On the Friday that The McClatchy Company, one of the country’s biggest news operations, reported a staggering $37.4 million loss for the quarter, The Midnight Sun, an Anchorage blog, publicly revealed that the struggling Alaska newspaper McClatchy sold to Alice Rogoff for $34 million only three years ago is up for sale.
“The long-running rumors and talk about Alaska’s biggest six-day newspaper’s troubled finances appear to be coming to a head, and owner Alice Rogoff could be near to selling the Alaska Dispatch News,” the Sun said in a wholly unattributed report. “Possibly sooner than most people expect, but there’s also doubt about the financial stability of the potential buyer—whoever it is—because whoever takes over the ADN will also take over the loans used to buy the paper from McClatchy. If things work out, expect things to move quickly.”
Margy Johnson, the Dispatch’s executive vice-president, did not return a call asking for comment on Monday.
Rogoff, who was in the tiny community of Halibut Cove for the July 16 birthday of Commissioner of Fish and Game Sam Cotten, was heard to tell some that a sale was then “imminent,” according to sources there.
The Cove has become Rogoff’s second home this summer.
At a July 11 court hearing on a lawsuit AlaskaDispatch.com co-founder Tony Hopfinger has filed against Rogoff, a hearing neither of the main players attended, it was revealed the Alaska Dispatch News was $4 million in the red only a year after Rogoff purchased the then-Anchorage Daily News from McClatchy and changed the name.
Sources familiar with the newspaper’s finances say losses have continued at the rate of $3 to $4 million per year since, and Rogoff has been actively shopping the debt-laden newspaper for months.
She herself appears to personally owe Hopfinger close to $1 million. She signed an agreement written on a restaurant napkin saying she’d pay him $100,000 per year for 10 years. She made one payment and stopped.
Builders by nature, Hopfinger and then-wife Amanda Coyne started Dispatch as an online only news site in their living room in 2008. It struggled until Rogoff, a shopper from the East Coast, came along a year later, liked what she saw, and bought a majority interest in the company.
Her intentions were good. She wanted to further discussion of Alaska public policy, especially Arctic policy, her personal passion. Thanks to the infusion of her money, the drive of Hopfinger and Coyne, and the hard work of a small group of journalists, Dispatch.com flourished.
Along the way, Hopfinger and Rogoff became partners and best friends. That lasted until shortly after the 2014 purchase of the Daily News. By then, Hopfinger and Coyne, who’d worked insane hours from 2008 to 2012 were divorced, and Hopfinger was beginning a new relationship.
Faced with what was clearly going to be a nightmarish struggle with the financial problems of the new business, Hopfinger decided he wanted out and negotiations began for the sale of his interest in Dispatch. The discussions were friendly.
One of the last good times he and Rogoff spent together was at his wedding in Santa Fe in May 2015. Rogoff went out of her way to attend.
Only about a year earlier, she’d handed Hopfinger the napkin contract as a show of good faith. “I agree to pay Tony $100K at end of each calendar year (beginning ’14) for ten years,” it said. It was dated April 18, 2014.
Rogoff’s lawyers now contend the napkin contract is invalid because it only specifies what Hopfinger is to get paid and not what Rogoff was to get in exchange. Hopfinger’s attorneys argue that’s irrelevant because Rogoff was privy to contract negotiations covering all details of a settlement, but didn’t want to sign an official contract because of a covenant on a loan with Northrim Bank.
The bank provided Rogoff what was termed a bridge loan of $13 million to facilitate the purchase of the Daily News, according to filings in the Hopfinger suit. The covenant said she was supposed to get bank approval on financial obligations over $50,000.
She allegedly did the napkin deal with Hopfinger to avoid having to ask the bank for approval. The note, which has already cost her serious money in attorney’s fees and could cost her more, is one among many financial problems she now faces.
Shopping a sale
Various Alaska Regional Native corporations have been approached by Rogoff about a Dispatch purchase, and the names of many wealthy Alaskans have popped up as potential buyers. The names include Bob Gillam, the founder of Anchorage-based McKinley Capital Management which now oversees $7 billion in assets; John Binkley, a Fairbanks businessman who heads the Cruise Lines International Association, has run a couple major Interior tourism businesses, and is a potential candidate for governor, and Jon Rubini, a real-estate developer and Alaska’s wealthiest man, according to the Forbes.
Neither Gillman nor Rubini returned phone calls. Binkley sent an email that dodged the question.
It is unclear if any of them have any real interest in a newspaper given the failing nature of the business in general, although Binkley did make an effort to purchase the Fairbanks Daily News-Miner before its ownership transferred to the non-profit Helen E. Snedden Foundation. Born and reared in Fairbanks, Binkley might have been driven by a desire to play a part in saving the local newspaper, given newspaper businesses are now considered a bad investment.
