Berkeley—To no one's real surprise, a NY court ruled on October 4 that the Pacifica Foundation owed $1.8 million plus attorney's fees to the Empire State Realty Trust, the multimillion dollar real estate firm that owns the Empire State Building, where Pacifica has lodged WBAI-FM's antenna since 1966. A 15-year contract signed in 2005, after the collapse of the World Trade Center, made antenna space in NYC a hot commodity, and featured soaring prices and a 9% annual escalation, which left the price of the rental by 2015 at more than 4 times the market value and in excess of $500,000 a year, a vast amount for a listener-sponsored radio station.
The contract was signed by an interim executive director, WPFW's Ambrose Lane, who held the position briefly between outgoing ED Dan Coughlin and incoming ED Greg Guma. By most accounts, he was a fine programmer, but a somewhat absentee interim director. It isn't clear if the full Board of Directors in 2005 ratified the contract before or after Lane's signature or at all, but the commitment to pay some $7.5 million dollars over 15 years through 2020 was made. Pacifica, with some struggles, paid the contract in full through 2013 and began defaulting in the 2014 fiscal year, eventually running up the $1.8 million debt cited in the lawsuit over the next three years. Interim ED's Margy Wilkinson and Lydia Brazon, and WBAI GM Berthold Reimers made vague references to negotiations in progress with the Empire State Realty Trust in the 2014-2016 period to lower the monthly rental cost by 2/3. Despite Pacifica proceeding to make the partial payments as if negotiations had worked, no actual agreement was ever obtained. Several million dollars in future liability remain on the duration of the contract.
The contract was signed by an interim executive director, WPFW's Ambrose Lane, who held the position briefly between outgoing ED Dan Coughlin and incoming ED Greg Guma. By most accounts, he was a fine programmer, but a somewhat absentee interim director. It isn't clear if the full Board of Directors in 2005 ratified the contract before or after Lane's signature or at all, but the commitment to pay some $7.5 million dollars over 15 years through 2020 was made. Pacifica, with some struggles, paid the contract in full through 2013 and began defaulting in the 2014 fiscal year, eventually running up the $1.8 million debt cited in the lawsuit over the next three years. Interim ED's Margy Wilkinson and Lydia Brazon, and WBAI GM Berthold Reimers made vague references to negotiations in progress with the Empire State Realty Trust in the 2014-2016 period to lower the monthly rental cost by 2/3. Despite Pacifica proceeding to make the partial payments as if negotiations had worked, no actual agreement was ever obtained. Several million dollars in future liability remain on the duration of the contract.
The contract's "elevator clause" (the large annual increases) were known to be a disaster waiting to happen for several years. The failed negotiation effort and the secrecy surrounding it for several years, obscured the scale of the problem. By the time the lawsuit was filed in December of 2016, it was too late. Pacifica attempted, with some reason, to make an "unconscionability" defense in the lawsuit, stating the lease was non-responsive to the free market and unreasonably oppressive. But the law does not often protect from the consequences of poor decisions, and it did not do so in this case.
The amount of the judgment, as well as the other accumulated debts, is sobering. But Pacifica is in the position that its assets are larger than its debts, so the decisions facing the organization are about which assets to retain and which will have to be accessed to settle debts. 4 real estate properties in 3 different cities total at least $10 million dollars in value and 5 major market broadcast licenses represent at least $150 million. Board and executive discussions on the matter by necessity occur in closed session. No notification to the network's members is expected until a decision is arrived at. Any proposed broadcast license transfers would be subject to an up or down vote by the network's donors, in addition to the governance board. The summary judgment, if not paid, would open the Foundation to eventual collection efforts, which could take the form of bank account sweeps or real estate liens, so action will have to be taken fairly soon to avoid that.
In Other News Around the Network
LA's KPFK has been heavily fundraising, but showing improved results with a robust $700K+ fund drive result in May. The fall drive underway was at $300K at the 10 day mark and is averaging receipts of more than $30K a day under GM Christine Blosdale.
