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Air American Radio: An Example of Ego and Crony Capitalism

I am certainly a big boy and know about risks. That being said, I am very disappointed how this whole thing has been handled.
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When my wife and I conceived of the idea of forming a liberal radio network in 2001, we had no idea what was in our future. As socially responsible venture capitalists (usually an oxymoron) we hoped that we would help to balance the media bias that led to the stolen election of 2000 that has so negatively impacted all Americans. You can read about this in my non-best selling book: Road To Air America. Unfortunately, AAR reached a dead end as a result of cronyism and ego which is usually a disease suffered by many mega millionaires of either political persuasion. My next book, Defying The Distortion, has a final chapter still waiting to be written and will be published when the AAR final chapter is known.

The positive news is that about 100 radio stations have now committed themselves to progressive talk radio and many of the listeners have demanded that their communities continue to carry non-conservative talk radio. AAR established a beachhead for the concept and the follow on content companies, if run well, will make non-conservative talk radio the wave of the future so that our country can re-establish itself as a shining light for democracy and human rights. But, the inside story of the major shareholders of AAR is the worst example of predatory greed and vanity. It was surprising to me as one who originally believed that rich liberals would somehow be different.

I have lost my faith in the higher echelons of the Democratic Party and the elite who control it. I thought AAR would be a grass roots network that would not suffer from the destructive corporate greed and vanity. Had I had the money to completely fund the project, that would never have happened. I know that good ideas cannot come from greed and ego. Unfortunately, the primary backers of AAR suffered from both and anything the Drobnys wanted to do was considered a bad idea. We were summarily kicked off the board and the founders truly became silent partners. Actually we were in fact muzzled.

In August of 2006, I was told that the major backers of AAR were no longer going to continue funding the company. Our company, Nova M Radio, was operating 2 radio stations in Phoenix and Little Rock. We had done very well with the AAR content so we had a vested interest in saving the network. We literally had to force our way into a board meeting by threatening legal action against the board if they would not allow us to make them an offer. The board had decided to go bankrupt in August and we had gotten in the way of their plan. The board allowed us to visit AAR in New York to do an audit and make them an offer in 24 hours or they were going to file for bankruptcy the next day, September 1 of 2006.

Anita and I are CPAs and are used to doing things quickly and within 24 hours we offered AAR a $2.5M plan to fund and save the network. We actually found that if you eliminated the $15M debt owed to the board members, AAR was in fact solvent and easy to save. Beside that, the branding of AAR was good and well recognized with close to 100 affiliates. We conceded to every issue that the board raised and even gave them and the other 66 investors a significant interest in our new company that would run AAR. The board did not take yes for an answer and decided to reject our offer on some technical pretense. So they moved on to their original plan to take over the company and eliminate the other 60+ investors including the Drobnys $3M investment. The other 60+ minority investors had put up about $10M in amounts ranging from $50K to $1M. But, the 3 people now responsible for running AAR post bankruptcy have a deal in the works and the old investors have been successfully eliminated despite their belief in the project. Below is a recent email I received from one of the $50K investors who was with us from the beginning:

Sheldon,

I just received the letter from Terry Kelly with the unsurprising news that our "Piquant" investment is for all purposes worthless. I am certainly a big boy and know about risks. That being said, I am very disappointed how this whole thing has been handled. Forget about the investment part, we weren't even treated like investors, not even an Air America knickknack or two. I know you haven't been involved since the beginning, but this whole thing was run like a joke.

I wish you well with Nova. Hopefully you have learned from what happened at Air America. If you ever want some good feedback on how to grow things there, let me know. In the meantime, if things go well, maybe you will send those of us that invested with you to start Air America some Nova Tshirts.

Happy Healthy New Year to you and Anita.

As you may know, we have been doing our own syndicating with our company Nova M Radio and our first talk host, Mike Malloy is now in several cities and Sirius Satellite. We have other programming which will be quite compelling and help carry on the trend to break out of the beachhead established by AAR. And, we plan to take Nova M Radio public within the next 3 months to make the investment one that can be supported by the grass roots majority of this nation. Joe Trippe is working with us to help make that happen. Nova M Radio will have as its investors people that can legally invest in a public company for $50 or $5M. And they will have the pride of ownership of a radio network that will represent the shareholders and the general public and possibly change the face of media that was our dream in the spring of 2001.