Alice Rogoff is out as the publisher of the Alaska Dispatch News. The Binkleys of Fairbanks and Alaska Media LLC are in, at least for now. And what it means for Alaska journalism is to be decided in Bankruptcy Court.
Rogoff’s last act as Alaska’s biggest media mogul was to announce via here newspaper that Chapter 11 bankruptcy papers were filed on Saturday evening. They had been expected after GCI, the Alaska telecommunications company, went to court on Friday demanding she pay nearly $1.4 million in back rent and electric bills due for use of its building and leave the building as she promised three years ago.
Rogoff in 2014 cut a deal with GCI to sell it the old Anchorage Daily News building on the edge of Mountain View just north of downtown in order to obtain enough cash to complete the financing of her $34 million purchase of the News itself.
Advisors told her the newspaper wasn’t worth that much. She wanted it so much she refused to listen and after the purchase refused to make the staff and budget cuts necessary to make the paper financially stable. As a result, it lost a reported $4 million in its first year, and continued to lose money at a similar rate up until about February of this year when Rogoff started saving money by simply not paying her bills.
She now appears ready to let her prize go for a tiny fraction of the original cost.
The prospective new owners are not going to have an easy task in trying to put the Dispatch back together again.
Rogoff’s sale of the Daily News building, which contained tens of thousands of square feet of space for the press and paper storage, left her scrambling to find new ways to print the newspaper. She tried to negotiate deals with various Anchorage-area printers, but all fell through.
She eventually bought a press in Indiana, shipped it to Anchorage, and stuffed it into an old, oil-field services warehouse she’d leased in an industrial area on Arctic Boulevard at the south edge of Midtown.
That press still isn’t working. The costs of fixing it are estimated in the millions of dollars.
As part of the deal with the Daily News, Rogoff agreed to remove the old press from what is now the GCI building. In court filings, GCI estimated that cost at $1.5 million, plus the $1.4 she already owes on rent and utilities.
Meanwhile, her over-staffed news operation continues to bleed money. It appears that since about February she has been using most revenue to meet payroll and letting a lot of other costs slide because of cash flow problems.
Given all of this, Rogoff told friends in Halibut Cove this summer that she was simply “done with it.”
A sale was to have taken place a couple of weeks ago, but fell through at the last moment. Rogoff reportedly killed it when she demanded more money at the last moment. The Dispatch story announcing the bankrupcy, the change in publisher, and the prospective news buyer on suggested the new selling price is likely to be under $1 million.
Cabot Christianson, a bankruptcy attorney whose family owns a vacation home along with Rogoff in the San Juan Islands of Washington state, will be handling the bankruptcy filings. He told the Dispatch News that Rogoff is planning to ask the bankruptcy court to allow her company to borrow up to $1 million in working capital from the potential buyers and will seek court approval to sell the newspaper as a whole to those buyers, although other buyers could enter the picture once bankrupty proceedings officially begin.
Ryan Binkley, representing the Binkley family, and Jason Evans of Alaska Media jointly issued a statement saying they were making “a bold first step to ensure the future of the Alaska Dispatch News going forward. At the same time the paper has filed for bankruptcy protection, we’ve entered an agreement to purchase the ADN and immediately take control of the operations of the paper, beginning Sunday.
“We are a group of lifelong Alaskans who have come together to save the ADN during this interim time.”
Until a deal is final on the ownership, Evans and Binkley will serve as co-publishers.
Binkley is a fourth generation Alaskan. The Binkley family is best known for its riverboat business in Fairbanks. It has long been a big player in Alaska tourism.
Evans is an Inupiaq Eskimo from Nome and aggressive young entrepreneur. He is the president of Rural Energy Enterprises along with the owner of Alaska Media, which operates three small weekly papers.
They pledged to work with “the talented and dedicated team here at the company…..ADN can’t be allowed to go away. It’s too important to the city of Anchorage and to the state of Alaska. Alaska deserves and needs a robust and healthy paper of record as much as it needs another public utility or infrastructure, particularly in these uncertain times.
“We grew up reading the ADN and our actions are intended to ensure that our grandchildren can do the same.”
Producing a paper of record, a publication that spans a broad area and covers much, has always been a difficult task. It has only become more so in the Age of the Internet, where just about anyone can become an instant publisher.
Newspapers now face competition from all directions.
Christianson told the Dispatch that while the Binkley-Evans group will be in charge of the day-to-day operations of the newspaper starting today, the final decision on ownership will take about a month.
The bankruptcy proceedings could open the door for others to bid on the property. And until the bankruptcy court puts its seal of approval on the deal, Rogoff remains the Dispatch’s owner of record.
The seriousness of Rogoff’s cash flow problem was illustrated by request to the bankruptcy court to allow the Dispatch to borrow up to $1 million from the new publishers to keep the newspaper operating.
The $1 million, according to what Christianson told the Dispatch reporter Annie Zak will be used to cover payroll, taxes, “and whatever else is needed to keep a paper running.” The money will remain under the control of the Binkley-Evans group.
The prospective purchase price is expected to be “up to $1 million.” Though that might seem like a good deal, it depends on how much debt and expense the new owners are forced to take on. Bankruptcy will free Dispatch of a lease on pricey office space on C Street and in Midtown Anchorage, and two 10-year leases on the warehouse space on Arctic, but how the bankruptcy court decides to handle other debts remains to be seen.
The new company faces big hurdles, but is now being driven by a new, younger generation with a can-do Alaskan attitude of an older Alaska.
The Zak story optimstically had Binkley and Christianson saying that no layoffs are planned and that the newspaper will try to protect the jobs that are there now. But those familiar with the ADN costs say signifcant cuts in staffing are unavoidable.
Bankruptcy makes those easier.
Often, according to the blog at Warn Lawyers, a law firm specializing in bankcrupty and financial law, “employees are ‘spun off’ in a sale of the company’s assets to a buyer. Otherwise, employees typically lose jobs immediately, or are retained temporarily during the winding-up period. Given these heightened prospects of job loss, you might wisely begin searching for a new job once bankruptcy enters the picture.”
Potential Dispatch buyers who became familar with the current finacial situation of the ADN said bankruptcy is probably the worst result for current employees of the newspaper, but possibly the only way to save the newspaper in Anchorage.
There is as yet no major city without a newspaper, but there are several – notably New Orleans and Birmingham, Ala., that are down to three-day-per week publications. The Dispatch News publishes six days per week.