Breach of Faith

Page 5 of 8

Then in early 1991, say Milian and his son, Barnett officials paid a visit to the station -- to tell them La Mogolla was "unacceptable" to Arboleya, who was also a CANF member. Milian says he "told them to go to hell."

A few weeks after the alleged visit, the younger Milian says, he got a call from IAC Advertising Group, Barnett's ad agency, which had been running about $1500 worth of spots per month on WWFE. "He said their client Barnett Bank had to be off the air today," Milian III recounts. "We complied. I remember thinking, How small-minded."

On April 9 came what the Milians refer to as "the second bomb": a letter from Barnett giving them 21 days to pay off the $500,000 credit line. The Milians assert they had been making their payments on time; as proof they submit a statement showing regular principal and interest payments Barnett withdrew from their account. In any event, under the terms of the loan, the bank was not obligated to give a reason for calling in the line of credit. Worse for the Milians, a default on paying off the balance would cause a default on the term loan as well.

"The ironic thing is we were just starting to break even and our ratings were going up," says Emilio III.

Arbitron surveys indicate the station steadily improved in ratings from late 1990 until reaching a peak audience share in late 1991, after the bankruptcy. But no Arbitron numbers appear for WWFE in the service's ratings for the first quarter of 1991. That was when Arbitron "delisted" WWFE -- deleting the targeted station from its ratings report for that quarter -- an extreme step the service hadn't taken in twenty years. The reason: The ratings service determined that Radio Fe had engaged in "rating distortion" by instructing listeners to load up any radio surveys they received with WWFE entries. The Milians say they were merely trying to respond to other stations' ratings-boosting practices of awarding prizes, which they couldn't afford.

WWFE tried to negotiate a 90-day extension to come up with the $500,000, but Barnett wouldn't budge, and in May 1991 the bank sued to foreclose. Milian filed for Chapter 11 protection in August. Still trying to put together enough money to stave off Chapter 7, he requested and received several extensions from Judge Weaver.

The station's financial woes affected all its dealings: Some original investors filed suit to recoup their money; the owner of the land where the broadcast towers stood sought a $276,000 mortgage payment; the contractors who had won the $14,000 judgment went back to court accusing station management of withholding payments. Days before the Milians filed for Chapter 11, Dade Circuit Judge Eugene Fierro ordered WWFE to pay $5000 to a local food bank as punitive damages in the case and to pay an additional $6300 to the construction company. Meanwhile, Barnett made sure Weaver ordered "adequate protection" while WWFE was in Chapter 11 A meaning the bank continued to withdraw interest payments from the station's funds.

"The bank always holds all the cards technically," says attorney Robert Hewitt. "You get to the point where you ask, Is it nice for the bank to do this? But anybody who thinks banks are nice these days is crazy. If this is a horror story, I could give you a lot of other horror stories where all of a sudden something like this happens."

In April 1992 Judge Weaver appointed a trustee, Jeanette Tavormina, to run the business and to speed up the reorganization process. Recalls Hewitt, who represented Tavormina: "I walk into the case not knowing a damn thing about it and we wind up in the middle of the Cuban revolution. Here we are going to courtrooms all crowded with passionate people, and I'm saying, Get me outta this. As far as who's right or wrong, I wouldn't touch that with a ten-foot pole."

Over Barnett's protests, the judge continued to grant extensions so the Milians could try to come up with the money to pay off creditors. "I've never seen a bank fight so hard to avoid being paid off," WWFE's bankruptcy attorney Chad Pugatch said in court. That summer Milian spoke of taking Radio Fe public and asked listeners to contribute money. Milian now says a total of $411,000 was raised, which he later returned to the donors.

Tavormina received at least half a dozen unsolicited offers to buy Radio Fe. The owners of both Radio Mambi and WQBA made written proposals. The Catholic Archdiocese wanted to buy. The lawyer for a corporation called Metrovision Broadcasting made an offer A and submitted a contract along with it. One reason for all the attention: A recent change in FCC regulations had made it permissible for a single entity to own up to two AM and two FM stations in a single market.

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Kathy Glasgow
Contact: Kathy Glasgow