Houston's KPFT is slowly recovering after a contentious management change following the 2016 retirement of long-time manager Duane Bradley. The station lost staffers and has been operating at limited capacity. Long time music programmer Larry Winters is working as the interim GM without taking a salary, and restored some popular music programs to attempt to stabilize dwindling receipts that had been noticeable for some time. The station's local board has been locked in factional struggles and is spending much of its time arranging trials in attempts to kick one or another person off the local board.
At NY's WBAI, the summary judgment for Empire State Realty Trust has been the major topic of concern as the culmination of the station's decline from being the financial powerhouse of Pacifica to its weakest financial link. Partially due to being burdened with expensive leases and longstanding tensions between premium-based and program-based fundraising that never seem to get resolved.
Berkeley's KPFA has also had recent fundraising success. The station chose to cut the last fund drive's scheduled conclusion. That management decision was worthy of note after a routine title search revealed that property taxes for the station's main studio building at 29 Martin Luther King Jr. Way had not been paid since the 2014 fiscal year, showing a $273K lien on the property from the County Assessor.
Pacifica is also struggling to resolve unpaid pension payments for employees dating from the 2014-2016 period. The network maintains, as a historical accident, two different retirement plans for its low paid employees, a 403(B) plan that provides an employer match on employee contributions and a defined benefit pension plan that provides an additional 2% of salary employer match. The 403(b) plan was intended to replace the defined benefit pension plan back in the 1990's, but due to some administrative ineptness, both retirement plans were written into a union contract and neither employee union, CWA nor SAG-AFTRA, has been willing to allow the plan replacement for the last 20 years. Pacifica has periodically been late on the pension payments before, most noticeably in 2011-2012, when a few months delay caused scathing national denunciations of then ED Arlene Engelhardt from the California Labor Federation, but the complete defaults in 2015 (on the 2014 contributions) and in 2016 (on the 2015 contributions) seem to be unprecedented. The three year liability (as the 2016 contributions also need to be paid this year) represents about $300K in back payments. The payments are overdue because of being mandated in the union contracts. The pension plan itself was written as a voluntary profit-sharing plan based on employer financial health. The parallel 403(b) retirement plan is fully funded. Some resolution of the 20 year old double-retirement plan snafu would assist with Pacifica's financial stability going forward.
Pacifica is also struggling to resolve unpaid pension payments for employees dating from the 2014-2016 period. The network maintains, as a historical accident, two different retirement plans for its low paid employees, a 403(B) plan that provides an employer match on employee contributions and a defined benefit pension plan that provides an additional 2% of salary employer match. The 403(b) plan was intended to replace the defined benefit pension plan back in the 1990's, but due to some administrative ineptness, both retirement plans were written into a union contract and neither employee union, CWA nor SAG-AFTRA, has been willing to allow the plan replacement for the last 20 years. Pacifica has periodically been late on the pension payments before, most noticeably in 2011-2012, when a few months delay caused scathing national denunciations of then ED Arlene Engelhardt from the California Labor Federation, but the complete defaults in 2015 (on the 2014 contributions) and in 2016 (on the 2015 contributions) seem to be unprecedented. The three year liability (as the 2016 contributions also need to be paid this year) represents about $300K in back payments. The payments are overdue because of being mandated in the union contracts. The pension plan itself was written as a voluntary profit-sharing plan based on employer financial health. The parallel 403(b) retirement plan is fully funded. Some resolution of the 20 year old double-retirement plan snafu would assist with Pacifica's financial stability going forward.
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Chris,
ReplyDeleteI originally wrote to the Internal Revenue Service that it appeared to me that WBAI was being operated in a manner to deliberately force Pacifica into bankruptcy.
I was correct.
Thank you.
Ed Manfredonia
I’m afraid that observaion becomes increasingly plausible—that would certainly be an accurate description of action taken by some members of the governance.
DeleteInteresting post. This is the first time I h ave seen an estimate of the value of the 5 licenses. I would assume that WBAI's license is the most valuable of the 5.
ReplyDeleteDoes anyone know the basis for the claim, which we hear repeatedly, that the ESRT rent is "4 times" the market value? Where are they getting this talking point from? Are new tenants on ESB's transmitter actually paying 1/4 of WBAI's current rent?
