The difficult business of trying to take a newspaper through a Chapter 11 bankruptcy reorganization will begin in Anchorage, AK today with a simple task – get the paperboys paid.
A newspaper is a team made up of a lot of different players, all of whom are important to delivering the product to its readers every morning. The newsprint carriers are the folks who labor almost unnoticed right up until the moment somebody doesn’t get their paper delivered.
Among the lowest paid newspaper employees, they are thus also the most likely to quit and go looking for a better job if not paid. But if they quit, the papers don’t get delivered, and undelivered papers are little but trash.
Thus, with a Friday payday approaching, bankruptcy attorney Cabot Christianson says in a motion filed with the bankruptcy court, the Alaska Dispatch News needs approval to pay “its newspaper carriers – the individuals who deliver the newspaper – a total of approximately $80,000 per week.”
The Dispatch News filed for bankruptcy on Saturday evening. The newspaper has been losing $4 million to $8 million per year since Alice Rogoff, the wife of billionaire David Rubenstein, bought it from The McClatchy Company in 2014 for $34 million.
It is now considered to be worth almost nothing. Alaska Media LLC and the Binkley Company, a Fairbanks family tourism business, have offered “up to $1 million,” and are trying to keep the operation afloat until the court approves a sale.
Questions have been raised about the deal, and there is no telling what the bankruptcy judge might do with a proposed Binkley group rescue plan. The Binkleys want to loan “up to $1 million” to the Dispatch News, which is now losing about $150,000 per week on printing the newspaper and running its companion website, ADN.com.
The loan would be repaid by the Binkleys future purchase of the newspaper or the purchase by another party. If the Binkley group were to purchase the paper, the “up to $1 million” purchase price would likely end up zeroing out the “up to $1 million” loan, and creditors would get nothing.
If another party entered the bidding – none have been publicly named but a few have been rumored – a higher purchase price would repay the Binkley loan, and creditors would split whatever money was left.
Some of the creditors think they might get a higher return if the Dispatch News was simply liquidated and the profits from the sale of assets split. Rogoff, who remains the owner of the newspaper though she’s been yanked as the manager, contends the newspaper is “vital to all Alaska” and thus deserves special consideration in bankruptcy court.
More than $2 million, minimum, is owed creditors, not counting about $1.4 million GCI, the Alaska telecommunications company, has demanded for back rent, electric bills and interest. MustReadAlaska.com has compiled a list of about 200 creditors to whom the News owes money.
GCI is on the MustRead list, but only for a fraction of what it says it is owed. GCI owns the old Daily News building, which houses the Dispatch News’ only printing press.
Dispatch News was supposed to have been out of the GCI building two years ago, but Rogoff ran into all sorts of problems in getting a new printing press set up. She has yet to start dismantling the old one.
She’s now into GCI for almost $3 million – the $1.4 million in unpaid bills and the estimated $1.5 million cost of getting her old press out of the GCI building and cleaning up old ink, some of which could be toxic.
But all of those problems pale compared to getting the paper boys paid because if they aren’t around to deliver the news, nothing done by anyone else much matters.