The former owner of the bankrupt and gone Alaska Dispatch News/ADN.com took the stand in Anchorage Superior Court on Wednesday to testify under oath that the former editor of the 49th state’s by far largest news organization lied about a note promising him $1 million.
Alice Rogoff, the ex-wife of U.S. billionaire tycoon David Rubenstein, said 10 annual payments of $100,000 per year she guaranteed ADN editor Tony Hopfinger in 2014 weren’t for the purchase of his remaining, 5 percent interest in the online-only news organization – AlaskaDispatch.com – he started with ex-wife Amanda Coyne.
Instead, the 67-year-old Rogoff said, the promise was an added “incentive comp” to Hopfinger’s already healthy, new, $190,000 per year salary to encourage him to stay in Alaska for a decade “as president of the company and help me make it work.”
The first witness called by Hopfinger’s attorney in a lawsuit demanding she pay up on a handwritten, signed and dated napkin-promise, Rogoff portrayed the note as nothing more than an effort to buy Hopfinger’s fealty because she needed him to make her newspaper enterprise succeed.
She admitted, however, that there are no witnesses to back this claim. The note was written while Rogoff and Hopfinger were in the offices of the Anchorage law firm Birch, Horton, Bittner and Cherot. It was witnessed by Jennifer Alexander, one of the firm’s small army of attorneys.
But Rogoff said Alexander was in and out of the conference room at the law firm and might have missed a discussion she and Hopfinger had about what the 2014 promise covered. Hopfinger’s lawsuit stems from his claim the note was a guarantee of a buyout of his 5 percent interest in Alaska Dispatch Publishing at a time when Rogoff was spending $34 million to purchase the Anchorage Daily News from The McClatchy Company in Sacramento, Calif.
An email Rogoff sent her accountant a couple of days after that Birch-Horton meeting reflects that Hopinger wanted to sell his interest.
In opening arguments in the case Wednesday, Rogoff attorney David Gross, another of the Birch-Horton staff, portrayed Hopfinger as a gold digger after the money of a woman now the state’s most famous rich lady.
“Pay Tony what he is owed in this case, which is nothing,” Gross admonished a jury of five women and nine men. But Rogoff later undercut Gross’s gold-digger claim as well as his argument the napkin agreement between the former best friends forever was invalid because it hadn’t been formalized.
On the witness stand, Hopfinger attorney Jeffery Robinson asked Rogoff how it was that Hopfinger, who was under contract to run Alaska Dispatch from 2009 to 2011, continued to work there and get paid from late 2011 until the time of the Daily News purchase in 2014 without a contract.
Rogoff explained a new employment contract wasn’t necessary, “not between Tony and me.”
Asked about a raise Hopfinger received during the Dispatch days that boosted his salary from $75,000 per year to $90,000 per year, Rogoff said, “I wanted to give him more of a raise, and he wouldn’t take it. I don’t know why.”
In her testimony, she described Hopfinger as more a partner than an employee in an effort to take over the news business in Alaska and build a media empire.
“We were in a continuous conversation about the journalism business,” she testified.
“He was also negotiating on my behalf,” she said.
“I was under the assumption, and Tony never corrected me, that he would be with me forever and ever,” she said.
During the meeting with Alexander in 2014 to draw up a new employment contract to replace the one that expired in late 2011, she said, she expressed the view the deal’s five-year term seemed too short.
“I wanted it to be lifetime,” she said, but Alexander joked that “indentured servitude was not permissible.”
Rogoff regularly turned in her chair to speak directly to the jury while on the stand. She was sometimes animated and other times thoughtful. Occasionally she crossed her arms in the way she was long known to do at Dispatch when irritated. Her tinted brown hair was pulled back. She wore a long, black almost trench-coat-like dress and a scarf covering her throat and pulled up around her neck.
She both looked and sounded younger than the grandmother that she is.
Business or hobby?
Opening arguments in the case revealed that when Rogoff arrived in Alaska in the late 2000s, she was supporting herself with funds supplied by a marital settlement agreement with Rubenstein.
It had earlier been reported here that Rogoff was getting $5 million per year from Rubenstein to stay in the 49th state, but the first public acknowledgment of that sum came during opening arguments.
How much she is now getting as the result of a year-old divorce from Rubenstein is not known. Before the trial began on Wednesday, Superior Court Judge Andrew Guidi cleared the courtroom for a closed-door session to discuss with lawyers information Rogoff and her attorneys want to kept hidden from the public.
