By John Riley, Out-FM producer and staff representative on WBAI’s Local Station Board
(Updated version of comments given at Manhattan Neighborhood Network in December 2017 to dozens of WBAI Staff who had come to learn about MNN’s proposal to Pacifica Radio for a partnership to preserve WBAI’s signal, mission and infuse large amounts of money to rebuild the crisis-plagued station.)
Thank you all for coming out for such a crucial conversation. In December and January, we organized
3 meetings for WBAI producers here at Manhattan Neighborhood Network about the proposal for a partnership with WBAI. A statement signed by 29 producers invited our colleagues and said we’re terrified about the crisis facing the station and the solution being pushed by many on the Pacifica National Board – a WBAI signal swap to a much weaker signal. But we’re also hopeful about the potential for a partnership with MNN to offer a path forward.
I’d like to give some of the financial background to the present situation. WBAI and Pacifica have been in a worsening financial downward spiral for the last 10 years, leading to the current crisis that poses a threat to the survival of both our station and our network. While all 5 stations have had various degrees of chronic shortfalls, WBAI has generated deficits of $500-600K every year for the last 6 years. In short, WBAI has a failing business model. Thus, at a national level WBAI is perceived of as a terrible threat to the other stations.
WBAI’s problems have partly been caused by the exorbitant Empire State transmitter rent and earlier, the huge rent on our former Wall Street studio, both far higher than those faced by any other station (in fact, 3 stations broadcast from buildings owned by Pacifica). These problems preceded Hurricane Sandy that drove us from Wall Street, which is often incorrectly blamed for our crisis.
In fact, our listenership has drastically declined. In parallel, our paid membership has also gone down — from 18,000 in 2010 to 7,000 in 2017. So it’s no surprise that the per-day pledge rate has also cratered – in the current drive, down to about $8,000 a day versus an average of $20,000-$25,000 a decade ago. WBAI management has responded by constantly increasing the length of fund drives: In 2009, we had 90-100 days/year. By 2014, 174 days (24 weeks). Currently 135 days (20 weeks)/year.
WBAI’s Declining Membership Results in Longer Fund Drives
Surveys of public radio stations have found a fall-off of 50% of listeners, or more, during fund drives. Management has blamed producers for failing to find premiums, but chronic, late premium delivery may be more of an issue. Late premiums may not bother people who are long-time supporters, but newer supporters may not be as understanding.
To make matters worse, in 2013, our parent Pacifica Foundation lost its annual grants from the Corporation for Public Broadcasting because of failure to do needed audits and other problems. Because of all these dramatic revenue declines, later in 2013 Pacifica mandated the layoffs of three quarters of WBAI’s paid staff – down from 27 to 7. That meant there was no one to do many of the essential jobs to run a station. Volunteers can only do so much.
Faced with the impossibility of paying the $50,000 monthly rent for the Empire State transmitter required by the contract, in 2014 Pacifica was able to get an oral agreement to pay $12,000 a month. But after WBAI had trouble even paying that amount consistently, Empire State reversed course and sued Pacifica last fall for payment of the full rent back to 2014, plus hundreds of thousands in late fees. In October 2017, a New York court ordered Pacifica to pay $1.8 Million to the Empire State Reality Trust, plus hundreds of thousands yet to be determined in attorneys’ fees.
Empire State could theoretically legally seize Pacifica’s bank accounts to satisfy the judgment, which could shut down the network’s operations. So last month, to satisfy the immediate $1.8 million judgment, the National Board last month authorized a loan from wealthy individual supporters of Pacifica, but that just “kicks the can down the road.” There is no plan for paying back the loan, beyond the possible sale of part of the Berkeley property containing an unused restaurant and the National Office, not valued highly enough to realize anywhere near the amount of the loan.
And this is far from the only debt facing Pacifica. Former Interim Executive director Bill Crosier, a National Board member from Houston, says that Pacifica has $6 million in other debts, including a large amount of unfunded pension obligations to Pacifica’s employees, bills from various lawyers and accountants, and approximately $2 million owed to Democracy NOW! under contracts that expired in 2012. (Note: Democracy NOW! has never made a demand for that money.)
Plus Pacifica is liable for the Empire State rent between when the request for court judgement was made in May and now – that’s $480,000. The Fall and Holiday drives aren’t bringing in enough to change this picture in a positive way. And of course every month the debt is growing, with current monthly rent around $55,000. Pacifica’s lease with Empire State runs thru April 2020, including an annual escalator clause bringing the rent up to $75,000, and there’s no prospect of getting out of it early. WBAI/Pacifica will owe $2.1 million more in the remaining 2-1/2 years.
