The privately held network, said by one veteran radio analyst to be operating at a multimillion-dollar loss annually, is keeping the identity of its new chief under wraps. Earlier this month, Danny Goldberg, former head of Artemis Records, was floated as one potential candidate for the CEO role.
The appointment is "another in a continuing series of steps where Air America Radio grows from enfant terrible to precocious young adult," said Air America President Jon Sinton, one of the few constants within the tumultuous business office of the 10-month-old talk network. "It's a very evolutionary business. Our business model has undergone changes with various iterations of investors."
like a campaign
Indeed, Air America started out almost as a political campaign strategy, with a group of left-leaning celebrities and executives hoping to create a space on radio for liberal talk. It has burned through a $20 million initial investment and announced in November it raised another $19 million. The company won't disclose revenue, but Mr. Sinton projects it to be profitable by year's end.
However, industry insiders expect that it will take the network at least five years to recoup the investment amount, which was considered high for a network startup. Operating costs are at least $12 million annually given what Air America is said to pay its on-air talent, an industry veteran estimates, and it's likely only bringing in $4.5 million in ad revenue. So the shortfall conservatively is $7.5 million a year.
According to media buyers, network spot rates for Air America hover between $250 and $400. And while that's a fraction of the $4,000-$5,000 Rush Limbaugh's show reportedly commands, Air America's marquee voice, Al Franken, has a way to go before he reaches the same sized audience Mr. Limbaugh reaches on his 600 affiliates.
Whoever now takes the top slot will need to be ready to execute an ad-supported model, which ultimately usurped all other business plans, including viewing the network as a nonprofit. And now, said Mr. Sinton, one of the few terrestrial radio veterans initially involved in the nascent network, "at the beginning, middle and end of a day, we're a commercial-supported station."
Air America operates under a standard network model. Though it leases space on New York's WLIB and uses an in-house sales team to sell its local and national spots, it also allows other stations to affiliate with Air America as long as they buy programming for two of the three dayparts between 6 a.m. and 7 p.m. Last summer it shifted its network ad sales responsibilities to Jones Media America, part of Jones Radio Networks, which also handles sales for Democracy Radio's Ed Schultz and Stephanie Miller.
Change was inevitable, said Michael Harrison, publisher of Talkers, who criticized the early fund-raising based model, comparing it to a political campaign with the short-term goal of unseating the Bush administration. "Their original business plan didn't fit the radio industry's laws of physics, but now they have good relationships with all the companies in the business that they need to. Politics is not the main goal of broadcasters; revenue and ratings are."
Air America's relationship with Clear Channel Radio underscores the difference between broadcasting and running a political campaign. Clear Channel, which syndicates arch-enemy Rush Limbaugh through its Premiere Radio Network, has done more than any other radio group to drive the network's fairly rapid post-election distribution. It's shifted 24 under-performing stations-that makes up almost half of Air America's affiliates-into progressive talk formats. Clear Channel's conversion of AM stations in Los Angeles and D.C. are particular boons for Air America, marking the return of Air America to the second-largest radio market and the entry to the nation's political advertising hub.
While the advertising mix still leans more toward under-the-radar medical products than it does blue-chip brands, that may soon change. Air America's distribution is quickly approaching what media buyers refer to as a "tipping point," when the network is available to 75% of the population. With this month's addition of the Los Angeles market, Air America crested 54%.
Pharmaceuticals, insurance and books have been popular advertising categories for Air America, but Nick Leonardo, a Jones Media America account executive who sells spots for both Air America and Democracy Radio network programming, points out that soon the issue advertising will begin. "The minute Bush did his budget, the obstruction stuff started," he said. "There will be a lot of groups with progressive messages-the AARP, the AFL-CIO-coming up."