Berkeley – (Editors note: After more than three and a half years of regular weekly bulletins, Pacifica in Exile did not come out for the last eight weeks. The primary reason for that has been to avoid providing surplus information to Pacifica’s main creditor, the Empire State Realty Trust, that could hamper negotiations. At this point, however, we believe the member’s right to know has to be the priority, and since various members of the Pacifica community have been putting out information of varying levels of accuracy for some time now, we decided the time was right).
When we last left off publication, Pacifica had been hit with a $1.8 million summary judgment from the Empire State Realty Trust for back rent from 2013 to 2017, The rent is for WBAI-FM’s transmitter which broadcasts from the iconic NY skyscraper. A 15-year lease had been signed in 2005 by very temporary IED Ambrose Lane, a WPFW broadcaster who presided briefly between Dan Coughlin and Dan Siegel. The lease was signed under somewhat mysterious circumstances in that members of the 2005 board of directors have not confirmed that they saw it or reviewed it prior to signing. The lease took full advantage of the skyscraper deficit in New York City after the collapse of the World Trade Center in 2001, hiking the rent abundantly every year for a decade and a half until 2020, where it topped out at more than 3/4 of a million dollars a year, a prohibitive amount for any community radio station.
Through all of its turmoil and trouble, WBAI and Pacifica paid the extortionist lease for a long time, incurring regular operating deficits to do so. A “Save the Transmitter” campaign in NY raised $375,000 in a month in February of 2013, but after tapping out the donors, the money dried up and the station, which had been carrying a million dollar payroll in addition to the now half a million dollar lease, made extensive staffing cuts and substantially shrunk its operation and the revenue it produced dropped from $3 million a year down to less than $2 million a year.
After the Siegel/Brazon coup in 2014, which has been chronicled in this publication,in detail, a rumored negotiation took place to try to reduce WBAI’s transmitter rent and/or to try to get out of the lease. WBAI has had a standing offer to move its antenna to the Conde Nast building at 4 Times Square for a modest monthly rate of $14K for 5 years running, but has never been able to take advantage of the offer (a 300-400% reduction in rent) because the Empire State Realty Trust would not let them out of their $8 million dollar contract. But the negotiation was a strange one. It began with then-IED Margy Wilkinson removing Pacifica’s NY real estate attorney from the negotiation process so Pacifica had no legal representation, and ended with a hush-hush closed sessionof the board in which it was announced that there was a “verbal agreement” that WBAI could pay a reduced rent of $12K a month.
WBAI did so for almost two years, and then Pacifica was hit with a lawsuit for the balance of the unpaid rent in December of 2016. The “verbal agreement” was worthless. WBA general manager Berthold Reimers, who was left to the negotiations with no assistance, put out a statement yesterday similar to that filed in court under penalty of perjury:
“I truly believed the National Office would negotiate some terms. Indeed, it took the Empire State almost 3 years to take action. The National Office did not negotiate. I am not an officer of the foundation and could not go any further”.
Among the issues creating the logjam was reported to be Pacifica’s inability to present ESRT negotiators with a current audited financial statement. At the time the lawsuit was filed in December of 2016, Pacifica’s last completed audit was two years old (2013-2014). Pacifica’s last completed audit as of today is for 2014-2015. The California AG has demanded the 2015-2016 audit report be filed by February of 2018. Pacifica would have to file it’s 2015-2016 and 2016-2017 audits by June of 2018 to regain eligibility for Corporation for Public Broadcasting grant funding.
Post-judgment, after Pacifica’s efforts to enlist NY politicians to ask the Empire State Realty Trust for mercy did not work, the predictable panic set in since a creditor with a judgment can eventually tap into bank accounts and place liens on real estate assets, to attempt to collect a debt if the debtor does not voluntarily pay up. Some Pacifica board members, observing the Foundation owns $10 million dollars in real estate mostly free and clear, apart from the Berkeley properties (KPFA’s main studio and the next door abandoned restaurant/national office) have liens on them due to four years of unpaid property taxes), sought refinancing on the LA property (KPFK’s studio). Several lenders in the subprime market offered $2-$2.5 million against the LA property in mid-October, which would have cleared the summary judgment, removed the threat of collection activity and provided a 2-3 year window to pursue a license swap or sale or a real estate sale.
Other board members, petrified by the overall size of the debts which, including the long-term debt to Democracy Now, have crept up to the same $5-$6 million mark that newly democratized Pacifica faced in 2001 after the insurrection against the old board of directors, insisted that Pacifica should file for Chapter 11 bankruptcy, undeterred by statistics that 85% of organizations that file for Chapter 11, collapse, and do not emerge from bankruptcy.
