MBA in Finance and had been a member of the American Stock Exchange. I made a market in derivatives- options and index options.

There appears to be a fundamental misconception of WBAI’s Income Statement. I must make a correction to R Paul Martin’s financial analysis. In his Treasurer’s Report Martin expounds:

Again, it must be noted that a significant amount of WBAI’s deficit is the result of the accrued difference between the Empire State Building (ESB) rent and the $12,000 a month that WBAI is actually paying. 

But here is the error. The rent for the Empire State Building is $55,000 per month. This sum of $55,000 must be entered as an expense on the Income Statement. Berthold Reimers is only paying $12,000 per month. This leaves a liability of $43,000 per month, which must be transferred to the Balance Sheet as an accrued liability, which is the rent owed.

This deficit for nonpayment of rent is approximately $516,000 per annum or $43,000 per month multiplied by 12 months. Please note that in a three year period this deficit amounts to approximately $1,548,000. But let us say $1,500,000.

That is an accrued liability of $1,500,000- just for the Empire State Building rent and this sum must appear on the Balance Sheet. And this sum of $1,500,000 does not include interest on the sum owed and penalties for late payment.

Thus a Balance Sheet and a Cash Flow Projection are meaningless because the numbers on the Income Statement are meaningless- actually fraudulent.

Since 2011 I have been pointing out that the financial figures are imaginary numbers and that these figures have nothing to do with the catastrophic financial situation of WBAI. It does not matter that the assets owned by Pacifica can be valued at $100 million; Pacifica (especially the jewel in the crown WBAI) is losing money on assets worth $100 million. Pacifica (and WBAI especially) does not know how to earn money on its assets. And the solution is not by selling Gary Null’s products.

Thank you. Ed Manfredonia


  1. "Pacifica (and WBAI especially) does not know how to earn money on its assets"

    WBAI's "assets" is the license at 99.5 FM. There is a limit on how WBAI can earn money on it's asset or anything else and still maintain it's not-for-profit status. All it can do is sell it's license at 99.5 FM and maybe broadcast on the internet. It will not be able to buy a low power FM station on the far end of the dial because all of these stations are subsidized by universities, even if they deny it.


  2. Manfredonia is of course correct.

    As for other comments, the ability to sell WBAI’s license is in fact highly conjectural, highly speculative at best, given a number of real-world realities – purely delusional at realistic real-world worst.

    The license is at best a wasting asset – at best.

    ~ ‘indigopirate’

  3. Even if we set aside the question of whether, or for how much, WBAI can sell its license and maintain its not-for-profit status, we have to wonder just how much selling that license could fetch. I remember reading or hearing, a few years ago, that the license could be worth $100 million. However, there was also talk about the decline in radio listenership overall--which, if anything, has accelerated, particularly at WBAI. So just how valuable an asset is WBAI's license these days? More than an NYC taxi medallion?

    1. It is Pacifica that has the not-for-profit status. WBAI (and its frequency) is commercial, which—along with its ideal location on the dial—gave it considerable value in the Sixties and probably the Seventies/Eighties.

      In the mid-Sixties, when we were offered a million dollars for the frequency alone, it was considered a good deal. It was an offer that never would have been made if we had a non-commercial license. The FCC did not change that status permanently, and the station would have been useless to Pacifica without that change.

      The high price for WBAI's license that has been bandied about is wishful thinking. Even as a commercial station, I don't think it's worth a lot of money. Whatever it might bring in would quickly be disappeared by the so-called PNB majority.

  4. My standard disclaimer – I am not expert. That said…

    They cannot get at that money, not easily, perhaps not at all. There are a number of problems, non-trivial. A few that come readily to mind:

    The license has not been renewed.

    Their sacred bylaws require a majority of the units to approve the sale of any frequency or unit.

    As it is they’re unable to get agreement on anything at all other than making and then tabling motions for ‘future consideration’. This alone would argue that they’re demonstrably incapable of any even modestly decisive action to save themselves from themselves, let alone the sale of a frequency or two or three.

    At present the representation necessary for such approval is in both formal and informal dispute. If they move to sell a license they will without question have even more lawsuits and an FCC hearing or two or three on their hands than they do now, possibly a word or a hearing or two or three from a state AG or three, and they can’t support their present operations and their present litigation as it is.

    Some board members seem to see ‘voluntary’ bankruptcy as a way to wriggle a way to sell a frequency or two and scoop up the proceeds. It doesn’t work that way. For one thing, a Ch 11 for a nonprofit is particularly challenging and requires a viable business plan to be presented by the nonprofit to the court’s trustee, and – critically – that plan cannot rely upon any projected increase in fund raising or the sale of a frequency or two – those are legal impossibilities. How, then, they think they can make the hoped-for magical Ch 11 salvation happen somehow escapes me. Perhaps they have better ‘Philadelphia lawyers’ than I’ve had.

    These are not people who manage, or who make things happen. They make motions, they scheme their little schemes, and they drift along, with the results we’ve seen now for many, many years.

    They cannot survive, though I wouldn’t claim to know the details of how their death unfolds. It’s nearly impossible to predict the details of crazy, at least in my humble experience.

    ~ ‘indigopirate’

  5. Gloria j Brown... Boring what's left of the bai listenership to death . yet again.

  6. WBAI's license is worth good money, but not what people may think. The major radio corporations are all a mess now and in debt. When the 1990s deregulation of how many stations one could own in a market finally arrived, they fell all over themselves buying up licenses, making many a family owned small station happy. However, they took on lots of debt in a soon to be slowly dying market. Now, these corporations are wondering how to get rid of many of their stations. No matter what, it was the corporations fault for putting on generic shit that caused the situation.

    Right now, the Christians are the ones interested in radio licenses, but there is a limit to what they can afford, even with the donating dummies. Another growing segment of the radio market is foreign language companies, not just Spanish. Also, China seems to be on a campaign to lease time from stations. I wouldn't be surprised if in the next few years, urban radio largely turns into holy hallelujah and Asian languages.


  7. Blame Bill Clinton for the radio de-regulation. This has lead to massive buy ups, debt loads and taking a lot of the originality out of radio. Now many are starting to unload stations or entire networks. Ex: CBS radio. Listen to anyone of their stations stop sets, and count how many PSA's and network promos that you hear. How much will CEO Les Moonves get for this network? Anybody's guess.

    The other problem? What corporation wants to take on Gary Null? While he may be rich and think he's a power player in NYC, when was the last time you heard anyone in corporate media mention his name? The average debt load for these corporations is in the billions. And even if your CEO is Murdoch, that's just not sustainable. Overall, ratings continue to go down. But this management sticks to the idea that right wing content makes big money. And that's just a lie.

    1. Radio deregulation was a very big mistake, i.m.h.o.

      As for Gary Null, quite frankly, I never heard of him except in connection with WBAI.

    2. Correct about Bill Clinton signing away and destroying radio. Even the Reagan administration only doubled the number of stations you could own in a market from one FM and one AM to two of each.

      Another thing to listen to on corporate radio stations are the commercials. Most of them are now for cure-all pills and local small time businesses. Even during prime time you don't hear many big, national companies advertising.

      Anyway, it's called deregulation, but I still can't go on a radio station and say, "I'm going to fuck the shit out of the mother fucker cunt's tits."