BAD BLOOD

Blazingly Mad Glenn Beck Sues His Fired CEO Christopher Balfe

The suit—in which Beck’s privately held company, Mercury Radio Arts, is the plaintiff and seeks a jury trial—alleges fraud, breach of contract, dereliction of duty, and various other misdeeds.

Lloyd Grove

LLOYD GROVE

08.01.16 5:45 PM ET

In what one former associate of Glenn Beck described as “the last gasp of a dying empire,” the volatile right-wing radio, streaming video, and cable television personality is suing his longtime former chief executive, Christopher Balfe, whom Beck fired in December 2014.

The suit—in which Beck’s privately held company, Mercury Radio Arts, is the plaintiff and seeks a jury trial—alleges fraud, breach of contract, dereliction of duty, and various other misdeeds.

“I feel terrible for Glenn and I hope he finds the help that he needs,” Balfe, who worked closely with Beck for nearly two decades before their split, said Monday in a statement to The Daily Beast.

“The lawsuit speaks for itself,” said a spokesman for Beck—the only comment provided.

Beck, meanwhile, told listeners and viewers Monday of his syndicated radio program, which is video-streamed on his paid-subscription site TheBlaze.com: “I am—[Beck’s wife] Tania and I—are both really saddened by this and saddened that it has come to this.”

The 16-page complaint was filed quietly Friday in Dallas County, Texas, District Court, and apparently leaked Sunday night as an “exclusive” to the Lawnewz.com website, with another account splashed on GlennBeck.com.

“There are articles that have come out today on apparently lawsuit websites. I’m not going to give them publicity,” Beck told his fans. “And you’ll see more articles, I would assume, over the next few days. It’s an ongoing legal matter. And you’re not going to hear me talking much about it.”

Then, despite his insistence on not giving publicity to stories about the lawsuit, Beck recited the web addresses of the articles in question.

He is, of course, well known for changing his mind—campaigning hard during the Republican primaries for former presidential candidate Ted Cruz, for instance, mere months after announcing with spectacular fanfare that he was leaving politics for good.

Beck’s lawsuit is sharply at odds with previous expressions of gratitude he made three months after Balfe, along with fellow ex-Beck executive Joel Cheatwood, left Mercury Radio Arts, where Balfe was chief operating officer, and its subsidiary The Blaze, where Balfe was CEO.

“Chris and Joel helped me build one of the industry’s first truly independent multi-media companies,” Beck declared in March 2015, after Balfe and Cheatwood, who had steered Beck’s cable television career at HLN and Fox News, announced their formation of a new digital media company, Red Seat Ventures, and took several more top Beck executives with them. “I am sad to see them go but they left our company with an incredible foundation.”

Balfe retained minority ownership in The Blaze after he left, according to the lawsuit, and two sources familiar with the arrangement told The Daily Beast that his deferred compensation agreement featured monthly payments to satisfy around a million dollars that Balfe is owed under the agreement for both his ownership stake and his pro-rated share of company revenues.

But in recent weeks, say these sources, The Blaze has experienced cash-flow problems and has been having trouble paying vendors, while the website’s online traffic has plunged from around 26 million monthly global unique visitors in January 2015, the month after Balfe was dismissed, to around 10 million currently, according to the measuring service Quantcast.

Several more key executives have departed in the past year, along with Beck’s longtime television agent, George Hiltzik, as well George’s son Matthew Hiltzik, who recently resigned as the outside publicist for Beck and his companies; New York PR maven Davidson Goldin now has that account.

In another blow to The Blaze’s financial stability, the cable television distributor Cablevision recently stopped carrying Beck’s programming—representing an annual loss to The Blaze estimated at more than $2 million in subscriber fees and advertising sales, according to the sources.

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These sources described Beck’s lawsuit as a pre-emptive strike.

They said that in June, after failing to receive his regular check, Balfe notified Beck’s company that if he wasn’t paid quickly, he would be exploring his options to obtain the money due him.

This none-too-veiled threat prompted Beck to file his own lawsuit claiming, instead, that Balfe actually owes him money—a portion of the $13 million Beck claims Balfe was paid as an executive between 2009 and 2014.

“This is a shockingly excessive amount that far exceeds appropriate compensation for companies of Mercury and TheBlaze’s size and financial performance,” the lawsuit contends.

