KPFA/Pacifica up for sale - again?

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"CONFIDENTIAL"
Riva Enteen

PACIFICA AND KPFA FOR SALE AGAIN?
Sunday, August 7, 2005
Bulletin #13
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Please feel free to distribute.
http://www.struggle-and-win.net


"This is the only non-profit I've ever been involved with without a line-of-credit. You
cannot keep doing business this way. The board ought to authorize a line-of-credit...
Read the bylaws. Read the powers of the Executive Director. He doesn't have to [get
board authorization]. It's my choice..."
-AMBROSE LANE, PACIFICA INTERIM EXECUTIVE DIRECTOR


"Each station is now struggling with a deficit or shortfall... I do not believe it can
be ignored for any reason. We must act."
-LONNIE HICKS, PACIFICA CHIEF FINANCIAL OFFICER (CFO)


"We spoke to Wells Fargo today which has the loan on Pacifica's KPFA building. They
talked about a 7.25% interest rate, which is about 1% above prime. We chatted a bit and
made a connection. It's always good to make a connection, especially in the banking
business where we're already banking... We're also looking at the Bank of America..."
-MARNIE TATTERSALL, PACIFICA NATIONAL FINANCE COMMITTEE MEMBER,
Treasurer, KPFA Local Station Board (LSB),
and Director of Finance for KGO & KSFO (radio stations owned by ABC/Disney)


The quotes above are from the Pacifica National Finance Committee meeting of July 29,
2005. Is this deja vu all over again?

In 1999, in his infamous email to then-board chair Mary Frances Berry, Pacifica
National Board (PNB) member Michael Palmer suggested that "The [KPFA] primary signal would
lend itself to a quiet marketing scenario of discreet presentation to logical and
qualified buyers."

Today, in 2005, Pacifica's management wants to take out a "line-of-credit" in order to
pay for the looming budget deficit that they have created through their gross
mismanagement. Is this not one more "quiet marketing scenario of discreet presentation" -- this
time to Wells Fargo or the Bank of America?


DOWN THE MONEY HOLE

The Pacifica network is hemmoraging money. According to a report presented at the
National Finance Committee meeting, prepared by Chief Financial Officer Lonnie Hicks, each
of the five Pacifica stations are over budget.

Pacifica's national office, located in Berkeley, is also significantly over budget.
According to Hicks, "We have spent $100,000 over the gross salary line, and $139,000 in
salaries and related... Adding salary increases for management staff put us over budget."
Under questioning, Hicks confessed that these management salary increases had not been
authorized by the Pacifica board. Some of these increases, Hicks said, were
"retroactive" for six months.

Is this one of the reasons that Hicks and other Pacifica management personnel,
including former Executive Director Dan Coughlin, have repeatedly refused to allow elected PNB
members full access to the network's financial records?

The biggest financial hemmoraging is at WBAI, Pacifica's station in New York. WBAI is
currently about $500,000 in the hole. How does a station get this far out of whack?
According to Stephen Brown, a WBAI LSB member:

"Every year, since 1978, the Gary Null Natural Living program has been responsible for
raising up to 1/3 of WBAI's total yearly revenue... This revenue stream was
deliberately cut off approximately three years ago, when WBAI Program Director Bernard White began
personally insulting Null on the air, snipped 20% off Null's daily air-time with no
reason or explanation, pre-empted him from virtually all pledge drives (again with no
reason or explanation), and then finally fired him in December of 2004." Brown calculates
that the "still unexplained decision to pre-empt Null from more than 12 pledge drives
has so far cost the station (and the foundation) up to $3.6 million."

Is this mismanagement, or sabotage?

In one small example, the KPFA Local Station Board is now paying a parliamentarian $80
an hour to attend every meeting, including "executive sessions," because the current
chair is so unfamiliar with elementary parliamentary procedure.

Another example -- security guards are now routinely hired for all PNB meetings.


"GIVING TEEN-AGE BOYS CREDIT CARDS..."

The discussions on what to do about the looming financial crisis are now centered in
the PNB's National Finance Committee. These discussions have focused on a debate about
whether or not to take out a line-of-credit. But what is not being discussed are the
underlying political problems that plague the network and are the real cause of the
financial crisis -- bloated staff expenses, poor programming that fails to garner the
necessary financial support from listeners, and the failure of the PNB to seriously address
these problems.

For example, the PNB National Finance Committee is now meeting almost weekly. Yet the
PNB National Program Committee, where real political discussion about programming should
occur, has barely met since the first PNB was elected in 2004.

Instead of dealing with the very real problems that plague the network, Pacifica
management is proposing to resolve the crisis by borrowing money. This is like "giving
teen-age boys credit cards," said Sandy Weinman, the LSB Treasurer of KPFT in Houston, Texas.
"We've survived this far in our history without a line-of-credit. It's not time to turn
over the Monopoly cards and mortgage our future."

To borrow money, Pacifica would have to put up something as collateral -- the
buildings, the broadcast equipment, the station licenses. In one scenario, the collateral would
be future income. Imagine a pledge drive where your money goes, not to Pacifica, but to
Wells Fargo or the Bank of America.

It should be obvious that if Pacifica goes deep into debt to cover up our runaway
budget problems, we are just asking for trouble, and serving up the network on a silver
platter to our creditors. "Our assets are beyond our buildings. The real worth is the FCC
licenses and the bankers know this," said Weinman at the most recent National Finance
Committee meeting.

But, in the minds of our current management, not to be in hock to the banks is somehow
unbusinesslike. "Is our role to survive?" mused Interim Executive Director Lane. "The
responsibility of a board member is to enhance the value of the corporation for which
they serve."

Not so, said PNB member David Adelson, a representative from KPFK in Los Angeles. "I
think the charge is to see that the Pacifica mission is fulfilled, not to enhance the
assets of Pacifica."


WHO'S IN CHARGE?

When it was her turn to speak, Patty Heffley, a PNB National Finance Committee member
from WBAI, said that she had not known that Pacifica management had received unbudgeted
raises and bonuses. "Who is in charge of the managers," she asked, "so they don't
overspend?"

"That's an interesting question," CFO Hicks answered. "Who's accountable for management
expenses of this organization? The issue has not been resolved... We need a national
policy for monitoring and controlling expenses."

If the current Pacifica management has its way, the Pacifica community might find Wells
Fargo or the Bank of America "monitoring and controlling expenses."


[ The quotes in this report are transcribed from the Pacifica National Finance
Committee meetings of July 29 and August 2, archived at: http://www.kpftx.org/#archives ]

also, notes of the meetings are at: http://wbai.net