It is widely believed that discussion was about the divorce settlement with Rubenstein, a budding talk-show host who is reported to be worth $2.8 billion earned from co-founding and building The Carlyle Group, an investment advisor that counts among its clients the Alaska Permanent Fund.
Rogoff, who was known to occasionally make a vile remark or two about Rubenstein in private, seemed to relish spending his money trying to build a media empire in Alaska.
(Editors note: The author worked for Alaska Dispatch for several years and for the Alaska Dispatch News briefly. In that time, he spent hours in Rogoff’s inner circle. His partner helped connect Rogoff with Hopfinger and Coyne to finance the original expansion of Alaska Dispatch in 2009. He was involved in numerous discussions with Rogoff, Hopfinger, Coyne and others about how to grow the Dispatch News and do battle with the much larger Anchorage Daily News. He and Rogoff parted ways in 2015 after he ignored directions to stop reporting on Roland Maw, then a member of the state Board of Fisheries and the one-time executive director of the region’s most powerful commercial fishing organization. As a result of questions raised while doing that reporting, Maw was charged with multiple felonies related to theft and unsworn falsification involving the state’s Permanent Fund Dividend.. The Dispatch News suppressed the Maw story, but it is unclear to this day whether Rogoff was directly involved in that decision. She was, however, as she said in a personal conversation at the time, concerned about the author stirring things up. Her newspaper was then in deep financial trouble and bleeding money to the tune of hundreds of thousands of dollar per month. She told Hopfinger she couldn’t tolerate or afford any activities that might expose the business to a lawsuit, even a frivolous one. Her decision to be rid of the author was a reasonable one from a purely business standpoint. Maw is scheduled for trail in February.)
None of Rogoff’s Alaska journalism businesses ever made a penny.
Her attorney – Gross – said during his opening arguments that Alaska Dispatch reported a loss of $958,000 at the end of 2011. By the end of 2013, the annual loss had grown to $1.8 million.
Total losses for the Dispatch from the time Rogoff entered the picture in 2009 to the end of 2013 were $5.5 million, he said.
By then, however, she was in conversations with McClatchy to buy the Daily News and the company website, ADN.com. That $34 million purchase, which left Rogoff heavily leveraged, came in April of 2014.
Afterward, Rogoff would proceed to lose money to the tune of an average of about $8 million per year before she took the business into bankruptcy in August of last year.
Whether Rogoff ever intended to make money at the Dispatch is unclear. The dream of Hopfinger and Coyne when they started the business was to build the country’s first profitable, online-only news organization.
The plan to do that was simple: Maintain rock-bottom overhead, hire some decent reporters, build a website people would read, and fund it in the old-fashioned newspaper way with advertising.
Alaska Dispatch operated out of small, funky office in a hangar at Merrill Field, a small-plane airstrip near downtown Anchorage. As Rogoff testified, she had no office there, and she was an irregular visitor. Her role in the company usually involved ordering up more spending.
Hopfinger and advertising sales manager Tom Marriage regularly complained that every time the website seemed to be moving toward profitability, Rogoff called for the addition of more staff, which raised expenses.
Her long-term plan appeared to mimic that of the California-based McClatchy, which entered the Anchorage news market when the Anchorage Times was the state’s far-and-away dominant newspaper.
“In 1979, when McClatchy bought the paper, the morning Daily News had only 11,500 subscribers, compared with 45,600 for the afternoon Times. But The Daily News surpassed The Times in circulation six years later,” the New York Times reported when the Times finally sold out to McClatchy and shut down its downtown Anchorage offices in 1992. “McClatchy poured millions of dollars into the newspaper, starting a new Sunday issue with a popular magazine celebrating the North, and other sections.”
After the Times died, McClatchy more than recouped any losses. The Daily News was a cash cow. It sent about $10 million per year south to McClatchy even as it began laying off newsroom staff that numbered over 100 in 2007 but had shrunk to 34 by 2011.
Though ADN 2009 publisher Patrick Doyle pitched the cuts as necessary “to ensure the viability of our newspaper and to adjust to these new competitive and economic realities,” the reality was the cuts were necessary to try to save The McClatchy Company, which tried to swallow a whale in the form of the $4.5 billion purchase of Knight-Ridder Inc. in 2006 and was choking on it.
McClatchy was still struggling to survive in 2012. It is struggling to survive today. In August, it laid off another 3.5 percent of its staff as it continues to downsize to limit constant losses.
Rogoff believed that by spending aggressively on the Dispatch, she could build the business to threaten the ADN, buy the newspaper and its website, and then use the ADN – as McClatchy did in the 1990s – to recoup the losses.