Media mogul Rupert Murdoch has predicted newspapers will be dead by 2032, and most, like McClatchy, are already struggling to stay afloat. Still, print has in recent years attracted wealthy Americans more interested in news or influence than in profit.
And Rogoff and Rubini, at least, have some history. They had discussions about his acquiring an interest in the Dispatch prior to the McClatchy sale.
Rubini, a former assistant attorney general for the state of Alaska, was the subject of a generally favorable story in the Dispatch on Saturday in which he scoffed at being labeled a real-estate tycoon. The story detailed his company’s effort to diversify from Alaska into Iceland’s booming tourism economy.
Rubini might not be a tycoon, but Forbes calls him and partner Leonard Hyde “real-estate titans” who “avoid high levels of debt, dread talking to the media, don’t like anyone knowing how rich they are and work out of Anchorage, Alaska, with the Chugach Mountains as their office backdrop.”
The Dispatch is debt laden, and the Alaska economy is in nowhere as good shape as that of Iceland. PT Capital Advisors, a subsidiary of the PT Capital private equity firm begun by Rogoff, took its investment capital there. It last fall announced it was buying the Iceland telecommunications company Nova.
PT is managed by Hugh Short, a Rogoff protegé. The current president of PT Capital is Rogoff’s good friend, former Lt. Gov. Mead Treadwell. Rogoff was identified in the ADN’s Rubini story as owning “5 percent of Pt Holding Co. LLC at the time of its initial report in 2013, though her share declined to less than 5 percent subsequently.” The story did not say how much less.
PT has also reportedly been involved in trying to negotiate the sale of Dispatch.
PT traces its roots back to the Platinum Holding Company and Platinum Capital, which Rogoff began formulating in 2012 along with Short and a California friend of her daughters, Joseph Sanberg. All were interested in a platinum mine in the Togiak Wildlife Refuge south of Bethel in Western Alaska.
Rogoff was at the time enthused about the possibility a mine could create jobs in an economically impoverished part of the state. Sanberg was a social activist trying to boost people out of poverty by creating job opportunities. Like Rogoff, whose business connection with Alaska really started with trying to help Alaska Native artists sell their art because she thought they were getting ripped off by art dealers, he was well-intentioned.
And the deal looked good. Seattle-based XS Platinum had purchased the mine for $50 million in 2007, but defaulted on its loans in 2012. Rogoff and her partners thought they could get the mine cheap. Luckily, they didn’t.
The general manager of the mine was in 2013 charged with criminally polluting Platinum/Squirrel Creek with mine waste. He was convicted of three felonies in 2015. By then, PT had moved on and Rogoff was heavily focused on her newest and latest well-intentioned investment, the Anchorage Daily News turned Alaska Dispatch News but unchanged online as ADN.com.
Though the purchase was reported as a $34 million deal, that price included a valuable piece of real estate, the Anchorage Daily News building on Northway Drive. Part of the bargain with McClatchy hinged on GCI, the Alaska telecommunications company, buying the building. The sale of the building reduced the price of the newspaper and website to $18 or $19 million, but left Rogoff without a printing press.
She did have an agreement with GCI to continue use of the old ADN press in the GCI building for 18 months with options to extend her stay (at ever-increasing rents) if problems arose making it difficult to get a new press running.
She also agreed to remove the old press from the former ADN building and clean up old ink and another chemicals. Some in the newspaper business have estimated cleanup costs could go over $1 million given the hazardous chemicals sometimes involved in printing.
But at this point, no clean up is in sight. The Dispatch continues to print at the GCI building on Northway Drive because the company’s only working press is housed there. How long this will last is unknown. There are reports, which cannot be verified, that GCI is demanding unpaid rent, and wants Rogoff out of its building.
Meanwhile, a new press Rogoff obtained and installed in an old, oilfield service’s warehouse on Arctic Boulevard remains inoperable and caught up in litigation. The electrical company which wired the building has put a lien on the structure and sued the owners, Arctic Partners, because of Rogoff’s non-payment of bills.
M&M Wiring says Alaska Dispatch employees acting as agents of the Tacoma, Wash.-based building owners contracted for about $1 million dollars in electrical work for which Dispatch then refused to pay about half.
Catalyst Paper, a Canadian company that is among the largest suppliers of the paper and printing products for the news business, is in court with Dispatch, saying the Anchorage company owes it more than $50,000 for printing products.
Rogoff is the wife of billionaire David Rubenstein. He is the co-founder of The Carylye Group, one of the worlds largest investment companies. But he and Rogoff are separated, and there have been unconfirmed reports he earlier this year cut off the financial support he had been providing her in Alaska.
