Air America files for bankruptcy, will stay on the air

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NEW YORK -- Air America Radio, the liberal talk and news radio network that features comedian Al Franken, filed for Chapter 11 bankruptcy protection yesterday but will stay on air as it reorganizes with funding from its investor group.

The network had denied rumors a month ago that it would file for bankruptcy protection.

Air America spokeswoman Jaime Horn told the Associated Press that the filing became necessary only recently, after negotiations with a creditor from the privately held company's early days broke down.

The filing and a shuffle of the network's executives marked the latest turbulence at Air America, which has struggled financially since going on air two years ago. In April, Danny Goldberg stepped down as chief executive officer and was replaced by an interim chief executive from a management consulting firm.

"Nobody likes filing for bankruptcy," said Scott Elberg, who yesterday was appointed CEO of the network. "However, this move will enable us to concentrate on informing and entertaining our audience during the coming months."

Air America has struggled financially since its inception. Documents filed with the bankruptcy court show that the company lost $9.1 million in 2004, $19.6 million in 2005 and $13.1 million so far in 2006.

Air America owes Mr. Franken $360,750, according to the court documents. Mr. Franken was traveling and unavailable to comment but would do so Monday, Miss Horn said.

The network also features shows from liberal talk-show host Randi Rhodes and syndicated shows from Jerry Springer and Portland, Ore.-based talk-show host Thom Hartmann.

Miss Horn declined to name the creditor that negotiations broke down with, but the company had tussled earlier with a business partner, MultiCultural Radio Broadcasting Inc., which is also a creditor to Air America's parent company, Piquant LLC.

The network will operate in the interim with funding from Democracy Alliance LLC, its investor group, which includes RealNetworks Inc. CEO Robert Glaser.

Mr. Glaser had formerly served as chairman of Air America and owns 36.7 percent of the company. He is also owed $9.8 million, according to documents filed yesterday with U.S. Bankruptcy Court for the Southern District of New York.

Mr. Glaser resigned as a director of Piquant effective yesterday morning, said Tracy Klestadt of Klestadt & Winters LLP, which represents Piquant.

Air America disclosed in the court documents that two directors left in the past two months, Douglas Kreeger and Tom Embrescia. Gary Krantz left as president in June, and Executive Vice President Tom Athans and Chief Operating Officer Carl Ginsburg left in July.

The new CEO, Mr. Elberg, who had worked at WKTU and also was a former general manager of the radio station WLIB in New York, has been with the network since May 2005.