At the end, the woman who long professed a desire to change Alaska journalism for the better cut a pathetic figure as she scurried away from the federal Bankruptcy Court in downtown Anchorage on Monday with a lone television cameraman in pursuit.
Atop the concrete steps of the historic Old Federal Building behind her, Fairbanks’ Ryan Binkley was holding court before a phalanx of journalists to explain his families’ high hopes for the news organization newly purchased for $1 million.
Only a little more than three years earlier, Alice Rogoff, the woman in the oversize wool coat now fleeing for her Porsche SUV, had paid $34 million for the Anchorage Daily News in order to merge it with the online-only Alaska Dispatch.com into which she had poured more than $3 million over the course of five years.
She had visions of creating an Alaska media empire.
“Many of you know the ownership of the paper changed hands in early May when I bought it from the California-based McClatchy newspaper chain and announced that I’d be combining my Alaska Dispatch staff with the employees of the Anchorage Daily News,” she wrote in July 2014. “Since then, you may have noticed we have more Alaska news every day. That is no accident, as our mission is focused on expanding news coverage, both in Anchorage and across the state.
“We aim to supply you with more information and many perspectives — not tell you what to think. Just as important is for you to become a voice in our state and share your thoughts with others. We encourage you to share your own opinions and to write letters and comments. The livelier and smarter the debate becomes, the more people will participate in it. We need that for our civic society to function as well as it should.”
She had a big dream.
It died an ugly and public death.
Rogoff, the estranged wife of billionaire David Rubenstein, possessed the sort of wealth that made her a friend to everyone until the money ran out. When she left the bankruptcy court, the people who had seemed always with her – Rogoff personal attorney Bill Bittner, bankruptcy attorney and old friend Cabot Christianson, sidekick and ADN vice-president Margy Johnson – were nowhere to be found.
Rogoff was a lonely, defeated figure hurrying to get away, a woman in her 60s with a heavy shoulder bag now on the run. And the Binkleys were a family wondering what they’d done.
Patriarch John Binkley, a one-time candidate for governor, admitted he felt a little like the dog that had chased a truck only to realize it had caught its quarry.
Bankruptcy Court Judge Gary Spraker confessed in court the he had to “bite my tongue” to keep from asking the Binkleys’ how they plan to resurrect a newspaper without a printing press that is bleeding money at the rate of $500,000 per month.
He was quick to add “that is not my concern.”
As a bankruptcy judge, he explained, his job was more triage than rehabilitation. The court sought to obtain “optimal value under the circumstance,” Spraker said, emphasizing the circumstance:
“The debtor was running out of money….there is no more money. There is no more time.”
The Unsecured Creditors Committee wanting to get creditors something out of the collapse of the ADN had hoped another buyer for the state’s largest newspaper might show up to engage the Binkleys in a bidding war.
It didn’t happen.
Sans another bidder, UCC attorney Micheal Mills asked the judge to raise the price the Binkleys would be required to pay or give the UCC time to get an appraisal on the value of the paper.
Given that another payroll cycle is approaching, Spraker concluded that wasn’t realistic. He weighed the possible collapse of the ADN, which would put more than 200 people out of work, against the $2 million owed about 180 ADN creditors, and moved to protect the jobs.
“I wish there was more time,” he said, “but we take it as we see it.”
He expressed the “firm conviction this is the best thing we can do at this time.”
All indications were that Bob Kaufman, an Anchorage businessman assisting Rogoff in trying to sell her company, had made a good faith effort to market ADN to other buyers only to come up empty, Spraker said.
“There was a nibble,” the judge added in a pitch-perfect Alaska analogy, “but they couldn’t set the hook.”
Bad days for newspapers
Kaufman took the stand in bankruptcy court to paint a grim portrait of the state of the old media in the U.S. today.
His first effort to market the ADN, he said, was to approach a newspaper broker who handles about half of the country’s newspaper sales.
