Seems the only people who don’t understand business dynamics are the Air America investors. The ‘start broadcasting and they will come’ business plan is the ultimate business risk. They ignored or misread the amount of ‘public demand’ for their kind of program message. But what is worse than that is that they expected rich democrats to help finance them. That was their first clue that not enough people would want to hear them to make it successful.
In November 2005, founder Sheldon Drobny writes . . .
As I wrote in my book, Road to Air America, Anita and I were initially encouraged about raising the necessary funds for the network. Bill Clinton and Al Gore gave us amazing contacts in Hollywood, Washington, and New York and we visited with almost all of the important rich liberals either directly or through their gate keepers. To our surprise, we did not get a single dollar from any of these people. So we had only our own money and some of our traditional investors to start up Air America Radio. We ultimately had to sell the company reluctantly in November, 2003 because we could not raise the 40-50 million dollars necessary to complete the funding.
The next twelve months included radio stations dropping them. Not enough advertising revenue for stations to carry them. Some stations were paid to carry their program. How’s that for a business model? That was their second clue of impending disaster.
Then came bankruptcy last month with 97 affiliates. Today they have 92, after losing Madison, Wisconsin, New Orleans, Huntington, WV, and Binghamton, NY and apparently one other somewhere.
Of course there is a conspiracy theory to AAR’s troubles. Investor Terry Kelly suggests . . .
“I find it puzzling as to the timing given the election results,” said Terry Kelly, one of the founding members of the Air America network and a longtime Madison businessman. “There is no business reason that is apparent to me (for the change), therefore, one wonders what the real reasons may be.”
I’m not in the broadcasting business, but I do play a radio. Seems to me that being 11th in your market would suffice for a business decision to drop them. Back in January 2004 I figured that Air America Radio would be nothing more than a mouth organ for the left, instead of a viable business. Last year Sheldon Drobney and this year Terry Kelly bares that out.
On Saturday, Nov. 11, 2006, Kelly said . . .
“It’s shocking to me, as a good progressive Democrat, the lack of support from wealthy Democrats. That’s the main reason why the company is in financial difficulty,” Kelly said. “I do not know if our efforts will be successful to re- capitalize the company, but I certainly hope so.”
No Terry, the main reason is that not enough people want to hear you. And here is why.
Economics 101 would suggest a correlation between no credibility and no money. Business 101 would suggest having a product doesn’t mean anyone will buy it.