Inside Air America

An Investigative Blog Report
August 18, 2005

BY BRIAN MALONEY AND MICHELLE MALKIN

Part Two: Beyond Evan- More Shell Games?

On July 21, 2005, a standing room-only crowd of Democrats filled a Highland Park, Illinois, public library conference room to hear two local businesspeople talk about their company and its future plans.

The attraction? These weren't your everyday corporate suits: it featured Sheldon and Anita Drobny, who last year put Al Franken and Janeane Garofalo on their upstart liberal Air America talk radio network. Hearing about their "success" was surely appealing.

To Democrat activists, these were bona fide celebrities. Sheldon, a Venture Capitalist, CPA and former IRS agent, spoke first, according to the 10th District Democrats Newsletter:

Yes, please note (in the quote to the left) that he did say, "if you tell a lie often enough, people will believe it".

Was the audience listening to someone who truly practices what he preaches?

That's because the newsletter also reveals:

Even if Drobny meant to say Air America had the most popular talk radio station in San Diego, wouldn't it also fall into the "lies repeated often enough" category?

San Diego's KLSD-AM currently ranks 22nd overall and is the fourth most popular talk station in the overall market, according to Radio & Records.

Even KFI-AM, a distant signal from Los Angeles, got higher San Diego ratings than the Air America station.

Uttered in a highly supportive environment, there was no chance Democrats in attendance would challenge Drobny's statement, even if they knew it was wrong.

That appears to be modus operandi for the Drobnys, well-versed in playing to friendly political crowds. While this pattern of behavior may have previously worked well, what happens when outside scrutiny is finally applied?

We may soon find out.

For nearly three weeks, Air America Radio has worked feverishly to convince the public a former executive is entirely responsible for the messy scandal that now threatens the liberal talk network's future.

That's where $875,000 in taxpayer money, meant for community programs run by the Bronx-based Gloria Wise Boys and Girls Club, instead apparently ended up funding Air America's cash-thirsty operations.

Michelle Malkin.com and The Radio Equalizer-Brian Maloney have uncovered a pattern of dubious behavior, however, that extends across Air America Radio's various public hiccups, blunders and scandals.

Is former head Evan Montvel-Cohen really the whole picture of Air America's questionable business practices?

Because Cohen's certainly no angel, he's a perfect scapegoat for past transgressions, while Air America today continues the same dodgy behavior. While actions opponents call "shell games" appear to continue, Cohen himself is nowhere to be found.

From Anshell to Progress Media and Piquant LLC, the Drobnys seem to be no strangers to shifting assets and allegedly walking away from large debts, when needed (See Part One of this series, featured on Michelle Malkin's site, for more on creditor Multicultural Radio Broadcasting's accusations of "sham transactions" and "fraudulent conveyances").

Even as we speak, what appears to be a new shell may be in the works. How do we know?

It comes right back to the same Highland Park library speech, where the Drobnys revealed previously secret plans to form yet another new company.

Sheldon's wife Anita took to the podium to spill the beans about Nova M Radio.

Disclosing Air America's future plans to a room full of rabid supporters might seem smart, especially if it brings potential investors to what inside sources say is an effort to raise $5 million to fund the new company.

Was such a public disclosure legal, however? Since Nova M Radio's offering is set up as a private placement, there have been no indicated or available US Securities and Exchange Commission filings.

Could the speech be considered an indirect attempt to solicit investors, in a way that would trigger required SEC disclosures?

Like the confusing web of firms they've previously created, Nova M Radio will be intertwined with Air America Radio itself, while being charged with the purchase of stations in rural markets to provide remote venues for its programming.

One broadcast executive, familiar with radio's challenges under even the best of circumstances, had this to say: "(It) just sounds like a transfer of money rather than a radio strategy. Anyone with five million dollars behind them could purchase stations or air time and do horse racing on the air, if they wanted to."

Referring only to the difficulties of making money in rural radio, the executive is explaining that creating successful operations in such places is exceptionally tricky, even for local, well-seasoned owners. While buying stations or leasing time is easy, small markets remain broadcasting's most challenging setting for making a profit, regardless of the radio format.

Do you have a plan, based on experience in the field, that can overcome these high hurdles?

Why another new company, however, rather than simply raising additional funds through Air America Radio's current parent, Piquant LLC?

That's where the biggest potential questions are raised.

Some insiders and industry observers believe Air America may be having serious difficulties raising money, after a well-publicized pattern of burning through cash, combined with spotty ratings and revenue performance.

Otherwise, what reason would there be to create a new firm? Couldn't additional investors or board members join Piquant LLC to fund the station purchase plan?

Could Nova M Radio also function as the next potential "sham transaction" vehicle, once Piquant is completely broke (which it seems close to now)?

Or, could it ultimately purchase Piquant for pennies on the dollar, while cutting away the latter's unfortunate creditors?

Even if the business plan really is about buying rural stations for Air America's programming, is it viable? Who would invest in such an operation?

Some of Sheldon Drobny's philosophy is laid out here:

As the co-founder of Air America Radio (AAR), I have learned a lot about broadcast media and the decline in markets and advertising caused by management that does not have a vision for growing markets.

One of the major issues we had when we started AAR was the lack of available radio stations that understood that the best and most loyal audience for advertisers is educated progressive people. These people used to be called YUPPIES, but there is a growing trend in America that TV and radio broadcasters are missing.

This educated and mostly secular audience buy a lot of stuff we call adult toys. They are the best audiences for advertisers.

Can a plan to spend $5 million on small-market radio stations really work, considering Air America is an even harder sell in small, conservative towns than New York City, where the format is already struggling?

If adequate revenues aren't materializing in big cities, or the national level, what would make mom-and-pop merchants advertise on an unproven format that bucks local political sentiment? Is there any remote chance of realizing a profit on this venture?

It doesn't appear the Drobnys, or others said to be a part of Nova M Radio, have any experience running small market radio stations, where long-established community relationships can be key to success. National advertising dollars rarely reach these areas, if ever.

It's exactly why major broadcast firms have generally stayed away from these areas, leaving it to small, local operators.

Rather than seasoned radio station management professionals, why, as confidential sources inform us, does the Nova M board reportedly feature three "progressive" talk show hosts?

And, given Progress/Piquant's consistently clumsy public face and internal disorganization, why would Nova M Radio be any different?

Attempts to reach Mr. Drobny via email and Air America via phone were not immediately successful.

A bigger, unexplored question, is whether Sheldon and Anita Drobny have any business raising additional capital for acquisitions, if they can't immediately afford to repay the Gloria Wise Boys and Girls Club in full for the $875,000 in diverted taxpayer funds it "borrowed" last year?

And, why won't they repay Multicultural Broadcasting $255,518 in damages awarded in last November's default judgment? Why is Multicultural forced to press Piquant/Progress/Air America to collect their money?

Is Nova M Radio simply a clever way to elude these sticky issues?

Is "when the going gets tough, invent a new shell company," Air America's motto? And why shouldn't they?

After all, they face little criticism.

As self-interested liberals such as Bill Press and Al Franken rush to defend Air America's operation, shouldn't they bone up on exactly who they're backing up in public?

It would seem good advice for the credibility-minded liberal celeb, since blaming it all on Mr. Cohen just doesn't hold water, when one considers the truth behind the spin.

AAR/Scandal graphic by Darleen Click, others from 10th District Democrats newsletter. Frankenfood by Pete at IHillary.

Inside Air America: An Investigative Blog Report