BERKELEY — The Pacifica Foundation, a Berkeley-based community radio network that includes the progressive radio station KPFA, is in financial crisis because of mounting debt — and is now teetering on the edge of bankruptcy.
Pacifica, a nonprofit founded in 1946 by conscientious objectors from World War II, is the mother of America’s alternative radio, pioneering decades of left-leaning public affairs programs and community-based music.
But it is $8 million in debt — more than double its assets. And now one of its creditors — the New York City-based Empire State Realty Trust, which is owed $1.8 million in back rent on the antenna and transmitter atop the Empire State Building used by New York station WBAI — is demanding to be paid. It has filed paperwork in California that would allow it to seize Pacifica’s assets, including KPFA.
In an effort to save its flagship station KPFA and four other stations, Pacifica is seeking loans to pay off its debt. But loans create their own problems, it acknowledges.
“It is scary, especially because it is difficult to come up with $1.8 million and it is difficult to make the changes needed to be sustainable and pay the bills,” said Pacifica’s interim executive director, Bill Crosier. “But we will get through it.”
“We have programming that you can’t hear anywhere else,” he said. “We’re a watchdog to what is going on in the White House and Legislature, as well as independent music that you can’t hear elsewhere.”
Starting Tuesday, the New York creditor has the legal authority to seize bank accounts and put a lien on Pacifica’s California properties, including the national headquarters and KPFA’s adjacent property on Martin Luther King Jr. Way.
This means KPFA could lose control of its building and finances if its property is seized or subject to a lien.
On the KPFA website, general manager Quincy McCoy warned that this “would take the Bay Area’s only truly progressive radio station off the air.”
“Pacifica has gone through so many different crises and emergencies, people say ‘Oh well, they’ll muddle through it,’” said UC Santa Cruz history lecturer Matthew Lasar, author of the books “Uneasy Listening: Pacifica Radio’s Civil War” and “Radio 2.0: Uploading the First Broadcast Medium.”
“But I’m not sure that Pacifica can muddle through this one,” he said. “I think we are in a really really bad place.”
The nonprofit foundation’s board hopes to secure two loans to forestall a crisis. One $500,000 to $1 million loan has already been offered by Los Angeles supporters, Crosier said. A larger $3 million loan is also being sought to pay off the New York debt and other financial obligations.
While he could not disclose the terms of the loan, Pacifica’s financial travails makes it very difficult to secure low-cost loans, he said. And he worries about the burden of a repayment plan. “It is not a prime rate loan,” he said. “We don’t have good enough credit.”
Pacifica’s $8 million in debt approaches the equivalent of its $10.17 million in annual receipts. And its debt is more than double its entire assets of $3.97 million, according to the Guidestar database.
Crosier disagrees with the board’s strategy and is urging the board to file for voluntary bankruptcy, which would protect the foundation’s assets from creditors and give it time to restructure. The $1.8 judgment could be reduced and its rent increases capped. While this would be expensive, it would protect assets and buy time, he said.
He said he hopes to update the stations’ programming and web platforms so that Pacifica attracts younger listeners. He also hopes to find grants and other sources of revenue.
“A loan is likely to just trade one problem for more serious problems” because there is no good repayment plan, Crozier wrote in a letter to the Pacifica board of directors.
Pacifica’s financial plight infuriates its Bay Area station KPFA, which says it is well-supported by listeners. It has paid its bills and expanded its operations, it says.
Asserting that it’s a victim of another station’s mismanagement, KPFA says that the Pacifica board should have taken steps early on to avert the crisis.
“The current financial problem at Pacifica is not of our making. Things at KPFA have been going well,” KPFA said on its website. “Although KPFA is financially healthy … WBAI is raising very little money. ”
KPFA is in the strongest financial position of any Pacifica stations, Crozier agreed. But Pacifica stations have a long tradition of helping each other out, he added. For instance, when KPFA needed money several years ago, the Pacifica network supported it.
Pacifica has been incurring losses for the last several years and its business does not produce a cash surplus to service interest or debt repayment, according to a resolution that Mr. Crosier sent to the board last week.
The network’s historic roots are deep in America’s pacifist and anarchist traditions. In the ’50s, it gained a large and proud following after the federal government called readings by poets Allen Ginsberg and Lawrence Ferlinghetti “vulgar, obscene and in bad taste.”
During the McCarthy era of the 1960s, it was investigated for “subversion.” It trained volunteers to travel to the South for the civil rights movement, broadcast an interview with Marxist revolutionary Che Guevara shortly before his death, and took to the airwaves to oppose the Vietnam War and bombing of Iraq. When the Symbionese Liberation Army wanted to distribute its famed “Patty Hearst tapes,” it went to Pacifica.
Its music shows are eclectic and noncommercial, ranging from the Grateful Dead-focused “Dead to the World,” bluegrass and country with “America’s Back 40,” “Pig in a Pen” and “Panhandle Country,” and the Mississippi Delta-inspired “Blues by the Bay.”
But it has lost about half of its listeners since 2000. (KPFA has lost fewer, an estimated 20 percent.) And it struggles to compete for attention with the internet’s vast menu of progressive blogs, podcasts, Facebook and Twitter posts.
“Younger people don’t listen to radio as much,” Crosier said. “We need to provide more web streams and other formats so they listen to what they want and when they want it.”
Pacifica hasn’t funded its employee retirement plan since 2015, and now owes the plan $750,000. It is delinquent in its audits, both for financial statements and retirement plans. Because book-keeping and reporting is deficient, it hasn’t produced a balance sheet in two years, he wrote.
A few stations do not have working capital to sustain their operations or make critical payments in a timely manner. Some do not have qualified accounting staff, he wrote.
Meanwhile, its sprawling, disorganized, opinionated and ideological governing structure — “something akin to the late Ottoman Empire of public broadcasting” — led to uncontrolled spending costs, Masar said.
It’s saddled with an across-the-network board of over 120 individuals, as well as squabbling community advisory boards. Even listeners have voting rights. Meanwhile, there’s been a lot of turnover in top leadership, so it struggles to make clear and quick decisions, he said.
“It’s drowning in governance,” Masar said.
The most recent crisis is due to a recent New York State Supreme Court ruling against the nonprofit in a lawsuit brought by Empire State Building LLC over nonpayment. The court awarded $1.8 million in damages to the company.
After the terrorist attack on the World Trade Center in 2001, rents on the Empire State Building transmission antennas soared because so many of New York City’s antennas were atop the Twin Towers. WBAI pays $60,000 a month — about $700,000 a year — for a signal. That’s more than half the station’s total annual budget.
But it’s locked into its lease for another three years. “That’s unsustainable,” Crozier said.
Unable to pay even the minimum amount for the last several months, he worries that it can’t pay the $2 million that it will accrue over the next three years. Yet default in these payments will bring Pacifica to court again — in even worse shape.
“There is a long list where we urgently need financial resources,” Crosier said, “to barely keep our head above water.”
KPFA tells its story:
To hear a KPFA podcast about its plight, go to https://kpfa.org/episode/pacificas-financial-crisis-kpfa/.
KPFA public meeting:
Saturday at 11 a.m. at the North Berkeley Senior Center, 1901 Hearst Ave., Berkeley.