Pacifica has reacted to all these problems in extreme crisis mode, and many board members from the Berkeley, Los Angeles, and Houston stations seem intent on throwing WBAI under the bus. Indeed, some members used the crisis to advance a long-time plan to cash in on WBAI’s troubles. Both Crosier and Pacifica’s Chief Financial Officer based in Berkeley, Sam Agarwal, have strongly advocated for the National Board to take two courses of action:
1) authorize management to declare Chapter 11 bankruptcy – which means reorganization, not dissolving, and
2) move toward a swap of WBAI’s powerful middle-of-the-dial signal for a far weaker signal, which one WBAI board member estimates could cut our potential listener range by half.
Just a few points about the devastating effects of bankruptcy:
1) Bankruptcy can’t alter court judgements, so it can’t reduce the $1.8 million Empire State debt, merely delay its
2) Some lawyers have estimated that Pacifica might face up to $1 million in attorneys fees for bankruptcy.
3) Bankruptcy would surrender control of Pacifica’s future to a federal judge and a committee of creditors, and might conceivably dissolve our National Board and the requirement in our bylaws that any signal swap or sale must be subject to a vote of the entire national membership.
Last fall, the Pacifica National Board largely met in secret to discuss a WBAI signal swap. Part of what we know – that they voted in September to begin obtaining bids – is only due to a leak from a whistleblower. Finalizing a signal swap would take several months, first to organize the referendum of all Pacifica members – and note that the BAI voters could vote it down but it could still pass with a majority of the other 5 stations’ members – and then to get FCC approval, which can take up to 3 months.
If our signal is swapped, we stand to lose many listeners whose radios are out of the signal range or who never hear about the new frequency, which would include many who are not internet-connected, plus the many occasional listeners who only turn to WBAI in crisis. 99.5FM is an important part of our brand name. Having far fewer potential listeners with a less powerful signal and a failing business plan will only lead to another sale before long.
The advent of the loans has temporarily reduced the volume of calls for bankruptcy and a signal swap, but Crosier and others have stated that they believe both options will inevitably come back into consideration by the National Board at a later time, as Pacifica’s financial picture worsens yet again.
An Exciting Solution: a Public Service Operating Agreement (PSOA) with Manhattan Neighborhood Network
In 2013, the National Board put out a request for proposals for such an agreement. One of the entities that applied was Manhattan Neighborhood Network (MNN), a non-profit public-access TV station with significant resources from cable franchise fees but LEGALLY INDEPENDENT of the cable industry. Their mission is well-aligned with Pacifica’s, as both seek to provide broadcast access to diverse community voices. The National Board later paused the process to see if WBAI could develop a viable sustainability plan, which never happened. The other main applicant has since, I understand, withdrawn its proposal.
In December 2017, MNN updated and resubmitted their proposal for a Partnership with WBAI/Pacifica. MNN is offering to pay all future bills, including PRE-PAYING our Empire State Tower rent in a lump sum for the remainder of the lease term – about $2 million. MNN is also offering to relocate our station to their state-of-the-art broadcast studios, rebuild the paid staff, upgrade our failing transmitter, and provide the station with its own TV channel, allowing the best of our programs to be shared nationally through MNN’s partnership with Free Speech TV. Many producers find the MNN partnership proposal to be a win-win that would maintain our station’s fiercely independent and progressive programming, finally put needed resources into programming and technical infrastructure, expand jobs at the station, and help rebuild membership. Most exciting, it would bring WBAI onto a 21st-century multi-media platform, the only way community media can survive in this digital era.
I was one of several local board members invited late last year onto a Pacifica National Board meeting call to discuss the current situation and was dismayed that the current PNB has no plan to rebuild WBAI – NONE. And the Board has failed to even discuss MNN’s revised proposal submitted in December. I believe that working together, we can change that.
Of course we need to carefully consider the terms that we would want Pacifica to negotiate with MNN, in such a way that protects the needs of listener-subscribers, producers, and paid staff. Everything from bill payment, to the carry over of workers to programming decision-making would be up for discussion. And on the subject of programming, I’d encourage everyone to read the handout that includes comments by Pacifica’s FCC attorney about how a PSOA works, including the responsibility of the license-holder, in our case Pacifica, to continue to have a major role in programming decisions.
Many producers already support the visionary proposal. But for it to be adopted, we will need to build support for the proposal among listeners, community groups, and elected officials, and exert intensive pressure on the Pacifica National Board. We hope you’ll join our campaign to make this happen! For more information, go to www.savewbai.org .