Anchorage’s paper boys and motor carriers will roll for at least another week or two.
After a twisted, tangled, three-hour journey through the finances of the near-broke Alaska Dispatch News, federal Bankruptcy Court Judge Allan Spraker – with the approval of Northrim Bank and the silent consent of other creditors – agreed to let the newspaper shift money around in its accounts to free $80,000 to pay the people who deliver the news.
They will get checks tonight. The Dispatch News’ finance manager told the court that if the circulation contractors didn’t get paid, they’d probably just quit when they showed up at the print plant to pick up papers early Friday morning.
But the immediate crisis is the only thing resolved as the courts try to sort the biggest Alaska business failure in at least a decade.
Alice Rogoff – who flew so high as the co-owner of the upstart, online news site AlaskaDispatch.com – has crashed so hard as the sole owner of the Alaska Dispatch News newspaper and website that the sound is reverberating across the state and starting to be heard Outside.
“Salmon swallows whale: Website buys Anchorage Daily News, Alaska’s largest newspaper,” the Seattle PI headlined when AlaskaDispatch bought the news.
“Salmon choking to death on whale” could be the headline now, though the Nieman Foundation at Harvard went with something tamer and a lot more upbeat this week:
“Alaska’s largest news site (which previously bought Alaska’s largest newspaper) is going bankrupt, but also getting new owners.”
Rogoff is an alum. She has an MBA from the Harvard School of Business.
A plane wreck
Whether her newspaper can be saved remains to be seen
Attorneys were ordered back into court on Friday at 1 p.m. to continue discussions on the proposal from the Binkley Company LLC to loan the Dispatch News up to $1 million to keep it functioning through a bankruptcy reorganization.
All this is so the Binkleys, a fifth generation Alaska family from Fairbanks, can buy the newspaper and website for up-to $1 million.
The up-to $1 million purchase price – whatever it turns out to be – would be used to pay back the loan of up-to $1 million. The Binkleys would thus get the company for nothing, which is a dollar less than they offered Rogoff for the Dispatch News in June, according to Ryan Binkley.
Most of the creditors who Rogoff owes more than $2 million would be left with nothing. The Binkley’s could actually make up to $30,000 on a 3 percent handling fee on the loan.
But it’s not like the Binkleys would be getting a great deal. As outlined in testimony at the old Federal Courthouse in downtown Anchorage, the owners of Fairbanks’ most successful tourism business would acquire something most like a Model-T Ford found on the Back 40 of somebody’s farm – a vehicle that with a lot of restoration could be made into a spiffy collector’s item but is at the moment junk.
Journalistically, the Dispatch News remains OK, according to most professionals in that business, but the journalism is little more than a blue tarp carefully covering what is a financial wreck.
Speaking telephonically from an undisclosed location, former publisher and still legal owner Rogoff testified as to how she bought the profitable Anchorage Daily News from the California-based McClatchy Company for $34 million in 2014 and quickly ran into problems.
“Let’s talk a little bit about the finances of the newspaper,” here bankruptcy attorney Cabot Christianson said, as he started to walk her through a sad tale of woe:
- 2015 losses of $5.8 million of which $3.8 was cold, hard cash.
- 2016 losses of $6 million plus of which more than $4 million was cash.
- 2017 losses on track to lose $8 million.
“All of the losses have been funded by my personal finances,” Rogoff said. Her main source of personal finance – maybe her only real source of personal finance – was spousal support from estranged husband David Rubentsein back in Bethesda, Md.
One of the richest men in the country, Rubenstein is the co-founder of The Carlyle Group, a global investment firm. He is said to be worth about $2.5 billion.
Rogoff’s net worth is unclear. She still owes Northrim Bank about $10 million on a $13 million loan she secured to help finance the Daily News purchase, Northrim attorney Michael Parise told the court.
The Northrim loan was thought by many to be fully covered by a marital separation agreement between Rubenstein and Rogoff. Such agreements have very specific rules in Maryland, the state where the Rubensteins lived before the Alice Rubenstein of Vail, Colo., moved north to Alaska and changed her name first to Rogoff-Rubenstein and finally Rogoff to escape the long shadow of her powerful husband.
“A couple with little hope of reconciliation may privately enter into an oral or written agreement to live apart. This is typically called a marital settlement agreement, separation agreement, or property settlement agreement,” according to the state of Maryland. “When the grounds for divorce is voluntary separation, a separation
agreement may be used as evidence to obtain the divorce.”
Court documents filed by Northrim earlier this year connected the Rogoff loan to such an agreement, but gave no details. Northrim was first to file a claim to the assets of the Dispatch News as well, and Parise was aggressively protecting that claim as if the bank might still have some financial exposure despite the marital agreement.