“He wasn’t interested,” Kaufman said. Kaufman asked for advice. He was given the names of some people, who might – just might – be interested in buying a distressed newspaper.
Eventually, Kaufman rounded up a handful of potential buyers, none of whom were named in court.
The first spent a week in Alaska, and left. Another came up from Chicago for a few days, Kaufman said. The most recent spent a couple of days. Another spent 10 days before saying it “found (the ADN) to be extraordinarily risky,” Kaufman said.
The reasons, he added, are obvious: A 10 percent per year revenue decline at newspapers in general; a state suffering through its worse recession in 30 years; and a newspaper with no press, which is sort like being a taxi business with no taxis.
Kaufman said the ADN’s latest looker – a group which appears to have been affiliated with the Glacier Media Group out of Vancouver, British Columbia, Canada – explored the idea of contracting out the printing for the ADN and concluded “you will never make money.”
That buyer, Kaufman said, “ultimately concluded he was not comfortable.”
The ADN under Rogoff, Kaufman noted, is a company that bought a $600,000 press it has “spent millions trying to get to work. The value is not in the assets.
“This is not a company that owns a beautiful office building….there is way more cost than value” in the assets.
No one in the court room was surprised to hear that after earlier listening to Rogoff explain her long history of subsidizing ADN.
A love affair
That Rogoff poured an astonishing amount of money into the ADN over the course of her ownership is undisputed.
Her bankruptcy court filings claim she is owed about $12.8 million as a creditor. She still owes Northrim Bank about $10 million on the loan that helped her buy the newspaper and website. She invested about $6 million of her own – or husband Rubenstein’s money – in the original purchase.
All told she appears to have spent close to $30 million – maybe more – in her slightly over three years-plus ownership of the ADN. As late as June of last year, she was describing the newspaper as in “investment mode.”
“….Like so many of you, (we) believe that a smarter, more diversified business sector will lead us to a healthy and different next chapter in our state’s development,” she wrote in June 2016. “So we’re continuing to develop new lines of business— new features that provide value to you, our readers: For stimulating tourism, we’re launching ShowMeAlaska.net, a new resource for Alaska travelers from in-state, Outside and around the world ; for Alaskans, a new and improved AKCarFinder.com, providing comprehensive dealer listings from around the state; and, yes, even a dating site, NorthernLove.net.”
ShowMe never really got off the ground. NorthernLove never made much money. But the ADN advertising department did manage to increase revenue by about a half million dollars or so between 2015 and 2016, according to court records.
It remained a company bringing in about $20 million per year in revenue when Rogoff decided early this year she had to get out and quit propping up the business she professed to love.
Why is still not clear.
When asked in court Monday specifically why she stopped subsidizing the ADN, she said, “I simply had no further ability.”
No further questions were asked. No details were given. Outside the courthouse Rogoff’s only comments to reporters were “no comment.”
Her sole source of support is $5 million per year that comes from Rubenstein per a “spousal agreement,” according to sources with knowledge of her finances.
What happened to that arrangement to diminish her benevolence toward Alaska journalism is not known. Various theories have been offered by those in the know:
- The projected $8 million loss for Dispatch in 2017 was simply more than her income.
- Rubenstein somehow cut off the payments.
- Northrim Bank, noting the dire financial problems of the ADN and the publicly unknown end date on the spousal aagreement, started to take bigger bites out of Rogoff’s income. The bank has revealed the Rubenstein payments, the size of which it did not specify, passed through a Northrim account.
Whatever Rogoff’s financial difficulties, she testified she began trying to pedal the company early in the year and “got a vague, generic statement of interest from one” potential buyer. Billie Morris, the owner Alaska Magazine and the Alaska Journal of Commerce, was reported to have offered $1 for the ADN.
“I had not put a price on the company,” Rogoff said, “(but) we believed there was value in the company. It would have been a very small percentage of revenue….We did not have any particular number.”
