Berkeley – To no one’s real surprise, a NY court ruled on October 4 that the Pacifica Foundation owed $1.8 million dollars 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’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 acculmulated 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 its last fund drive short after raising $588K rather than continue to the 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 1929 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.
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Started in 1946 by conscientious objector Lew Hill, Pacifica’s storied history includes impounded program tapes for a 1954 on-air discussion of marijuana, broadcasting the Seymour Hersh revelations of the My Lai massacre, bombings by the Ku Klux Klan, going to jail rather than turning over the Patty Hearst tapes to the FBI, and Supreme Court cases including the 1984 decision that noncommercial broadcasters have the constitutional right to editorialize, and the Seven Dirty Words ruling following George Carlin’s incendiary performances on WBAI. Pacifica Foundation Radio operates noncommercial radio stations in New York, Washington, Houston, Los Angeles, and the San Francisco Bay Area, and syndicates content to over 180 affiliates. It invented listener-sponsored radio.