February 6, 2002: Pacifica's old administration left the network saddled with $4.8 million in debt, more than anyone had expected, according to auditors who have examined the books since dissidents regained control of the network last December.
Interim executive director Dan Coughlin made the figures public today (Feb. 6) in an interview with Kris Welch on KPFA's Living Room broadcast. Coughlin said that the full report will be posted on the Pacifica website (http://www.pacifica.org) within a day or two.
"It's the worst financial situation we have ever faced," Coughlin said. "Some of the conclusions [reached by the auditors] are shocking. We will have to hunker down, listeners and staff, because the crisis is deep."
A new budget for the current fiscal year projects a further deficit of $1 million.
Coughlin and KPFA general manager Jim Bennett, who also appeared on the show, said that the network would conduct national fundraising efforts attached to individual station drives. KPFA will start a new drive on Feb. 13.
Coughlin also stated that:
o The new Pacifica regime is working to resolve differences peacefully with station staffs upset over the new direction the network is taking. Except for the general managers who have been replaced at KPFK, KPFT, WPFW and WBAI, "we have not fired or banned one person, and we are trying to respect everyone's rights," he said. "We are going to resolve our differences peacefully."
o A new general manager, Duane Bradley, has been hired for KPFT in Houston, in a process that was coordinated by the Houston Local Advisory Board.
o He doubts that members of the former Pacifica National Board majority will be successful in challenging Pacifica's licenses over changes being made by the new board.
o He strongly supports moving the national office of Pacifica back to Berkeley. It was taken to Washington by former executive director Lynn Chadwick after the KPFA protests against the firing of Nicole Sawaya erupted three years ago. " I think it's imperative that the national office move back to Berkeley, its historic home, where Pacifica was born," Coughlin said.
o No decision has been made on the "hot button" issue of Pacifica Network News and the former PNN reporters who have reorganized as the Free Speech Radio Network, mostly because of unresolved financial issues.
o Pacifica is trying to figure out a "bare bones" way of bringing Larry Bensky back to national programming. Bensky now is heard on Sunday Salon over KPFA, and is paid by KPFA.
o Pacifica may have to cut back on staff and salaries. "We have to make tough decisions around the network to restore financial stability," he said. "That means cutbacks. We are working with staff and unions to identify where we can pull back and tighten our belts." He has cut his own salary 25 percent, Coughlin said.
The financial audit was conducted by a team of accountants paid by an anonymous donor to go over the Pacifica books. They found, Coughlin said, that where Pacifica had a surplus of $600,000 at the close of its fiscal year on Sept. 30, 2000, the network was $3.5 million in debt a year later, on Sept. 30, 2001. Further, he said, another $1.8 million in debt had been added by Dec. 31, 2001, just after the new interim board took power.
"Our main task is to stop the financial hemorrhaging," Coughlin said. There are three main sources of debt:
o Around $500,000 for a rash of lavish severance packages handed out by the old administration to themselves before leaving office.
o $2.5 million in bills from law firms, public relations firms, and security companies hired over the past year and a half. These bills include $410,000 to Epstein, Becker and Green, the law firm that employs former Pacifica director John Murdock, in addition to $750,000 already paid to the firm; $462,000 to Williams and Connolly, another Beltway law firm; $303,000 to Mitchell, Silberberg and Knupp in Los Angeles, in addition to $250,000 already paid; $214,000 to Decision Strategies, a "litigation intelligence" firm in Washington; $250,000 to the legal firm of Fulbright and Jaworski; and $284,000 to Westhill Partners, a public relations firm.
o $2 million in bills for general operations, such as telephones and electricity, that had not been paid because the money went to lawyers and PR firms.
Coughlin said that Pacifica is not paying the severance packages, which it considers improper and possibly illegal. It is also considering challenges to some of the other bills, such as the ones from EB&G.
Some of the other cases, he said bordered on misfeasance. In one case, he said, he had been called by a car rental company reporting that a car that had been rented by a Pacifica executive who had left last year was still being charged to a Pacifica credit card. The card had been shut down and the police have been notified to find the car.
"The national office created these problems," Coughlin said. "We have to 'fence off' this old debt and look at the needs of the local stations first."
Among the most pressing of those needs, he said, was the installation of a new transmitter for KPFK, which has been limping along on 30 percent of its rated power for months, the money already raised and earmarked for the transmitter replacement having been drained off by the old administration and spent elsewhere.