But back in March of last year, when Balfe and Cheatwood were launching Red Seat Ventures, the 52-year-old Beck gushed: “I am truly grateful that we remain friends and am very excited to see what they do next.”

Their friendship didn’t survive, however, after Beck hired a little-known tech entrepreneur named Jonathan Schreiber, a diehard “superfan” of Beck’s syndicated radio program, who arrived in September 2014 from Israel via Miami, networked his way into Beck’s inner circle, gained the boss’s confidence and began accumulating power in the operations of both Mercury Radio Arts and The Blaze.

According to company employees, as The Daily Beast reported last February, Beck seemed to have become infatuated with Schreiber, who first showed up at The Blaze’s now-defunct Manhattan studios, and later had been regularly spotted in Beck’s expansive, glass-walled office at the rambling company headquarters in the Dallas suburb of Las Colinas—sometimes hugging his idol after a heart-to-heart.

Schreiber’s Orthodox Judaism apparently was in sync with Beck’s ardent religiosity as a Mormon convert, although staffers said Schreiber—who became president of Beck’s parent company—had an off-putting, arrogant manner with underlings, who gave him the nickname “Voldemort.”

Back in February, as Beck increasingly complained about Balfe and others who had helped orchestrate his career, Schreiber defended his own leadership to The Daily Beast.

“Glenn Beck, brilliant media mogul, realized he was unhappy in the direction his company was going so he brought in new blood,” he said in an email. “The goal being to put the company in the right direction. Through that process we separated with many people. Some will be missed, some less so.”

He added: “I am very proud of my work here, I am very proud of the culture we have created AND PROUD OF [his capital letters] the people WE have been able to bring in to the fold… No one likes to admit that they are not here because of themselves, it must be Voldemort.”

http://www.thedailybeast.com/articles/2016/08/01/blazingly-mad-glenn-beck-sues-his-fired-ceo-christopher-balfe.html

Glenn Beck’s Farewell Address to His 40 Laid-Off Troops… from His Pretend Oval Office

 

In a special video posted to his website today, Glenn Beck addressed news reports of the latest mass layoffs at his troubled media empire.

According to a report yesterday in the Daily Beast, Beck laid off 40 employees of his Blaze media organization “in order to satisfy the requirements of a multimillion-dollar bank loan taken out recently to keep Beck’s revenue-challenged enterprise running.”

As the Daily Beast noted, “This latest round of mass firings comes as no surprise to insiders at The Blaze and Mercury Radio Arts, which laid off dozens of employees last May on a day referred to internally as ‘Black Monday,’ around the same time that Beck was purchasing a private jetliner and a $200,000 Maybach sedan.”

In the video released today, Beck is seen seated at a replica of the Resolute desk in his mock Oval Office set delivering the opening monologue of his radio show.

Below is the transcript of his remarks.

***

I wanted to start there today because there’s a story that maybe you have read that came out yesterday that is talking about how yesterday my company, TheBlaze, laid off 40 people. And my media empire is crumbling. And part of it is because I’m traveling around with Ted Cruz.

Well, I want you to know, yes, I’ve lost a lot of money traveling around with Ted Cruz. I’ve lost about half a million dollars. That’s my choice. I believe in something.

Did that cause the 40 people to lose their job? No.

I want to talk to you today because we’re in a community together, and I trust you. And I tried to be trustworthy. And when I make a mistake, I own up to it. And I’m a trusting guy.

I think anybody on the show will tell you my biggest problem is I trust everybody, until they prove otherwise. And I try to live my life in a transparent way. And I try to surround myself with others that I believe are trustworthy.

And then I went on to build my own company with an authentic voice, a trustworthy company. And one of my main principles — and you heard me saying Isaiah it a million times: We take on no debt. Root ourselves in principles and people. Live within our own means.

And I trusted the people that ran my company, that they wanted the same things. And in the beginning, maybe they did want the same things. But a couple of years ago, I realized there were problems in my own company, and that even though the managers were all saying the right things to me, those things were never getting done. And you know this to be true. Because I would talk about things that we were going to do on TheBlaze and everything else, and then they never seemed to materialize. And I was losing credibility with you, but behind the scenes, I was a holy terror for about a year because I couldn’t find out what was going on.

Without saying anything bad about anybody because we just have different principles, the people I had moved down to Dallas and the rest was in New York and Los Angeles and Washington, DC — and we were working now towards being, I guess, a normal, status quo kind of media company, a big media company, and I didn’t ever want that.