She made two potentially fatal errors, Fuller Cowell, a one-time publisher of the Daily News, later the publisher of the Fairbanks Daily News-Miner and now retired, later observed.
The first was obvious. She paid too much for the ADN.
The second was that she bought the ADN intact instead of buying its assets. That put her on the hook for severance payments to ADN staff if she laid anyone off and created other problems. As part of that deal, she agreed to pick up workmen’s compensation claims against McClatchy and more.
About the only thing at which she balked was paying the costs of retiring ADN editor Pat Dougherty. She pushed back at that, and McClatchy finally said it would take care of him.
After the sale, Rogoff only compounded the newspaper’s problems by ending the ADN’s mandatory annual furloughs, which McClatchy had instituted to reduce costs; giving some ADN employees raises to bring them in line with the pay for Dispatch employees; and adding staff.
And even as her company bled money because of all of this, she was – as late as March 2016, only nine months before she approached the precipice of bankruptcy – writing about how the ADN was in “investment mode.”
“News flash, first: We are buying a higher-quality printing press that will be in place later this year,” Rogoff wrote then. “With so many of you still loyal readers of our print newspaper, this will give you reassurance that we’ll be printing for years, and perhaps decades to come. Thanks to this different press, the paper will be more colorful, somewhat redesigned, and vibrant in new and different ways. We are planning for at least 15 more years of printing the paper at a new location in Anchorage.”
The 15-year life would shrink to a little over a year before Rogoff’s paper was dead.
Against this backdrop, it is hard to place a value on the Dispatch News shares that Hopfinger says he sold Rogoff. Gross, in his opening argument, tried to convince jurors the Dispatch was never worth anything and thus, Rogoff wouldn’t cut a deal to sell, and even if she did, it would be illogical to spend $1 million for nothing.
But Rogoff emails, and her testimony on Wednesday, under cut that idea as well.
On a screen in the courtroom, Robinson popped up an early morning email from Rogoff to Hopfinger scheming to put together a collective of Dispatch.com, ADN.com and KTUU.com (the online site of Anchorage television station) to build an Alaska news supersite.
Rogoff tried fob the January 2014 missive off as “late-night musing,” but the reality is Alaska Dispatch was in some ways staffed by a gang of vampires, including the author. Emails and stories in need of editing were regularly flying back and forth in the tubes in the wee hours of the morning.
In Rogoff’s email to Hopfinger, she valued the Dispatch at $3 million to $4 million based on the number of visitors the website attracted. She put the ADN’s value at $15 million to $20 million.
Asked how she arrived at those numbers, she confessed to Robinson that she “pulled it out of thin air.”
What followed was a long discussion of “eyeballs,” ie. the number of people looking at screens like this at this very moment. Rogoff said she’d talked to KTUU owners about eyeballs.
“We’d already told them we had value,” she said. “We had value….(but) the value of the eyeballs depends on who is using them and what for.”
She then used a styrofoam coffee cup she was holding at the witness box for a demonstration.
“You can’t say this thing, my cup here, is worth anything,” she said, because it’s worthless until someone makes a bid for it. That helps establish a value, Rogoff said. She did not mention that the same could be said of her bid for the Daily News.
Value, however, is a moving target, as she also noted. The Northrim bankers who gave her a $13 million personal loan to help with the purchase of the Daily News wouldn’t have bought the eyeball idea, she said.
“They didn’t believe the assets of the company were worthy anything,” she said, which forced her into taking out that personal loan. And even then she had to get Rubenstein to co-sign.
Rogoff’s testimony is to resume Thursday at 8:30 a.m. in Guidi’s courtroom.
When it ended, she was explaining the email to the account saying that “Tony prefers not to have ownership going forward.”
Robinson was trying to find out why that was and what Rogoff expected to happen to Hopfinger’s ownership if she didn’t buy it. Rogoff said part of Hopfinger’s problem was that she was talking about bringing businessman John Rubini into the Dispatch as a partner, and Rubini didn’t meet Hopfinger’s “narrow view of (journalistic) standards.”
Rubini is a politically well-connected real estate developer. The Los Angeles Times in 2003 accused him playing a part in a sweetheart deal that helped the late Sen. Ted Stevens invest in real-estate that went from a value of $50,000 to $750,000 to $1.5 million over the course of only five or six years. Stevens denied there was ever any wrong doing.
Hopfinger worried that Rubini might try to use the newspaper to push a political agenda.