You know how they misconstrue just about everything? Here is my guess in this instance: "The space over at 4 Times Square (former Conde Naste building) can be had for 1/4 of what we pay at ESB!"
DeleteWhile that's a true statement, the fallacy is in comparing one location with the other. The 4 Times Square location rises to 810 feet, while ESB rises to 1250 feet. Any old radio techie knows that when you construct an antenna, height is critical to best coverage. Especially true for the FM band, because at these frequencies, transmission is essentially Line Of Sight. If the receiver can't see the broadcast antenna, big signal loss.
So that is why a 440 foot higher broadcast antenna is worth far more. Four times more? That's a different question.
. An excellent point. The ESB’s height was an important factor in my decision to make the move. I believe we (WBAI) were on the roof of a 40-floor midtown building at that time. Of course, the ESB’s offer to pay the moving cost was also an incentive. Purchasing a new transmitter was a natural made possible by an interest-free loan from Lou Schweitzer.
Delete
ReplyDeletethanks for reposting here and notifying as that informative to all Pacifica website is not regularly writing now as before did/ done.
so a Q re :At KPFK
= is Christine Blosedale a GM or iGM ? those are not same level nor have actual power or permanance, or do they ?
do interim have same salary & benefits as full termed staff/GM ?
one is temp and other is selected /voted in ? how doeos all that work out legitimately ?
and
who all choses/determines staff hires at station top level anyhow? like GM or PD ?
thanks for clarifications from those who know more
The ED is supposed to hire a GM from a pool of candidates approved by the LSB.
DeleteThe GM is supposed to hire a PD from a pool of candidates approved by the LSB.
Once they figured out they could retain someone indefinitely as an interim, they just hired whoever they wanted.
A problem with KPFT is that they're mirroring KUHT (the Univ.of Houston NPR affiliate). KUHT has a producer with an English accent. KPFT has to have one. NPR stations ask for listener donations and sell ad time. That's one reason why Bradley was pressured out of KPFT. He wants to sell ad time and be upfront about it. But the rest of the LSB said ____ you. So now as a compromise he does a hour 5 days a week.
ReplyDeleteInstead of endless speculation, has BAI or any other station been officially appraised? I have no idea how long one would normally take, how much would a standard fee be, etc. Despite that, Pacifica National needs to face an ulgy fact. Considering the long time horrible reputation they have, what if they tried to sell a part or all of the network and NOBODY bought it? I can't imagine some hedge fund stepping in and buying. Get an investor's group of rich progressives together? People tried that with Air America. How long did that last? People are staying away from lots of potential deals becasue of the ongoing debt load problems. Wanna know how a station's doing financially? Listen to their stop sets.
Just heard some fool who is doing a show w. Latin music suggest that WBAI is being charged 4 times the going rate and that this may be an order from Trump.
DeleteFist of all, the 4-times claim is a typical Reimers fabrication for which I have seen no proof, secondly, these propagandists find it impossible to face the real world. Now this idiot is rehashing the “victim” fantasy Linda. Perry and others tried so hard to sell to the station’s audience remnant.
Hate to say it, but lowlife opportunists like this guy killed the station a long time ago and it is high time to pull the plug and hope that 99.5 lands in honest hands again, even if that spells outright commercialism. The long-standing scam-based destruction of the station from within gives real community radio a bad name.
The claim is based on on what other stations are supposedly paying at ESB and Time Sq.
DeleteI don't know much about that. Its amazing how they just can't accept Pacifica signed a bad deal and Reimers unilaterally decided to pay less and then lied about negotiating with the ESB. There was no deal. No understanding. Perhaps Reimers was trying to somehow force the PNB to deal with it. Who knows? Shocked that their strategy of shaming ESRT into somehow letting them walk away from the debt AND the contract didn't work, they're now scrambling to find some kind of quick fix. Anything that will let them avoid facing how they got into this mess in the first place. Where is that rich progressive guy's number again? What about Amy? Can't we just sue ESRT? Where is that list of major donors?
