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August 10, 2005
Air America: Piquant Media Buyout A Shell Game?

Piquant Media owns Air America Radio and has repeatedly said during the financial scandal, still unreported by the Exempt Media, that it has no legal obligations for the debts incurred by former ownership, Progress Media and specifically Evan Cohen. Al Franken repeated this during his radio show two days ago, claiming that Piquant only agreed to reimburse Gloria Wise Boys & Girls Clubs out of a sense of moral obligation.

However, that fails to tell the entire truth about the ownership of Piquant, its predecessor Progress Media, or the slim differences between previous and current management at Air America Radio.

Air America Radio did not start out with Evan Cohen, as Piquant and Franken convenienly suggest. It started out with a man named Sheldon Drobny, a wealthy Chicago investor who wanted to build a leftist media empire and settled on radio to start it. Front Page Magazine told the story at the netlet's inception:

The idea to create a liberal radio network as if National Public Radio, ABC, NBC, CBS and the other left-leaning networks were insufficient came from Chicago businessman Sheldon Drobny, who said he was willing to invest $10 million in the venture. In 2003 he created AnShell Media as home for this enterprise and hired Atlanta broadcast veteran Jon Sinton as its chief executive officer.

Drobny and his wife Anita started a holding company called AnShell to manage the effort. However, Sheldon Drobny ran into a buzzsaw when National Review's Byron York reported on Drobny's rehashing of Lyndon LaRouche conspiracies on his own website, Drobny compared George Bush to Adolf Hitler on a number of occasions and regurgitated LaRouche's hallucinations of ties between the Bush family and German Nazis.

As a result of the fallout from York's article, Drobny sold most of his interest in AnShell later that same year to a new consortium comprised of himself and his wife, Evan Cohen, Rex Sorenson, and Cohen's college classmate David Goodfriend, who brokered the initial meetings between the Drobnys and Cohen. If David Goodfriend sounds familiar, it may be because Goodfriend served in the Clinton White House as an assistant press secretary. The new holding company was christened Progress Media, and its president remained Jon Sinton.

In 2004, the landscape changed again. By June, Progress had run out of cash after less than two months on the air and had lost airplay in Los Angeles and Chicago due to its inability to pay its bills. In a series of tense meetings, the other principles in Progress decided to force out Evan Cohen and Rex Sorenson, who had allegedly misled the others on the financial state of the enterprise.

Now here's where the Piquant derives the idea of "previous ownership".

The Drobnys and other investors forced Cohen and Sorenson to give up their voting stock and depart. They then formed Piquant Media, which the Chicago Tribune reported in detail on June 19, 2004 (via Wizbang):

The investors in Air America Radio, the liberal talk radio network that launched in March, are restructuring the company to free it of any obligations incurred by ousted chairman and founding investor Evan Cohen. The investors, including Highland Park couple Sheldon and Anita Drobny and Air America Chief Executive Doug Kreeger, formed a new corporation, Piquant LLC. They plan to use the new entity to purchase the assets of Air America from Progress Media and RadioFree America, two related companies that own and operate the network.

"We have an asset purchase agreement we've entered into," said Norman Wain, another investor. "Progress Media and RadioFree America are selling all of their assets to Piquant."

Anita Drobny will be chairwoman of the board of the new company, according to people familiar with the deal. The purpose of the transaction is twofold: to eliminate Cohen and his partner Rex Sorensen's shares in the company, and to insulate the cash-strapped network from any debt or other obligation that Cohen may have incurred.

Note that the ownership of Piquant LLC remains essentially the same as Progress, just without Cohen or Sorenson. The Drobnys still remain the big backers and now control the board; Jon Sinton remains with the company as president of programming; Doug Kreeger remains with the company as an investor. The notion that the asset sale changed management and ownership significantly is a mirage, a smokescreen to avoid Progress' debt and obligations and to allow Air America to free itself of the taint of Cohen's alleged deeds.

UPDATE: Macho Nachos, who frequently links here, has already posted on this topic a number of times. He provides his links here, along with a healthy venting of steam that I hadn't noticed it yet. I don't catch them all, but I try to set the record straight when I miss.

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Posted by Ed Morrissey at August 10, 2005 7:07 AM

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