How Al's Bloated Compensation Threatens Air America (Al Franken)

Nearly six months after shady taxpayer funds transfers from a Bronx-based nonprofit to liberal talk radio network Air America were first disclosed to the public, this dirty scandal's final chapter has yet to be written.

Now, from a key point during its still-unfolding timeline, newly obtained documents raise serious questions about host Al Franken and the firm.

Had Franken not been so pushy during his Air America contract negotiations, could the whole matter have easily been resolved?

Much damage has now been done: still under scrutiny by New York City's Department of Investigation is the sleazy $875,000 in "loans" from the Gloria Wise Boys & Girls Club between September, 2003 and March 15, 2004, to help Franken's bosses pay the fledgling outfit's mounting debts.

After substantial negative publicity and DOI demands, Air America finally agreed in September to put the entire amount into an escrow account controlled by company attorney William H. Schaap.

A DOI spokeswoman did not return a call seeking comment on the investigation's status.

Meanwhile, what's left of the community center is hanging by a thread, stripped of its Boys & Girls Club charter, cut off from grants and facing eviction from its Co-Op City location, as the New York Post has reported.

Happily waltzing through the middle of this mess nearly unscathed, however, is Franken himself. Fawning press coverage almost everywhere was the result of his recently-completed book tour.

And why shouldn't Franken be smiling? While repayment was delayed until it was too late to save Gloria Wise and its afterschool programs for disadvantaged youth, Al got everything he wanted and then some.

Did his greed greatly contribute to the problem, by keeping Air America financially-drained and unable to return the money? Quite possibly, according to newly-obtained documents.

During the same mid-to-late 2004 period when Air America parent Piquant LLC was quietly considering how to resolve the still-undisclosed scandal, Franken was demanding everything, including the kitchen sink.

A June, 2004 Wall Street Journal investigative report on Air America stated Al was making "over $1 million a year". That was accurate, but not for long.

Despite mixed reviews, low ratings and a perpetually shaky cash outlook, Franken was handed a virtual blank check by Piquant. Even as the extent of the Gloria Wise crisis became clear to an ever-changing series of managers, Franken pushed ahead anyway with an eye-popping 2005 compensation package.

Included was a staggering base salary boost to $1,725,000, plus fringe benefits and potential bonuses, after less than a year on the air. Nor was his bloated staff left out. The result: what is quite likely talk radio's largest-ever and most overpaid entourage, mostly from the ranks of Al's Harvard research team.

The kicker: Franken successfully insisted the entire base sum be paid in advance, during the first week of January, 2005! According to his contract, only death, disability or resignation would lead to any repayment.

Worse, Billy Kimball, his senior producer, also enjoyed a $275,000 early payout. More on Billy in a moment.

Why would the firm agree to these unpleasant terms? Why couldn't poor kids in the Bronx have their taxpayer grants back? Apparently, more important was keeping Al happy.

When he claimed on-air to have only first heard of the scandal in early August, 2005, investigative partner Michelle Malkin and I produced a Franken-signed and notarized legal document disclosing the Gloria Wise mess, dated November, 2004.

Franken has long maintained the "loans" culprits were long-departed former managers, including Evan Montvel Cohen. While we've never claimed Franken was directly involved in securing the funds, it is fair to take issue with statements regarding his knowledge of the scandal.

Even if he truly didn't know, a position this signature strongly refutes, the company had to be aware it had no business placing Al and Billy ahead of inner-city schoolchildren.

Fearing Wise and other business issues would soon bring down the company, did Franken press ahead with upfront payment demands?

That's a funny thing, because when it came time to negotiate for 2006, Al was instead willing to take his base pay, now bumped up to a cool $2 million, in $500,000 quarterly chunks. And earlier in 2004, he frequently spoke of receiving paychecks like everyone else, including to the Journal.

Only during the period where the company was sweating out the possibility of having to repay Gloria Wise did Al Franken demand it all at once. Coincidence? Perhaps.

Whether Air America actually wanted to reimburse the nonprofit isn't known, but they delayed it as long as possible. And Gloria Wise representatives wouldn't agree to a multi-year installment plan.

Until the DOI finally put its foot down in September, demanding a lump sum, the company was adamant about making $50,000 quarterly payments, according to three proposed agreement drafts from 2005, exclusively obtained here. In each, Piquant stated that it was unable to make immediate repayment in full.

Meanwhile, what was it that made Franken (who, along with the company, has never been willing to speak to Malkin or myself about any of this) so valuable to Air America? It couldn't have been ratings, where his cumulative audience growth for persons 12 and older was zero percent between fall 2004 and spring 2005, according to the company's own Arbitron audience data tabulations. Nationally, he checked in with a whopping 0.1 rating through last October.

