With time clicking down on a plan offered by a fifth-generation Alaska family to save the state’s largest newspaper, a gaggle of lawyers representing a small mob of creditors were back in federal Bankruptcy Court in Anchorage on Friday spinning their wheels and making little progress.
At the end of the day, they could agree only that the Alaska Dispatch News should be allowed to spend $50,000 from a pool of cash on hand that is now down to about $135,000. The latest spending would cover payments due on workmen’s compensation claims and employee reimbursements, according to Cabot Christianson, the attorney representing Alice Rogoff, the owner of the Dispatch News.
Christianson is to spend the weekend in meetings with attorneys from Northrim Bank, the Binkley company and GCI, the Anchorage telecommunications company, in an attempt to hammer out agreement on how to allow the Binkleys, who run a Fairbanks tourism business, to loan $1 million to Rogoff’s failing company.
Friday’s weather might have been a portent of where things are going. It was overcast and warm in downtown Anchorage with tourists wandering the streets when everyone descended on the old federal court-house in the heart of downtown at 1 p.m.
By the time everyone emerged a couple of hours later, the air had chilled and the skies were starting to spit rain. Pat Dougherty, the Anchorage Daily News editor Rogoff deposed when she bought the newspaper from the California-based McClatchy Company, had pulled on a puffy coat.
One could look down the street a block from where he stood and see the old offices of the Anchorage Times, a newspaper once more powerful than the Dispatch News of today. The Anchorage Daily News, the predecessor to the Dispatch News, crushed it and put it out of business in one of the country’s last great newspaper wars. It now houses state court offices.
The Dispatch News is perilously close to following the Times into history. Without the loan from the Binkleys, the news operation won’t have the money to meet payroll next week, and cutting a deal on the loan is proving highly difficult.
Rogoff owes Northrim about $10 million. She took out a personal loan for that money, but earlier this year the bank added the newspaper to a marital settlement agreement and other collateral previously backing her loan. That put Northrim first in line for reimbursement if Rogoff defaults on a loan pay-off due in a month.
The situation gets especially complicated in that although Rogoff owes the bank the money, the Dispatch News has been making the interest payments. Northrim, given a fiduciary responsibility to its clients, can’t allow the Binkleys to step in front of it in line with their $1 million loan should Rogoff’s shrinking newspaper empire come crashing down.
The Binkleys, on the other – just like the bank – want to find some way to ensure they’re not just throwing away $1 million by helping bail out the failing newspaper.
To further compound the picture, GCI says Rogoff owes it about $1.4 million in rent, electric bills and penalties for the use of the old Anchorage Daily News printing press which still rumbles in the GCI building. That press happens to be the Dispatch News’ only functional press.
It was supposed to be gone from the GCI building two years ago, a year after Rogoff bought the Dispatch News for $34 million from McClatchy. But GCI can’t seem to shake the Dispatch News. GCI is headed into state court on Monday to confront the newspaper over the bill and an eviction notice.
An attorney for GCI told the bankruptcy court on Friday that the company is willing to work with the Binkleys to allow the Dispatch News to continue to print the newspaper for a couple of months in the GCI building, but the complicated deal the two parties had worked out ran into objections from Christianson.
There hadn’t been time before the bankruptcy hearing, he told the judge, for him to review the document, let alone to discuss it with his client. Erik LeRoy, the attorney for the Binkleys, suggested that maybe if some language pertaining to the Dispatch News and GCI was removed from the contract, everyone could agree and move on.
LeRoy thought the language might be a GCI effort to leverage itself into a better position in state court on Monday. His suggestion went nowhere.
During a break for attorneys to huddle on possible changes to the GCI-Binkley agreement, John Binkley – a one-time candidate for Alaska governor, the one-time head of the Binkley family companies and now the president of the Alaska arm of the Cruise Lines International Association, said he was worried that the deal being worked on by his son Ryan looked like it might be in a “flat spin.”
A flat spin is an aviation term that describes an airplane whirling toward the ground while spinning like a boomerang. Flat spins are sometimes called “unrecoverable spins” because they can be impossible to escape.
“Just as Dante’s Inferno described several levels of hell, the world of spins has many levels of terror,” Alton K. Marsh once wrote on the website of the Aircraft Owners and Pilots Association. “…Level Three is an accelerated spin (and) way down there at the bottom level, hidden among billowing clouds of smoke and guarded by fanged, blood-starved creatures, is the inverted flat spin. You can barely see it. The problem for the untrained pilot is that all of the levels are interconnected, with trap doors leading from one to the other. Mess up a stall recovery, for example, and you could spin. Mess up a spin recovery and you could accelerate it — rather than stop it.”