A nail-on-the-head post. We knew Reimers was lying to cover up his own criminal mindset/ineptitude when he wanted us to believe that he had been "negotiating" with the ESB for many months. I only fault the ESB for allowing Reimers to carry on his charade for so long. The simple fact is, as you point out:
DeleteA rental/hookup agreement was signed by a very temporary Pacifica rep closely associated with former iED Dan Coughlin, who wants to acquire control of WBAI.
Reimers was not onboard when that took place, but he boasted of having a solution to the station's financial problems. It is reasonable to assume that he read the ESB contract, but he did nothing to have it amended, so he paid a lower monthly rent (when he DID pay) allowing the arrears to accumulate. The man is a sorry wimp, a useless opportunist whose long stay at WBAI's helm has been based on lies and deceit.
The game went on and on, aided and abetted by majority members of Pacifica's National Board and WBAI's LSB, who subverted the organization's mission for inexplicable reasons. I personally believe that we now know what they wanted—to bankrupt WBAI so that it could be rescued (acquired) by Coughlin.
The judge's decision to demand that WBAI/Pacifica pay its bill in full is just and reasonable, albeit regrettably late.
I don't think prison bars would look out of place here.
BIA Advisory Services (BIA/ Kelsey)performed the FMV assessment for the former New Jersey Network stations. (WNJB, WNJM, WNJM, WNJO, WNJP, WNJS, WNJY, and WNJZ)
ReplyDeleteLink to assessment: www.state.nj.us/treasury/administration/pba/radio-intangibles.pdf
A basic "stick" valuation can be done for under $1000.
It is 4:30 PM on Sunday. The sound from WBAI keeps cutting in and out, and, as usual, nobody at the station seems to notice.
ReplyDeleteThe fool who is on the air now mentions that the radio signal is "choppy" and that it's probably the result of a Trump plot to put WBAI out of business.
DeleteThat, of course, assumes that WBAI has listeners and is broadcasting something meaningful. Can you hear it?
"Monster Black and his boyfriend are a threat to America... make them unlistenable.... and get that Bates guy—he and Kathy-poo are telling the truth about America being nothing more than a misspelling of Africa."
I can just see that on Trump's to-do list.
Delete234. Withdraw from Paris accord.
235. Put WBAI out of business.
236. Withdraw from UNESCO.
Hey Jared. Good work making sure the Nationals never reach the World Series.
Make sure Pacifica doesn't get their CPB funding back.
Like Trump even knows what WBAI is, and if he does, that it still exists. It really goes to show you how crazy and paranoid the scum at WBAI is to put out these false speculations to stir up both fear and self-importance. Sorry, but it isn't making you more than a few Dollars more, at best.
DeleteExpect more funky audio and phone problems. Bates likes to pull that shit to make it seem like "they" are out to silence WBAI. George Noory does the "drop the guest from the phone line and bring them back a few minutes later bit" to make it sound like something conspiratorial is afoot.
Hey, WBAItes! No one cares about you. Got it? Got it! Good!
SDL
"IT'S NOT ABOUT YOU, IT'S US...
ReplyDeleteWE ARE EXPERIENCE TECHNICAL DIFFICULTIES"
Seems like English language difficulties as well......
Community Advisory Board WBAI / Sunday, October 15, 2017 / 1:00 PM ET
ReplyDeleteSince it was not streamed, anyone attend?
Hey Max. If you're trying to raise money, its probably not a good idea to depress us with the judgement saga and how the other stations want to sell the station.
ReplyDeleteThere is absolutely no reason to accept WBAI/Pacifica’s repeated claim that they are paying more than the going rate at ESRT.
ReplyDeleteESRT presented as part of their case expert testimony that the rate for which they signed in 2005 was typical of contracts at that time, which would strongly suggest, in turn, given typical terms of contract, that others are paying rates comparable, at present, to what they’re paying at present.
WBAI/Pacifica attempted no rebuttal other than their repetition of their unsupported claim.
~ ‘indigo, the occasionally feral pirate’