Nor could it have been his ability to lure additional stations into the fold, as he was stuck with 68 mostly-tiny stations carrying his show, as of October (by contrast, frequent Franken-target Sean Hannity just celebrated his 500th affiliate sign-up and Rush Limbaugh has more than 600). That's well after he negotiated these huge salary increases and bonuses.

And it wasn't revenue: his show still isn't profitable, despite representing nearly 50% of Air America's entire programming payroll. "Team Franken", representing all of the program's costs, currently sets Air America back over $3 million annually. How could revenues ever be expected to surpass that?

None of that seems to matter. Even more astounding, his own 2008 base pay will increase to $3 million, whether or not the show is a success. That's assuming he and the company stick around that long.

In addition, his contract has long contained $500,000 ratings bonus stipulations, should certain audience targets be met. The Sundance Channel, which has televised his radio show, pays him an additional annual amount between $100,000 and $125,000. Live ad reads and other on-air endorsements add thousands more to the total.

Consider that Ed Schultz, a non-Air America syndicated liberal host with a similar number of stations and listeners, is said to make about $400,000 annually. In addition, many with national radio shows heard on as many as 100 stations are known to make a fraction of that figure.

To determine what a person heard on between 50 and 100 relatively small stations might make, the Radio Equalizer surveyed syndicated hosts. While such information is usually closely guarded, one national personality told me base compensation of $75,000 to $100,000 would be typical.

Why so little? "Because many national advertisers don't even begin to consider your show until it's heard in many more than just 100 markets," according to the talk host.

Franken's huge group of assistants also amaze the radio industry. With 10 budgeted positions, it's a shocker for hosts used to having one or two staffers assigned to their programs.

Topping the list is Kimball, a former writer with Craig Kilborn's now-defunct late night CBS chat show. In what must be an all-time-record radio producer's salary, he's paid $600,000 a year, a small part of it covered by Franken himself. Lower-level assistants hover in the mid-to-high five digit range, quite high by industry standards.

In the end, evidence points to Alan Franken, Inc. (his own company's name) and Air America placing their own desires ahead of poor children. He never offered to help the kids affected by program shutdowns. And instead of coming clean about his scandal awareness level, Al played games and made implausible denials.

And with a mainstream media unwilling to probe the matter, why should we expect it any other way?

Brian Maloney was on O'Reilly tonight talking about Air America. Franken is raking it in though ratings are in the toilet. I don't see how this can continue after the lefty seed money is used up. They will have to find more stooges.

Included was a staggering base salary boost to $1,725,000, plus fringe benefits and potential bonuses, after less than a year on the air. Nor was his bloated staff left out. The result: what is quite likely talk radio's largest-ever and most overpaid entourage, mostly from the ranks of Al's Harvard research team

Overpaid ping.

Maloney also said on O'Reilly that Rhodes gets $300,000 per year. Their whole compensation structure makes no sense at all with the numbers they have.

They have amazed me so far with their ability to survive at Air America, but Maloney also said they would not be getting any more Soros dollars and other backers were bailing. Reality has to arrive sooer or later.

People assume that Air America is a failure, and I did also for a long time. However, there is a difference between Rush, Hannity, etal and Air America. The former is entertainment, the latter propaganda.
Entertainment is listener oriented. If you don't like what you are hearing, you can go down the dial to another station, or turn off the radio entirely and do something else.
Propaganda is owner/sponsor/investor oriented. The ratings don't matter, because the point is to get your propaganda on the airways. The only question is whether you are getting enough for your money.
Sure, the backers would like to have ratings, if they had them the cost of the propaganda would go down, but they aren't what drive the business for Air America. The only question is do they have an alternative that would get their propaganda on the radio. If not, then they will probably keep doing what they are doing now.
Maybe the backers will finally admit it's too expensive and cut their losses. More likely they'll continue to throw money into the network.
I don't expect Air America to go away anytime soon.

What's all the clamor about. At $2 mil Big Al is still not any near his due. I mean come on.... Rush is thought to make $25 mil.

At that differential Al Franken is a real bargin.

Oh yes, Al is a real bargin. Just like that bargin fertilizer I got when I scraped the dog do from my shoe on my grass. This toad look a like is actually repulsive to both the eyes and ears.

Maybe the backers will finally admit it's too expensive and cut their losses. More likely they'll continue to throw money into the network. I don't expect Air America to go away anytime soon.

I agree and have posted that numerous times. I believe it so firmly that even if the "sponsors" (Soros and DNC) bail out, there is a group that will continue to push the "propaganda" routine and may even approach Congress for funding since they could claim the rest of the am dial is "owned" by Bushies and the conservatives and therefore the DNC need an outlet (up and above the already liberal NPR).

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