What looked to be a simple purchase plan between Rogoff and the Binkleys last Saturday is now looking more and more like it might to have fallen through those trap doors to enter Marsh’s realm of “billowing clouds of smoke….guarded by, fanged, blood-starved creatures.”
How hard can it be?
Late on Saturday, when Rogoff was talked into selling her newspaper to the Binkleys instead of taking it straight into bankruptcy to be cut up into parts and sold for whatever those parts were worth, the transfer scheme looked simple.
The Binkleys would lend Rogoff $1 million now and agree to buy the paper later for $1 million contingent on the loan being paid by the purchase price. Rogoff would then put this agreement in her pocket and take the newspaper and its website, ADN.com, into bankruptcy.
If another bidder for the newspaper showed up during the Chapter 11 bankruptcy proceedings – Rogoff testified Thursday that there might be some out there though none have publicly emerged – and bid more than $1 million, the Binkley’s would be repaid their loan plus a 3 percent service fee and Rogoff would get all funds in excess of $1 million.
Those funds would already be earmarked for creditors.
Creditors looking at nothing out of the Binkley deal might get something if, for instance, the Binkleys got into a bidding war with someone like Sheldon Adelson, the casino-magnate who bought the Las Vegas Review Journal for $140 million in late 2015, and a higher price for Dispatch News emerged.
There was a rush of rich folk buying newspapers early in the decade. “Can billionaires save the American newspaper?” CNBC asked in a 2014 story about the trend. Rogoff, the estranged wife of billionaire David Rubenstein, bought the Dispatch News that year. It was all downhill from there.
By the start of this month, the Binkleys have said, the newspaper had lost $4 million and was bleeding money, on average, at the rate of $744 dollars an hour, $17,857 a day, $125,000 a week, or $500,000 a month.
No billionaires have been stalking the Anchorage bankruptcy court, but there are rumors San Fransisco billionaire Tom Steyer, the founder of NextGen Climate, might be interested.
Steyer does have an Alaska connection. He, New York City mayor Michael Bloomberg and media mogul Fred Eychaner of Chicago were big players behind the Democratic super PAC that provided about 95 percent of the $5.1 million for Put Alaska First, another super PAC backing incumbent Sen. Mark Begich in the last election, according to the The Center for Public Integrity.
A Democrat running in a Republican state against a candidate heavily backed with money from business interests, Begich almost squeaked out a victory. The politics of who might buy the Dispatch News have predictably become a subject of some discussion.
“There have been plenty of people openly worried about the (proposed Binkley purchase,)” Matt Buxton wrote at The Midnight Sun this week. “A picture of Kai Binkley Sims posted to the Anchorage Republican Women Facebook group has circulated on Twitter. In the background is far-right Anchorage assemblywoman Amy Demboski.”
The Sun is owned by Jim Lottsfeldt, who headed Put Alaska First.
While readers of the newspaper – many of whom tend to think newspapers have far more influence than the modest power they do possess – might be concerned about the political leanings of any bidders for the ADN, the situation is different for creditors. A bidding war would only be good.
That flat spin
If, of course, a newspaper fast running out of time lives long enough to get into a bidding war.
Without the Binkley loan, the newspaper could be history by the end of the month. And what GCI does in state court on Monday morning might have some influence on what happens in bankruptcy court later that day.
The telecommunications company and lawyers for Rogoff are due to face off at 10 a.m. over the eviction and rent owned GCI. As part of that suit, GCI is trying to push Rogoff out from behind the shelter of the Alaska Dispatch News LLC and AK Publishing LLC.
GCI argues those limited liability companies and others – the Moon and Stars LLC being key – that surround Rogoff are really just protective cover for what is at heart a one-woman business. GCI lawyers want the courts to rip off the veil and expose Rogoff to personal liability for her company debts.
Some lawyers say it’s a long shot. Others, noting the way Rogoff sometimes seems to confuse the companies when talking about which does what and use them interchangeably, thinks GCI might have a shot.
If they do, almost everything changes for a list of creditors near 200. The newspaper and ADN.com have very limited assets – computers, desks, photo equipment, a press with a lien on it sitting a building that’s leased, tools, old news boxes, etc.
Nobody has the idea of the value there, but it’s not much.
Rogoff herself is a different matter. No one publicly knows her net worth, but Northrim must. And her net worth was obviously high enough the company was convinced that it was a safe bet to lend her $13 million to help facilitate the purchase of the Daily News from McClatchy.
At the time, estimates of the value of the newspaper sans the Daily News building that GCI bought for about $15 million, were as low as $7.5 million, and there were questions as to whether the operation could continue to make a profit.
CORRECTION: This story was corrected on Aug. 19, 2017 to remove a reference to “typewriters.” The ADN owns many computers on which people type, but it is unclear whether there are any typewriters in the building. Typewriters are rare at modern day newspapers and usually appear only as decoration.