Rogoff’s loan, he told Spraker, is “in technical default,” and is “a month and day” from its due date. He said the bank couldn’t go along with the Binkley loan plan until unspecified issues with the loan were resolved.
“There’s nothing to protect the bank,” he said, but added there was a temporary agreement between the bank and Rogoff, and there was hope that modifications to the loan could be inked by both parties by noon Friday.
Meanwhile, he said, the bank could allow the Dispatch News enough latitude to pay the paper carriers.
All told, Rogoff testified she’s spent $17 million of her own money on the Dispatch News since 2014.
It was, she said, “an investment in something,” a bid “for quality journalism.”
But by about the start of this year, she confessed, she realized that whatever the Dispatch News was journalistically, it was a big failure financially. She then started trying to sell it.
There were talks with Morris Communications about a possible sale. Morris then owned the Alaska Journal of Commerce along with newspapers in Juneau, Kenai, Homer and Chugiak-Eagle River. It has since sold the first three newspapers listed there.
With Morris reluctant to buy, there were also discussions of a possible joint operating agreement, or a possible contract for printing given the Dispatch News’ print press was living on borrowed time.
Rogoff sold the Daily News building on Northway Drive to GCI, the Alaska telecommunications company, in 2014 to get the final $15 million need to close her deal with McClatchy to buy the Daily News. The McClatchy printing press remained in the Daily News building.
Rogoff was supposed to get it out in 18 months. It’s still there. GCI last week filed an eviction notice to get the press out of the building and a lawsuit to force Rogoff to pay almost $1.4 million in back rent, utility bills and penalties.
GCI was in court along with other creditors. It is wanting advance payments from the Dispatch News if it is going to continue to print in the GCI building while going through bankruptcy. Those payments would have to come from the loan from the Binkley group, which has already taken over operations of the Dispatch News as what is called a “debtor in possession.”
Mrs. Rogoff-Rubenstein, who came to Alaska in 2006 as a MINO – married in name only – is now an OINO – owner in name only.
As the full-on owner of the Dispatch through the spring and early summer, though, she tried shopping the paper everywhere after Morris turned her down, she said. She pitched state business leaders, talked to newspaper brokers, and launched a national search.
“There’s still potentially interested buyers out there,” she testified, but GCI’s threat of eviction and its demand for $1.4 million in back rent forced her hand. That made her decide to take the Binkleys up on their offer to take the Dispatch News off her hands because keeping the newspaper alive is, in her view, vital to all Alaska.
All is fine
The Binkleys have brought in Jerry Grilly from Denver to help them try to get the paper back on its feet. The publisher of the Anchorage Daily News when it won a newspaper war against the Anchorage Times a generation ago, Grilly said outside the courthouse that he still thinks of the paper as his baby.
Asked about the Binkley’s decision to install a new manager for the company, Rogoff told the court she didn’t really see any need for that.
She called her management team “excellent and competent,” and any criticisms of their performance “quite exaggerated.”
And she recoiled at the idea that the Binkley group as interim managers, and yet a long way from owners if they ever become such, might make any changes to the paper in the short-term.
“The prudent thing to do is to let it exist in its present size and fashion,” she said, and let the news owners decide what to do once they have secured ownership.
Every company in the newspaper business that has looked at the Dispatch News to date has said that major cuts in cost and staff will be necessary to make the paper break even. Some Dispatch News employees have seen the handwriting on the wall and already begun looking for work elsewhere.
Noting her $17 million, now-gone subsidy of the Daily News and the $10 million she still owes Northrim, Rogoff believes that whatever happens she did her part for Alaska journalism.
“That’s an extraordinary high price,” she said. “My goal was to increase the quantity and quality of journalism…I believe we did do that.”
How much of what she did will long survive remains to be seen. There is no guarantee the company gets out of Chapter 11. Many don’t.
Some of the creditors who stand to lose everything have expressed the opinion they’d rather see the business liquidated even if all they get is some art from the ADN offices.
As for the companies 200-plus employees, all of them could lose their jobs in a worst-case scenario, and up-to 40 percent or more may need to go in a best-case scenario, according to industry analysts.
“I’ve not wanted to put those people at risk myself,” Rogoff said.
But by failing to stem her company’s bleeding, the publisher with the MBA from Harvard has put at risk the jobs of many more than would have been gone if she’d started the trimming in 2015 when it first became obvious the company had serious financial problems.
The bankruptcy hearing resumes at 1 p.m. Friday in the old Federal Courthouse on Fourth Avenue in downtown Anchorage.