Given all these problems, Rogoff – once ecstatic about ownership of the Dispatch News – has reportedly told friends she’s had it with the newspaper business.
Who would take on the operation, however, remains a big question. Among the companies in the newspaper business Rogoff reportedly solicited was Morris Communications, a publisher in Augusta, Ga.
Morris has deep ties to Alaska. Company chairman Billy Morris, the son of the founder, maintains a home in Anchorage and has been involved in Alaska journalism since 1969 when the company bought the Southeast Alaska Empire, now the Juneau Empire.
Morris steadily expanded in Alaska and now owns Alaska magazine; the Alaska Journal of Commerce; the Peninsula Clarion in Kenai; The MILEPOST, the definitive guide to driving the Alaska Highway; the Homer News; the Alaska Star in Eagle River/Chugiak, an Anchorage suburb; and Destination Alaska, a travel guide.
The company maintains an Alaska headquarters in an office building just off Dimond Boulevard in Anchorage. Susie Morris Baker, now the company vice-president, is the former publisher of the Clarion and met her husband in Kenai.
Many in the family are avid anglers, and parents, grandparents, children and grand kids regularly come north to partake of Alaska’s world-class fishing. Billy was a friend of the late Bob Atwood, the publisher of the former Anchorage Times.
The Times was Alaska’s dominant newspaper from World War II into the 1980s. Publishing a newspaper in the Anchorage market has been a dream of Billy since the 1970s.
Too many problems
But Morris officials reportedly took a look at the Dispatch News and concluded it wasn’t worth much, if anything, given Alaska’s struggling economy, a new and still inoperable Dispatch printing plant with myriad problems that could cost more than $1 million to fix, and the Dispatch’s considerable debt.
Dee Dee McKenzie, Alaska group publisher for Morris’s properties, did not return a phone call.
It is unclear how much Rogoff still owes Northrim, but it is conceivable the debt is more than the newspaper is worth. Some of Rogoff’s advisers valued the Daily News worth as little as $7.5 million at the time of the sale.
Daily News circulation plummeted from a peak of near 100,000 on Sundays in the 1990s to less than 35,000 at the time Rogoff bought the paper. She had high hopes of turning around what had been a steady slide in circulation. Some small town American newspapers have been able to build circulation, but the trend in major markets has been a steady decline of 5 to 8 percent per year.
Anchorage is or once was considered a major market. Daily Dispatch circulation is now believed to be below 30,000 and still steadily falling.
ADN.com remains an Alaska online news powerhouse, but the online operation doesn’t begin to generate enough revenue to support the operation’s high overhead and approximately 200 employees.
Whatever happens with the Dispatch going forward, newspaper and web analysts expect serious downsizing.
A sale, a shift to three-day-per-week publication to save money on paper and ink, or simply a shut down would mark a sad end to what was a heralded purchase not that long ago.
“One of the more fascinating local media experiments in America is playing out in Anchorage, AK, where, last week, the sale of the Anchorage Daily News was finalized,” wrote Sara Morrison at Columbia Journalism Review in May 2014 .
“…The deal does create an exciting opportunity for Alaska media—though not one without risks. If the leaders of the new operation can find a sustainable business model, manage the merger of two newsrooms in an insular media market, and sustain a high level of editorial energy even with one less competitor out there, the state could be better served than ever. But if they stumble, Alaska’s news consumers could be worse off than before.”
Three years, two months on, it looks as if Rogoff has concluded that the sustainable business model is a goal beyond reach. Whether Morrison’s prediction of news consumers “worse off than before” comes true remains to be seen.
(Editor’s note: The author of this story is a former reporter and editor for the Juneau Empire, a Morris publication. He worked at the Anchorage Daily News for more than 25 years. He joined AlaskaDispatch.com in its formative stage. He was once a close personal friend of Rogoff, Hopfinger and others involved in this story and had access to some of the inner workings of the Dispatch. He joined the Alaska Dispatch News after the Daily News sale, but did not last long. He ignored an order to stop investigating Roland Maw, a member of the state Board of Fisheries and a crony of Gov. Bill Walker, a friend of Rogoff’s. His investigation eventually led to the state of Alaska charging Maw, who was claiming to be a resident of both Montana and Alaska, with multiple felonies related to defrauding the Alaska Permanent Fund. Rogoff was unhappy with what she considered the “controversy” the Maw story generated. She and the author subsequently negotiated a quiet departure from the Dispatch intended to help protect the integrity of the news operation.)
CORRECTION: This story was edited on July 26, 2017 to collect a faulty John Binkley link.