PACIFCA/WBAI FACES SEIZURE OF ITS ASSETS

As the leaders of Pacifica Foundation continue to fight among themselves, WBAI’s transmitter landlord – the Empire State Building (ESFT) – made legal moves to get the past due money it is owed.

At an October 31^st motion hearing, New York Supreme Court justice Gerald Lebovits ruled in favor of ESRT and ordered an immediate summary judgment.  Now ESFT can legally to begin seizing assets such as back accounts, office equipment and real estate [link].

Lebovits also ruled against a motion by Pacifica to designate the lease agreement “unconscionable” which would force ERST to renegotiate the terms of the lease. That won’t happen.

ESRT can begin seizing WBAI/Pacific’s assets as early as Monday, November 13^th. The exact day will be set when the Court’s decision is/was officially posted.

In a late October memo distributed to Pacifica’s employees, Interim Executive Director, Bill Crosier, tried to keep a brave face when discussing the situation:

I want to assure everyone that we will not allow ESRT to seize Pacifica's assets and clean out our bank accounts. I realize that's what people are afraid of, but that's not going to happen.

Chapter 11 bankruptcy (which would stop collection efforts while we continue to operate, until we can develop a plan to pay creditors) remains a possibility, but we want to avoid that because there are significant costs to the bankruptcy itself, plus some other issues, even though there are some advantages.  A bridge loan is also being considered, but both Sam Agarwal (our CFO) and I feel it should be part of a bigger plan.

Rumor has it that Crosier’s attempt to take Pacifica into Chapter 11 has met stiff resistance from Pacifica’s voting members. Under Pacifica’s arcane governance rules, naysayers can block virtually any move by the Board or the Executive Director.

PACIFICA’S OPTIONS

• Chapter 11 Bankruptcy

Filing a Chapter 11 “reorganization” bankruptcy petition will stop all creditor collection efforts, including ESRT’s. This will give Pacifica time to plan its next steps. But, it also sets in motion an intrusive investigative process.

Chapter 11 would require Pacifica to submit, and subsequently receive the court’s approval, for a financial plan that makes sense. This will be a big lift because Pacifica’s total debt is estimated at more than $8 million.

• Swap 99.5 FM For a Smaller Station

MAP FOR WBAI 99.5 FM

The FCC license for WBAI at 99.5 FM is likely Pacifica’s most valuable asset. Pacifica obtained 99.5 in 1960 when a commercial station owner donated it to them.  Because 99.5 could broadcaster a commercial station, its value is huge – perhaps $50 million.

A number of commercial Classical stations have either sold or swapped their commercial license for a noncommercial one. WQXR, WCLV and KING all kept on the air by swapping FM frequencies and using the proceeds to build the new station.

MAP FOR WKLV 96.7 FM

Educational Media Foundation (EMF) might want to swap New York area frequencies. EMF owns WKLV 96.7 FM, transmitting from near the Connecticut border. WKLW does pretty well for a suburban station. It had 498,700 estimated weekly listeners in the Nielsen Audio October PPM ratings.

On the right are the two coverage maps: WBAI 99.5, from the top of the Empire State building, and 96.7 WKLV, booming in from the boondocks.

EMF would K-LOVE getting 99.5 FM in the heart of NYC. They’ve likely got the cash Pacifica needs. EMF’s recent purchases in Los Angeles, San Francisco and Providence show their willingness spend money for a licensee they want. And, EMF does business when almost anyone.

• Arrange a Bridge Loan

A bridge loan is intended to smooth the waters for a business or organization as it tries to recover from financial problems. Noncom broadcasting bridge loans are made to certain qualifying public media organizations. The foundations to it to support essential media. The lenders require due diligence about the viability of the enterprise moving forward.  If the lenders think the borrower’s plans are worthy, they will lend money.

Of course, the money comes with strings.  The borrower must pledge it’s assets to the lender. The borrower must agree to meet standards and have firm plans for financial stability. Also, the borrowers is required to pay an application fee of 1.5% to 3% depending on the circumstances of the loan and the value of the transaction.

• Do Nothing

If past can predict the future, this is what will happen. Pacifica’s leaders have dithered and debated so far. The debates are endless and pointless. Public service is not a factor.

I recent overheard a tape of a conference call with members of Pacifica’s Board and a well-known public broadcasting consultant. The consultant was the only broadcaster in the room.

During the call, the Pacifica folks were extremely naive about the fundamentals of radio broadcasting. It was often difficult for them to ask questions. These are the people who will decide the future of Pacifica, if they act.

But, if they don’t act, reality will determine the fate of WBAI and the Pacifica Foundation. This isn’t about politics or social issues, it is about Pacifica's lack of competency to be in the broadcasting business.