Court decision in Empire State Bldg versus Pacifica & WBAI

Court decision in Empire State Bldg versus Pacifica & WBAI

Dear WBAI and
Pacifica Supporter –

In two short words: We lost. On October 5, I sat in court as the judge (his ruling evidently already written out before he even got to court to hear the oral arguments) pooh pooh’d Pacifica’s defense and ordered it to pay $1.8 million plus legal fees to the Empire Realty Trust “immediately and in full.”

How the foundation will pay is the big question. There are several possible scenarios. The most sensible – because it is the least damaging – would be for Pacifica to sell some of its real estate holdings in California and Texas, valued at about $8-$10 million. Of that amount, $1-$2 million could be gained by selling a building in Berkeley, which hasn’t been used for radio functions for years. It was formerly home to a Chinese takeout restaurant that shut down years ago. Right now, it is practically falling down, overrun by rats, and is used to store a pile of cardboard boxes filled with Pacifica’s old tax forms and phone bills.

There is also a small building in Houston, TX, the location of KPFT, which has been appraised at $2-2.5 million. The house itself is not worth much, but the land is, because it is in a high-rent residential district. So any buyer would no doubt tear it down and build a more appropriate structure. If it were sold, KPFT could easily lease new quarters in a more sensible area, at very low rates.

Unfortunately, factional wrangling on the national board may block this sensible financial decision. Instead, the board may opt for an irresponsible political decision – by which I mean selling off one or more of Pacifica’s five stations and broadcasting licenses. Since Pacifica’s mission is to disseminate information and ideas – not to be a real estate holding corporation – choosing to sell a station’s irreplaceable broadcast license, instead of an easily replaceable piece of real estate, would be a deep betrayal of Pacifica’s founding mission, and an abandonment of the listeners who depend on it as an independent alternative to mainstream corporate media.

I have suggested the above scenarios because Pacifica’s Executive Director, in the press release issued right after the court ruling (which I have appended below), does not mention any payment plans at all. He says only that the board will meet to discuss the matter, and that “There's going to be some pain involved,” without specifying what kind of pain, and how much.

Below is Pacifica’s press release
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FOR IMMEDIATE RELEASE

Court Protects ESRT’s Lease Terms for Pacifica’s Non-Profit WBAI Radio in NYC – Denies “Unconscionability” Motion

Pacifica National Board to Meet Thursday Night to Decide on Next Steps

NEW YORK CITY –A Manhattan, NY, court sided today with Empire State Realty Trust in what critics described as “price gouging” against the small, non-profit radio station, Pacifica’s WBAI. In the ESRT lawsuit against Pacifica for unpaid tower rent at the Empire State Building, Judge Lebovits denied WBAI’s motion for “unconscionability”, and gave ESRT a summary judgment of $1.8 plus million, plus attorney’s fees. The latest invoice from ESRT was for $2.4 million, including fees up till last month. Pacifica’s national board of directors will meet Thursday night to decide the next steps for the station.

“All stations should continue doing what they are doing - bringing great news, music, and public affairs that the other stations won't let you hear,” stated Bill Crosier, Interim Executive Director of the Pacifica Foundation. “There's going to be some pain involved to come up with the money for the judgment, but we will get through it.”

In a statement to staff, Crosier said, “We do have some options, but they are more limited now, and none are easy.”

The judge, in effect, ruled that it was not price gouging, when he denied Pacifica’s unconscionability motion. The lawsuit was a classic “David vs Goliath” standoff with the multi-million-dollar Empire State Realty Trust (ESRT). The Trust, owner of the Empire State Building, was accused of price-gouging the local non-profit radio station with a lease having monthly fees that increase at more than four times the rate of inflation. The lease was renewed in 2005 with terms that were significantly worse than the previous lease, after the Twin Towers and the antennas for all the broadcasters there were destroyed on 9/11/01, leaving radio and TV stations with few options for antenna space, and giving the Empire State Building a near-monopoly for stations to deal with.

The standoff also compelled Mrs. Patricia Perry, an 85-year-old mother who lost her son on 9/11, to start a petition that accused the company of profiteering off of the tragedy [that left it as the only location in New York City with a viable broadcasting antenna--SB]. Her petition urged the realty company to negotiate in good faith with WBAI.

Said Mrs. Perry:

“This station has always been one of the feelings of pride of our city and beyond - providing a platform for our local elected officials and NYC’s best and brightest. For decades, WBAI has fearlessly served the public with independent news, music, and public affairs that other stations won't let you hear. My son did not risk his life for you and Empire State Realty Trust to profit from it. It is not the New York Way.”

The summary judgment leaves the 68-year-old radio network, which owns five broadcast licenses in New York, Washington DC, Houston and Northern and Southern California, along with a valuable historical audio archive, with a challenge in figuring out how to satisfy the multimillion dollar real estate trust.

The 15-year lease signed in 2005 does not expire until 2020 and has raised antenna rental costs by 9% a year for the last 12 years. The rent is currently set at more than half a million dollars annually or approximately 4 times the current market rent for Midtown Manhattan antenna rentals. Pacifica Radio's WBAI had housed its transmitter at the Empire State Building since 1966.

The full text of Ms, Perry's petition can be read below.

Dear Mr. Malkin,

My son, police officer John W. Perry, was killed on 9/11/2001 while attempting to save a woman’s life when the South Tower collapsed on him and countless others that horrific day. The pain and impact of 9/11 were felt by local businesses and people throughout the New York City area. One of those impacts was that your property, the Empire State Building, became one of the few places for local TV and Radio to transmit from since all antennas on the Twin Towers were destroyed.

One of those stations, Pacifica's WBAI, has been part of the fabric of our great city for decades and now is on the verge of shutting down because you continue to price gouge and take advantage of the station by repeatedly jacking up the monthly lease payments. You took advantage of this when WBAI's antenna tower lease was renewed in 2005 by making the license fees under the lease increase by more than four times the rate of inflation. That is unconscionable.

WBAI management went to Empire State Realty Trust three years ago, asking that you accept the market rate for antenna tower leases because WBAI could not afford the large annual increase in payments in the lease, but never got an answer.

Please negotiate in good faith with WBAI and stop price gouging this small non-profit - be fair and reasonable. Let them out of their lease, release them from the obligation to keep paying increasingly exorbitant fees, and don't force them to pay additional late fees and legal fees because they have not been able to keep up with the unfair lease payments.

This station has always been one of the feelings of pride of our city and beyond - providing a platform for our local elected officials and NYC’s best and brightest. For decades, WBAI has fearlessly served the public with independent news, music, and public affairs that other stations won't let you hear.

My son did not risk his life for you and Empire State Realty Trust to profit off of it. It is not the New York Way.

Sincerely,
Patricia J. Perry, Seaford, New York
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