September 8, 2005

Air America Radio (AAR) Update: Is the Endgame Near?

WELCOME Radio Equalizer readers! Just to be clear:, a publicly-held company, which has burned through over $90 million since its inception, is separate from AAR and unrelated to it. AAR is not a publicly-held company, so we don’t know what their financial statements look like.

I haven’t done much with the Air American Radio story, because I’ve been reading with slack-jawed astonishment the continuing stream of posts on the subject by the two bloggers doing the dirty work: original story-breaker Brian Maloney at Radio Equalizer (his Sept. 7 entory on AAR is here) and the indefatigable Michelle Malkin (her two latest are here [Sept. 7] and here [Sept. 8]).

I blogged on Brian’s original AAR piece at this prior post, and also noted Michelle’s early involvement. I called her “the bad guys’ worst nightmare.” It appears that I underestimated her tenacity. Their combined work has been the best example of cooperative investigative blogging I have seen.

Thanks to Brian and Michelle, AAR is faced with a frightening trail of damning court and legal documents; inaccurate press releases and web site announcements; and on-air misstatements and probable lies by its personalities, especially the widely-known Al Franken.

So now you have to ask if AAR can survive.

Ordinarily, the litany of problems cited would cause the affected business, its owners, and managers to slink into a corner, put the business out of its misery, and hope no one notices. But since AAR is seen by the far left as the heroic counterweight to conservative-dominated talk radio, it’s not inconceivable that they will survive for quite a while with capital infusions from rich liberals with more money than sense.

This is essentially how online magazine (NOT related to AAR) has survived, despite losing over $90 million since its inception about 8 years ago (the reported negative Retained Earnings, for those not familiar with accounting terms); likely having stiffed many creditors, employees, and suppliers in the process; and having little realistic prospect of turning a profit (though it “only” lost $358,000 in the most recent quarter).

AAR has also had the good fortune of being largely ignored by the Mainstream Media during the ongoing debacle (noteworthy exception: The New York Sun, whose latest is here). Because of that, despite the blog exposures of Brian and Michelle, it’s very possible that liberal investors may not appreciate the scope of the company’s crisis. Past conduct by AAR would seem to indicate that they won’t be volunteering any details.

The third commenter at this Prof. Bainbridge post notes that if AAR’s finances are in as bad a shape as they appear to be (you would think that they would do anything to pay back the entire $875,000 that they owe Gloria Wise Foundation if they could, so you almost have to conclude that they can’t), they could be forced by other creditors into involuntary bankruptcy.

In a late update to the previous paragraph, Michelle’s second post above notes that the $875,000 is now in an escrow account controlled by AAR’s lawyers, even though the New York City Department of Investigations (DOI) had demanded that the money be placed into an escrow account controlled by DOI. It seems with AAR that it’s never done cleanly or by the book. Yet another update to the previous paragraph: Brian’s September 9 post notes that DOI says the money is “reportedly” in an AAR lawyer-controlled escrow account, indicating a less than complete trust in AAR and its representatives that appears to be warranted in the circumstances. Brian questions whether the money is truly in escrow, and notes that AAR’s lawyers may have no legal liability if it isn’t.

The whole sordid affair will be interesting to watch for a time, but may very well do a slow, painful fade similar to Salon’s.



  1. Plus ca change, plus c’est la meme chose*
    The more things change, the more they stay the same.

    (* Sorry to Francophones for possibly butchering the translation and for not finding the special characters)

    Things are just never easy with the management of AAR, are they?

    Regarding involuntary bankruptcy, what would that mean for AAR’s operations? I don’t want them to shut up… the more non-Kool-Aid drinkers hear of them, the more they are likely to be repulsed.

    Comment by eLarson — September 9, 2005 @ 5:28 pm

  2. Thanks (BTW, meant to blogroll you earlier, and just did now).

    As the airlines have shown, you can operate in bankruptcy for a long time, and maybe even eventually emerge from it. AAR could do the same, although the degree of embarassment vs. the rest of talk radio would seem to make that idea intimidating.

    I too sort of root for them to stay on, as I believe they are persuading no one and ticking off very many. But I also want some accountability for stealing from kids and the elderly. Maybe a takeover by sane and entertaining libs would be a decent answer, but the supply of such people is very limited.

    Comment by TBlumer — September 9, 2005 @ 11:02 pm

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