Pressed on that subject, she said the thinking was the company might have been worth up to $4 million – $30 million less than she paid – but “that would be high.”
Whatever the estimated value, it didn’t matter because Rogoff couldn’t find a buyer, although it should be noted that she didn’t start off trying to sell all of the ADN. Most of her early efforts, according to potential buyers, were aimed at selling the Alaska Dispatch News newspaper with Rogoff hoping to keep the ADN.com website.
No one would touch that deal in a world rapidly moving from words on-paper to words online.
Rogoff said she talked to the Binkleys about buying ADN early in the year, but like the other discussions that one went nowhere.
By early August, however, the news organization was in serious trouble. It was months behind in its payment of health insurance premiums – a legal violation that had been reported to the authorities – and GCI – the telecom and cable company which owned the building holding ADN’s only working printing press – was dunning the news operation for money.
Then, in early August, GCI went into state court to ask a judge to evict ADN from the GCI building and order it to pay $1.4 million in overdue rent, penalties and electric bills for the ADN printing press.
It was then Rogoff turned to the Binkleys for help. They loaned her $1 million in early August to keep the ADN afloat and offered buy ADN by paying themselves back the $1 million.
As of Monday, the $1 million loan was largely spent.
It will be “totally absorbed by this week,” Ryan Binkley testified when he took the stand in court on Monday.
Binkley attorney Erik LeRoy then walked him through a discussion of all the “snakes in the grass” the Binkley Company LLC, of which Ryan is the managing partner, had discovered in trying to sort out the ADN’s massive financial problems.
Rent is due GCI on Tuesday, Ryan said, and $350,000 in payroll needs to be met next week although ADN has almost no cash on hand. The suggestion to Spraker was obvious but unstated:
The ADN was going to fold unless it was sold to someone with enough capital to keep it afloat.
How much that will eventually cost the Binkleys is an unknown. Ryan said anticipated costs vary “depending on the location of the printing.” The Binkleys are still working on ideas for how to print the paper.
“We don’t have a plan yet,” he said.
“We are trying to sort out the printing,” which he described as “job 1-A.” As he spoke, his father and sister Kai Binkley Sims watched intently from the front row of court. The Binkley Company, Ryan said, might be interested in buying one of the ADN presses.
Which one is undecided. The others could eventually end up with the Bankruptcy Court to be auctioned off to help pay some of the debt owed creditors, but their value is so small they wouldn’t pay much.
And Northrim has claimed first position on any debt as a secured creditor, a position the Unsecured Creditors Committee is challenging.
For the Binkleys, though, that is now all in the rearview mirror. They’re position going forward is clear. The job is to salvage the state’s largest news organization. Some wonder if that can be done.
Christianson – Rogoff’s bankruptcy attorney – said the purchase agreement requires the Binkley group to take on about $2 million in liabilities, including up to about $600,000 in severance payments to ADN employees who lose their jobs and aren’t rehired.
Everyone in the news business who has looked at the ADN has said costs need to be cut dramatically. Estimates on required personnel downsizing have ranged from 30 percent to 50 percent.
Erik LeRoy, the bankruptcy attorney for the Binkleys, confessed there are those who think anyone buying the ADN is irrational.
“I’m representing three irrational Fairbanksans who thinking they’re doing the right thing,” he added. He confessed that the Binkleys might be doing the same as Rogoff once did, but he was confident they could do it better and make it work.
Ryan had a simpler explanation.
“We’re riverboat gamblers,” he said.
The Binkleys started building their family fortune hauling tourists on tours of the Chena River in Fairbanks on the Riverboat Discovery, a classic sternwheeler. They later diversified into other tourism businesses.
Over the years, they have succeeded as bottomline businessmen in a sometimes inhospitable corner of the 49th state. Winter temperatures in Fairbanks sometimes drop to 55 degrees below zero. Or colder
It takes a special breed to survive there for generations.