The split on the Board of Directors, did not break down along the long-established Siegel/Brazon/Independent lines, but instead found the Save KPFA Berkeley group allying with CFO Sam Agarwal to shill for the bankruptcy filing, while several independents agreed with the rest of the former Siegel/Brazonites that Chapter 11 should be avoided if possible. Pacifica was slow to initiate the October loan applications, responding to only one in November, and ignoring the other two until this week. The first loan offer came with some onerous initial paperwork, but instead of counter-offering and indicating which terms were unacceptable, executive staff simply rejected the loan, did not pursue the other two offers and began a sequential series of appeals to the Board of Directors to let them file for Chapter 11, without even providing a pre-filing copy of the petition. i.e. a blanket authorization. This proposal that has now been voted down by the National Board three times in a row.
The second loan broker, whose offer was responded to just this week, appears poised to make a loan on reasonable terms for three years, which would allow Paciifica to settle the judgment amount and remove any threat of collection activity.
The National Board has been neglectful in reporting out their closed session activities, as they are required to do, so Pacifica in Exile is providing this list of the material closed session motions that have been voted on this year through December 18, 2017. We hope it will assist you in understanding the actions being taken on your behalf as donors and members. We encourage you to download it and read it. While we could provide you with open session meeting audio, this document is likely to contain more of what you are most interested in right now.
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Finally, we’d like to end with a bit of an editorial note. The facts are above and available for your perusal, but in our opinion the word “independent” in independent media is an important one. We believe Pacifica should make every effort to remain independent and not be eager to throw up its member-purchased assets for grabs, at the discretion of the federal government (which is currently populated largely by lunatics) and a creditors committee headed by an aggressive capitalist real estate speculator and billionaire. That’s a bad place to be. It would make Lew Hill cringe.
Fantasies about bankruptcy as a panacea i.e. it will get us out of the Empire State lease or it will make all of the debts go away, are unlikely to come true. Bankruptcy courts exist to get creditors as much of their money as possible and Pacifica has assets worth a great deal more than its debts. Ten times more is a conservative estimate. If Chapter 11 bankruptcy was salvation for broke entities, then 85% of organizations would get out of it, not the reverse where 85% of organizations collapse inside of it. To spend a million dollars or more of your charitable donations in an effort to beat those bleak odds and do battle with some of NY’s most experienced and aggressive lawyers, for years, should be an unappealing prospect to everyone.
There are no easy decisions. The 3 million in debt that Pacifica was carrying in 2013 (2/3 of it to a relatively friendly creditor Democracy Now’s Amy Goodman) metastasized during the 3-year Siegel/Brazon coup into $5-$6 million. The ticking bomb that the NY lease agreement always promised came to pass. Some assets are going to have to go to service that debt and the expensive and ultimately unsuccessful democratic experiment will have to be rethought, hopefully without jettisoning the democratic impulse entirely. But who makes those decisions is very important.It should be us. Those who built it, own it. If Pacifica’s 68 years mean anything at all, that is what should be true.
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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.
As a regular listener of KPFK (and a retired CPA) I’d counsel against Chapter 11 which more often than not ends up being converted to a Chapter 7 liquidation. And I fail to see the necessity of maintaining high rent space atop the Empire State Bldg. So why not just vacate the space and find cheaper digs someplace else as has been proposed?
In my opinion the time to line up ducks to prepare for a possible C11 application was more than 2 years ago. It is too late. Your options are limited by “look back”.
The use of voluntary chapter 11 has nothing to do with percentages. 85 % may do this or that. But bankruptcy court is no lottery. The law is a tool which those looking for a path out of a financial morass can use to have a way forward. Having no clear headed person to read the map, I fear Pacifica may drive itself over a financial cliff instead of making a turn.
Pacifica’s path is not that complicated, Jeremy. Loans are available to pay off the immediate judgment and there is nothing Empire can do to hurt them if they would just pay off the judgment. For the long term, there have always ever been one answer, which is to leverage assets to pay off the large debts that have acculmulated due to the prohibitive contracts signed with DN, Empire State and earlier with the Wall Street digs for WBAI. (Between those three contracts, almost $15 million dollars was siphoned out of Pacifica). There will either be a license swap or sale, or the real estate will be sold. That happens in or out of Chapter 11, because there is no panacea for having enough assets to pay your debts, but not wanting to use them, which is Pacifica’s condition.
I know it sounds really really nutz but can someone contact Bill Gates? Seriously. Why not? They support other things. Maybe a one time save. At this point we need it. The only ones that can save us the ones that have that big of a piggy bank. Grace Peace