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.
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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.
Flat spin
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.
I agree about the failure of the ADN to cover the Obama private dinner. That really pissed me off. I would love to see the guest list – even now. Obviously Alice Rogoff made a lot of business mistakes. But I don’t think the ADN would have been better off with McClatchy. It was dying. I hate the name Alaska Dispatch News. I think the news coverage is uneven. Why don’t they cover Anchorage more? But besides all of this criticism, Rogoff can’t be expected to continue to prop up the newspaper forever. Her corporation is entitled to declare bankruptcy and try to reorganize. Rogoff may be a rich philanthropist does not have to donate ONE million bucks to Tony Hopfinger. Their contract included the implied agreement that he was going to manage the newspaper. He quit. He left. Therefore, he is owed nothing. (I think he should settle the case; he would be lucky to get 50K. As it is, the attorneys are going to be the only winners.) I agree about trying to set the ADN up as a non profit. They need to go mostly digital and get their affairs in order first.
NDS – Hopfinger started / worked at the Dispatch for years and without that work, Alice would have had nothing to enjoin to, and then use to buy the ADN. I agree with other commenters here….let the paper fold, then bring it back to life without this financial entanglement. The key though is the press. And as they say, the person who owns the press, owns the world. Can’t help but think however, someone could buy a smaller press (used) for a lot less cost, ship it up and put it in a location that could house it. If the Binkleys have that kind of money, they could easily do that. It makes no sense to give her $1M and then more later. Just start another paper, hire the best of what’s at the ADN and move on!
Word Press didn’t like my formatting. Here’s a link to the WaPo article: https://www.washingtonpost.com/news/reliable-source/wp/2017/08/18/billionaire-david-rubenstein-and-his-wife-have-a-marital-settlement-agreement/?utm_term=.99411cc8eedd
Forbes says Rogoff’s husband David Rubenstein is worth $2.8 billion. They have 3 adult children and reportedly, Rubenstein filed for divorce in February. Purely speculation but that seems to be when the money flowing to ADN stopped. WaPo a few days ago:
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Pure speculation but my bet is that the prior agreement dictated that Rubenstein pay Rogoff’s bills and send her $XX million a year and that figure has gotten out of hand. Now, he wants a divorce and a final figure. $100 million now is better than $20 million a year for 20 years.
Jim – i can’t find anywhere Forbes reported that. i can’t find any evidence either of them filed for divorce. the other speculation is more than speculation. they did have a marital separation agreement. i now have multiple sources saying the spousal support was $5 million per year. it appears to have been disrupted in February. why? nobody seems exactly sure. what happened after that has not been reported, but probably should be.
It’s not like you can’t get news elsewhere. Because you can. And from many sources. But having it in front of you with your morning coffee, well, that truly is hard to beat!
$5 million a year is not much of an allowance from a guy worth $2.8 billion. The guy paid $21 million for a copy of the Magna Carta and then spent $2 million on a box to display it. He spent $14 million on “the most expensive printed book,” The Bay Psalm Book. More: Rubenstein’s “patriotic philanthropy” benefitting the National Park Service makes him a leader in the incredible legacy of private support for national parks:
January 2012 – $7.5 million to restore the Washington Monument after the earthquake
July 2014 – $12.35 million to restore Arlington House, The Robert E. Lee Memorial
September 2014 – $5 million endowment for the White House Visitor Center
April 2015 – $5.37 million to improve the U.S. Marine Corps War Memorial
February 2016 – $18.5 million to restore the Lincoln Memorial
April 2016 – $1 million to fund critical repairs to Belmont-Paul Women’s Equality National Monument
I totally agree! Plus they have been married for decades. She is owed one half of his fortune. it is their fortune together really.
unless, of course, Nancy, she signed a contract a decade ago, long before Carlyle went public in 2012, and suddenly David Rubenstein went from rich to ultra, super rich. Rubenstein’s net worth was estimated to be about $500M in 2006. that’s a lot, but not up there with with stars. if you could do a deal with that guy to pay you $5M a year, free and clear – ie. he picks up the taxes, too – i’d look at that as a pretty sweet deal. if you’re interested in offering it, ping me at craigmedred@gmail.com. then again, i’m sure if you made that deal a decade ago, not knowing what the future might bring, you could look at it now and think you got screwed. still, if you signed a contract, it’s a contract; in some places a woman’s word is her bond. and it’s not like she’s spent the last 10 years in any way helping Rubenstein earn the $2B added to his worth since 2006. they’ve hardly ever been together except when she joined him to hobnob with the rich and famous or the President. http://www.911myths.com/images/6/6f/Item9959.pdf
I’ve been reading every article with a mix of despair and suspense. Great work Medred. And sad as all hell.
thanks, Eric. sad as hell, but there were some good times in the old hangar….
