Lazio Makes Industry Waves

2000 Campaign Could Affect Radio Access

If a fundraiser held June 29 at Le Cirque is any indication, the broadcasting industry loves Rick Lazio. Indeed, the media bigs who showed up that night raised $125,000 for Lazio's Senate campaign, according to host Bill O'Shaughnessy, who owns radio stations WVOX-AM and WRTN-FM in Westchester.

Among those who shelled out $1000 each to, as O'Shaughnessy's invitation read, "spend some good, quality, one-on-one time" with Lazio were NBC chairman Bob Wright, former ABC Radio president Ed McLaughlin, and New York State Broadcasters Association president Joe Reilly.

It wasn't old media's first public display of affection for Lazio. In May, just after he declared his candidacy, National Association of Broadcasters president Jim May beseeched a group of lobbyists to help Lazio "post some good, strong numbers" by June 30, the Federal Election Commission's next cutoff for financial disclosure statements.

No sooner had June 30 rolled around than Lazio's campaign announced it had raised about $4.5 million in three months. But the broadcasters' largesse began as long ago as last August, when it was reported the Television and Radio PAC had dropped $10,000 in Lazio's Senate piggy bank. (TARPAC makes contributions for the NAB.)

So why do broadcasters love Lazio? It doesn't hurt that he's a member of the House committee that oversees broadcasting issues, or that he recently voted for a bill that would stop the Federal Communications Commission from issuing hundreds of licenses for low-power radio stations to community groups nationwide. For six months, the NAB has waged a very public war on the FCC, warning that the agency's antidote to media consolidation will create a "sea of interference." In response, FCC chair William Kennard has accused the NAB of using the interference argument as a "smoke screen" to hide its members' true motive, which is to "protect their markets."

O'Shaughnessy, a self-professed "Rockefeller Republican," says his support for Lazio has "nothing to do with" the candidate's stance on low-power radio. He simply finds the man "very attractive" and "very sincere," whereas he detects "no realness" in Democratic candidate Hillary Clinton.

Obviously, being anti-low-power radio isn't the only reason one might endorse Lazio. But it's no surprise that O'Shaughnessy, an NAB board member, brands the FCC plan "social engineering" that, if enacted, would have everyone wanting a piece of the radio spectrum, from the "Catholic Church" and "Guy Molinari" to "gays and lesbians" and "my Jewish friend next door."

Lazio made his position known in April, when the House passed a bill that would cut the potential number of low-power licenses by 80 percent. The same week the NAB was having its annual conference, Lazio told the House the anti-FCC bill was the only way to "maintain the integrity" of the radio spectrum. He couldn't make the New York State Broadcasters Association annual shindig in June, but he called in by speakerphone to warn against the threat of competition posed by low-power radio.

Pete triDish, a community radio activist, is skeptical of Lazio's motive for taking that position. "From a technical perspective," says triDish, "it's apparent that he's bought the NAB line—hook, line, and sinker."

The NYSBA says it has not given money to Lazio's campaign, but the NAB would not say one way or another. Spokespeople for Lazio and Hillary Clinton did not respond to a request for comment.

Next fall, the battle will likely be played out in the Senate, where a bill introduced by Judd Gregg would kill the FCC initiative altogether, while another, sponsored by superpopular John McCain, would green-light the proposal, while giving full-power stations the right to sue low-power stations for interference. Despite its lawyerly compromise, the McCain bill represents the best hope for low-power advocates, a strange coalition that includes the U.S. Catholic Conference, the Consumers Union, Bonnie Raitt, the Indigo Girls, Joan Jett, and Sonic Youth.

At a press conference announcing the McCain bill June 8, Michigan Democrat David Bonior declared the only opponents of low-power radio to be "media conglomerates and their high-powered lobbyists." But the media moguls aren't just banking on Lazio. This debate could be moot in November if front-runner George Bush wins, whereupon he could either veto the McCain bill or name a new FCC chairman. Then it's good night, community radio.


Pawning Salon?

In the June 20 Press Clips, I wrote that the "grim reaper" had recently visited Saloneditor in chief David Talbot. But while Talbot had just laid off 13 staffers to remedy a drop in projected revenues, the reports of Salon's demise were greatly exaggerated. Actually, the site has enough money to last until June 2001, according to a Securities and Exchange Commission form filed by Salonon June 29. The form, known as a 10-K, reflects Salon's financial performance in its FY 2000, which ended March 31.

It's true, as Salonexecs like to say, that the site enjoyed "record" revenues of $8 million last year, a 174 percent increase over FY 1999. But they've been less forthcoming about how much it costs to maintain the award-winning site. Last year, according to the 10-K, operating expenses came to a record $30.9 million, including some pesky "content" and "non-cash" expenses that Salonexecs prefer to leave out. Having spent about $4 for every dollar that came in, the company is now $46 million in debt and has about $18 million cash on hand.

Salonhas lots to boast about—its unique users tripled last year, and as of March 30, it had more than 360 advertisers and advertising sponsors. And the spinoffs: This fall, Viking/Penguin and Random House/Villard will publish new Salonbooks, and this winter, Bravo Networks will debut Salon TV, a weekly series.

Therein lies a subplot. As part of the December 1999 TV deal, Salonissued more than 1 million shares of stock to Bravo parent company Rainbow Media, which, in turn, promised to put $11.8 million worth of Salonadvertising on TV.

But having sold a 10 percent equity stake, Salonnow finds itself in a quandary. The 10-K cites a litany of risk factors, chief among them the following catch-22: They may have to sell more equity to survive, but doing so might dilute shareholders' control and/or kill off future financing altogether.

The bitter end is signaled on page 32. After a passing reference to "the uncertain nature of the financial markets," the 10-K says, "If we raise additional capital by issuing equity or convertible debt securities, the percentage ownership of our then-current stockholders will be reduced. . . . Additionally, we may not be able to obtain additional financing on favorable terms, or at all."

All that great content for nothing? Christopher Byron recently predicted in The New York Observerthat Salonwill be "stone broke" in 15 months. "This is the New Paradigm?" he asked rhetorically. "If so, you can have it."

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