Pacifica took the money for the transmitter from a federal agency, Coughlin said. "We have to finish the project or the FCC [Federal Communications Commission] will get involved." The FCC could put a "hold" on the KPFK license, Coughlin said, because the station is not reaching the audience it is licensed for. That would not take the station off the air, but would give outsiders a say in how it is run.
About $100,000 is needed to complete the transmitter project, Coughlin said.
Coughlin devoted considerable time to discussing the new regime's efforts to restore stability to local stations that had been shaken by the network's sudden change in direction.
"We are trying to make changes that are needed in the net as fast as we can. We understand pressures we are getting from all across country," he said.
"We have new leadership - we need a decisive break with the past policies that failed Pacifica over the past three years. New general managers are in place working hard to rebuild the network. In addition, we managed to reintegrate the old fired and banned staff at WBAI - more than two dozen staff were fired and banned last year arbitrarily. We are trying to restore that station to stability," he said.
"The new manager at WBAI is the old manager - Valerie Van Isler. She and program director Bernard White have both been reinstated." Van Isler, he said, would be evaluated according to the iPNB's resolution on WBAI. "We'll move ahead with respect for her and others," Coughlin said.
Houston station manager Garland Ganter - who presided over the shutdown of KPFA in 19998 - and six others at KPFT have stepped aside voluntarily, Coughlin said. Some of these are looking for spots elsewhere in Pacifica.
In Washington, he said, there was "consternation in the listener community" about the direction the station had been taking. The new interim general manager, Tony Regusters, is well known in the capital and has been welcomed by the staff. Regusters has worked as a producer with Bensky and Amy Goodman, and is experienced in television and radio. He is a former press secretary to Rep. Maxine Waters (D-L.A.).
In both Houston and Washington, he said, the big issues concern what kind of public affairs programs will be broadcast.
"We are letting local communities organize and develop their own programming; there will be local control in terms of finances and local policy decisions," Coughlin said.
In Los Angeles, where Steven Starr of Indy Media has been named general manager of KPFK, staff and community are sharply divided, Coughlin said. "The station's paid staff is divided from the LAB and from the community that has supported the station for decades. We are working with station staff to reintroduce the LAB into the life of station. Many staff sealed themselves off from the LAB, because the LAB and the local community were launching lawsuits," Coughlin said.
"We are trying to bring about reconciliation and healing. The LAB's - which will be elected - will be directly involved in station daily life. Lot of critics of reform come from station staff; the KPFK staff was very critical - it's a difficult situation there. We are trying to be inclusive and participatory - no one at KPFK has been fired, there is no bloodbath, we are working with staff."
Mark Schubb, the former station manager, and Marc Cooper, KPFK programmer and producer of Radio Nation for the Nation magazine, "have been vociferous advocates of their position," Coughlin said. "They have caused controversy. We are working with Cooper and Schubb -- Schubb has been replaced but is still in the Pacifica system. We are looking to resolve our differences peacefully."
The need for general belt-tightening makes it difficult to resolve issues such as returning Bensky to national programming, Coughlin said. "We have to figure out a way to maintain national programming visibility. Right now, Bensky is being employed by KPFA to do Salon, with the idea that with that as a base he can volunteer to do some national programming and be an analyst on hearings."
"We have to give back to Larry after him hanging in there," Bennett added. "There is a commitment from national to use Larry's great skills nationally, with help from KPFK."
Bennett also indicated that KPFK might be able to assist other , weaker stations in the network during the crisis. "KPFA can help stations along, because we have more control over our finances - we can pay our bills and help rest of network," Bennett said.
Although Pacifica is deeply in debt, it is not penniless, Coughlin said.
"If we sold all our assets except the licenses, we would have a $1 million surplus," he said.
Although he professed to be unworried about possible legal challenges from disgruntled members of the new board minority, Coughlin warned that the network still faces serious political challenges.
Both current iPNB member James Ferguson, in a broadcast on NPR, and former board member John Murdock, quoted in Newsday, have threatened challenges to Pacifica licenses because of the changes being made by Coughlin and the new board
"They are free to do whatever they want," Coughlin said. "I don't think they will be particularly successful. They can sue colleagues on the board, mount challenges in any way they see fit. I don't know if this is just big talk or if they will really take any action."
However, he said, "We all have to remember that there are serious forces opposed to restoring Pacifica to the community. This is not a game we are playing. There are five key licenses [at stake]" as the country struggles with the aftermath of the World Trade Center bombings and the Afghanistan war. "We have to understand we will be challenged as we try to democratize net and restore to original mission."