Something that I have never read in the many news articles written about Alice Rogoff and her ADN journey, is that at the core of the matter – she is just following a script, though on a much larger scale, that dozens of wealthy women have followed before her. It’s called “Doing the Alaska Thing”. Back in the 60’s and 70’s occasionally women from wealthy East Coast families would head to Alaska. They would build primitive cabins with their friends in places like Eagle or Chase or Homer and do “The Alaska Thing” for a year or two. Then they would go back to NYC and marry a bond trader or mutual fund manager. I’m sure this phenomenon goes back to the Gold Rush days. And Rogoff proves that it goes on today. With Rogoff however, it’s not just a hippie boyfriend in Talkeetna or some old trapper at Minchumina that gets burned. It’s a lot of people getting burned. And it is Alice setting the bar at record heights for a foray out of Manhattan to “Do The Alaska Thing”. Rogoff has done her “Alaska Thing”. And she has gotten burned herself. Maybe she will “Do the Cuba Thing” next. Who knows. But she won’t be the last wealthy woman to “Do The Alaska Thing”. It’s a long tradition that will not die anytime soon.
i don’t know that the Alaskans in the deal always get burned, Tim. case in point, Mary Lou Whitney.
Okay I am not some crunchy granola liberal PC person, but this comment is sexist. Men and women come up to Alaska in their twenties for adventure. Lots of us stay. We are from all over the country and from all socioeconomic backgrounds. And I think more young men head North than women anyhow.
At this point, it would probably be much easier for the Binkleys to withdraw and let the paper fold. Then they could build a replacement, minus Rogoff’s extensive entanglements.
It seems that it would almost be best to let it close. Then the Binkleys could build a paper to fill the void, minus all the Rogoff entanglements.
Let the piece of crap propaganda rag die on the vine. It’s not needed, or wanted.
Paul: yeah, some people think that. some think the opposite. some think it’s a mixed bag. it’s pretty easy to diss the media today. i myself probably do it too much.
What do they say about “casting pearls before swine”?
Your last few paragraphs anticipated a key question in all this: What is A.R. personally worth and can the creditors get at it. You, Craig, can’t know what she’s got in personal wealth, although I could be wrong. But you should be able to make a ballpark estimate. What do you think it is? … Finally, you’ve been covering this story for some time. What’s your most disinterested guess as to how it’s going to end. Thanks.
I really think it doesn’t matter what she is personally worth. She formed a corporation to buy the ADN. She has spent millions and millions. Enough is enough. She tried; she couldn’t make a go of it. Many people were employed for a lot longer because of her. I think people (like Tony Hopfinger) are taking advantage of the fact that she is personally wealthy. How much did Tony put up to buy the ADN? NOTHING! How much time did he put in working there? Not very long before he left. Why in the world does Alice Rogoff owe him a million dollars? GREED pure and simple. The ADN is worth nothing. It has a negative value at this point – so his “share” of the pie is worthless. He is lucky he is not on the hook to the creditors.
There’s an argument that it was Alice who blew the chances for the paper’s survival through its expansion in 2014 & other business decisions she made. If McClatchy had been willing to stick it out with its conservative business model, maybe we would not have got to this place. Sure Rogoff pumped millions of her own money into the Anchorage economy. She also put millions of other people’s money into the economy. And if the paper dies, how much $$$ will NO LONGER go into the local economy. What kind of a hit will Anchorage’s economy take when 200-plus people are no longer working here. The hagiography of Rogoff is getting out of hand. I give her lots of credit for wanting to boost the paper, for her interests in the Arctic and in Alaska Natives. But she’s tight w/ information and kept her staff shackled with respect to this particular story and to the Obama dinner last year. And she apparently had no idea how to run a business. So let her pay her creditors, out of her own bank accounts if that is what it will take. And that includes Hopfinger. You’ve got amazing gall to call him greedy when she and Rubinstein, as philanthropic as they are (and for good causes, too), own obscene amounts of money. If they really care about the paper, let the two set up a non-profit corporation to own & run it, on the model of a Pro-Publica or similar. If she truly cares, the paper won’t die. If all along it was little more than a vanity toy for her, then goodbye, ADN.