But because our team was split from Dallas, Los Angeles — I think we had people at one time in Chicago, Washington, and New York — I didn’t know who really got the vision and who didn’t, who got it and who didn’t.

It was almost two years ago when we had a museum here at the studios in Dallas. And we invited you to come and just see the museum. And I bet there were 10,000 people here that came through — and I loved it. And everybody kept telling me, go home. Go home. Go home. And I wouldn’t go home. None of us did. Nobody on the show went home.

We were there and we spent that whole weekend with you because we love you. We love you.

But I noticed one thing about my company. Not one single person from the management team actually showed up that entire weekend. And I realized, they didn’t love the audience like I did. They weren’t connecting to the message like you did and I did. I’m not sure they were part of the culture of the principles. And I knew I had to get a hold of my company again, and that would mean making really hard choices.

First one was, are you going to stick to your principles? You going to be honest with yourself? Stand for what you believe in, or are you going to give into the status quo and go along to get along? Because these people were my friends, they were my partners, and I don’t know at the time, I thought maybe they were right. But I knew they weren’t in my gut.

And my gut and my spirit said, “Stick by what you know, even if it’s hard and even in the end if you lose.”

I had to start firing people, people that I counted as my friends, best friends, partners. And the process that I began was the hardest process of my life. Yeah, almost as hard as picking myself up off of that carpet when I was facing suicide, that carpet that smelled like soup. But this time I had something I didn’t have before: I had you. I knew you existed. I knew that you believed in the same principles I believe and that we — no, that I had made a promise to you. Our lives, our fortunes, and our sacred honor.

And so I kept going. This has been a really hard five years for me, but the last 18 months have been unbelievable. One thing I had to do was get everyone in my house under one roof so I could look everyone in the eye. Culture matters at a company.

I stopped telling you about the things that were coming on TheBlaze. It’s called the Phoenix project. We’ve been working on it now for about nine months. I haven’t talked to you about it, nor will I until we launch it. I’m tired of telling you the things that I think we’re going to do. I bet you are too. We’re just going to do them. Because I failed you too many times.

The reason the articles like the one that came out yesterday are coming out, part of it is political. Part of it is because Frank Sinatra was right, some people get a kick out of stomping on your dreams. They really do.

Some is, I guess, it’s news when somebody loses their job. Unfortunately, my media company isn’t the only place in America laying people off. My media company is not the only one that’s looking at their balance sheet and saying, “We can’t go into debt, or we’re going to lose all of the jobs.”

They said in this article yesterday — this has been claimed before that my business is failing. I will tell you, two years ago, it was. It was absolutely on fire. Because when I started to go into the books — I was a bad steward. And when I started going into the books and see what had been done to my company that didn’t ever take on debt, I was first told that we were, I think, $4 million in debt. And then it became $7 million in debt. And then when I got the final accounting, 18 months ago, my company that doesn’t take on debt was $13 million in debt.

If I’m going to tell you you shouldn’t have debt, how could I have a company that was $13 million in the hole? I made really hard decisions. And in 18 months, my company that is dying and struggling paid our debt down from 13 million to two.

A couple of months ago, we had a great sponsor of ours, about a 7-million-dollar-a-year sponsor go broke. I feel for that company because everybody that worked for that company, much larger than mine, went out of business. And they left us with a lot of debt.

You see, economies, it’s — it’s like Jenga. One person pulls one big thing out, and the whole thing could fall. But it definitely weakens. And the more pieces of stress or the more pieces that come out of Jenga, the weaker your house becomes. Somebody — Delco goes out of business because GM is no longer making their cars in Ohio, and so that hurts Delco. And then that hurts the grocery store down the street and the restaurants in the town.

We’re in this together. I’m not going to tell you that I’m not running a fail company because the proof is in the pudding. I will just tell you the old managers got us into $13 million of debt. And in less than 18 months, we’ve shaved that off by over $10 million. That doesn’t seem like a failing business. That seems like a business that is thriving and is doing its best to set its principles right.

But I want you to know, when you read TheBlaze, because I’m not happy with it — and I’ve quietly said that recently, over the last year or so. Not happy with it. But it’s changing. We just hired one of the guys who put together American Idol, Oreo cookies. We just hired a guy who was one of the main guys at Good Morning America and CNN. We just hired an HR person from Viacom. I’m rebuild