The staid facade to which 67-year-old, millionaire publisher Alice Rogoff has clung through more than a year of off-and-on court appearances in the wake of her bankrupting Alaska’s largest news organization finally cracked on Thursday.
On the stand in Anchorage Superior Court for the second day answering questions related to a $1 million lawsuit filed by former best-friend forever Tony Hopfinger, she looked very frail and human for a brief few minutes.
Some tears appeared in her eyes amid questions about the tight bonds that once bound her to Hopfinger and then-wife Amanda Coyne, the founders of the Alaska Dispatch. Rogoff described Coyne as the “guru” of the long gone, online news start-up, and Hopfinger as the cement that held the business together.
Over the course of a few short years from the end of the 2000s into the 2010s, Rogoff invested enough money, and Hopfinger, Coyne and a small group of reporters invested enough sweat energy in the Dispatch to build it from nothing to a respected and steadily growing news organization. The Columbia Journalism Review labeled the Dispatch a “regional reporting powerhouse” in 2010.
The Dispatch was as much a family as a news organization in those days, and though Rogoff only flitted in and out while others labored 60 to 80 hours per week, she was emotionally attached. She was the visiting grandma to a bunch of young reporters being schooled by Hopfinger, Coyne and a cranky old uncle, who worked in a rundown office in an airport hangar with a cupboard always stuffed with snacks and wine, and a refrigerator guaranteed to contain the makings for a late-night sandwich and, of course, a beer.
Rogoff knew how to take care of her people in those days, and though the pay wasn’t that great and the offices were a little grungy, the Dispatch had a lot of the fabled elements of internet start-ups everywhere: free food and a free bar, freedom to innovate, and esprit de corps.
More than once in those days, Rogoff testified, she told people she, Hopfinger and Coyne were in a “three-way marriage. I used to say that all the time publicly. We just all understood each other.”
“In my mind,” she said,”we would be making money.”
The marriage started to come apart after Coyne fell out of love with Hopfinger and in love with a powerful Alaska lobbyist in 2012. That caused all sort of problems. Hopfinger and some others on the Dispatch staff didn’t think it was a good idea for Coyne to be covering politics while in a romance with someone who tended to end up with his fingers in every big political deal in the state.
“(Hopfinger) thought that a little more than I did,” Rogoff admitted. “He thought he couldn’t trust her reporting.”
Already separated from billionaire husband David Rubenstein and destined to divorce, having grown up and spent most of her adult life in and around the ruling elite on the country’s East Coast, Rogoff had a slightly different view.
In “that great swamp of Washington, D.C., that (sort of thing) happens every day,” she said. But it fell on Rogoff to deal with the problem.
“I had to confront Amanda,” Rogoff said. “It was very difficult for me.”
Coyne was sent packing with a years salary and a $5,000 payment for her 5 percent interest in Alaska Dispatch, which was at the time losing about $1 million per year. Rogoff told the company accountant to transfer Coyne’s shares in the company to Hopfinger, but that never happened.
Coyne eventually ended starting her own website and working with the Anchorage Daily News (ADN), the largest daily newspaper in the state and the home to the state’s biggest news website. Rogoff bought that business in 2014, combined it with the Dispatch to create the Alaska Dispatch News, and suddenly had herself a news operation that was everything the Dispatch wasn’t.
Though the Dispatch News lost money in every year of its existence, the losses – even when they reached $1 million per year – were well within the $5 million per year Rubenstein was paying Rogoff to stay in Alaska as part of a marital separation agreement.
Rogoff also thought $5 million enough to subsidize her in the short-term as she and Hopfinger turned the combined Dispatch and Daily News, renamed the Alaska Dispatch News, into Alaska’s dominate news “supersite,” as she called it.
The supersite turned out to be a goal too far. The online culture of the Dispatch immediately clashed with the newspaper culture of the Daily News. The free kitchen and bar went away on the first day of the merger. The esprit de corps was dead by the third. Reportorial freedom died almost as fast.
Dispatch, which had been free to cover whatever was interesting, was suddenly saddled with covering everything that “needed” to be covered. The expansion came complete with an HR director and an employee handbook which not only banned a drink in the office; it said you couldn’t even have a beer on the premises, which specifically included the parking lot.
A couple of reporters joked about how they’d need to be sure stop at the microbrew on the way home instead of the way to work, but it wasn’t funny.
Neither were the new business’s financial problems. Rogoff suddenly had more reporters and editors than she needed, but she couldn’t let any of them go without paying severance because instead of simply buying the Daily New’s assets, she’d bought the business which brought with it responsibilities and image issues.
Rogoff didn’t want to be seen as the woman who purchased the state’s largest newspaper and promised bigger and better journalism only to fire a bunch of people. As a result, the new ADN became a lot like a cash-strapped state government; there was a lot of talk about budget cutting and not much budget cutting.
Even that plus the culture-clash combined couldn’t, however, match a bigger, fundamental problem.
In order to swing the $34 million cost of buying the ADN in the spring of 2014, Rogoff had sold the newspaper’s 125,000-square-foot headquarters containing its press to GCI, a telecom and cable television company, for $14.5 million. As part of the deal, the company gave Rogoff time to find a way to print elsewhere, but the clock was running.
Finding space for new offices for the Dispatch News staff wasn’t hard, but the press was another matter. The Goss Headliner in the old Daily News building had beneath it a reinforced-concrete floor thicker than that beneath any other building in Anchorage because the press required it.
Rogoff was either going to need to build a new headquarters into which to move the press, an expensive operation; find a suitable old building that could be remodeled to hold a newer press requiring less foundational reinforcement, an only slightly cheaper operation; or contract to print the newspaper as the Binkley Company from Fairbanks would do once it bought the $34 million Dispatch News out of bankruptcy last year for $1 million and rebranded it back to the Anchorage Daily News.
Hopfinger negotiated two tentative deals with companies willing to print the Dispatch News. Rogoff ended up vetoing them both.
Hopfinger, meanwhile, was wrestling not only with the merger of the two companies and the pressing press issue, but with family issues. His brother was already fighting cancer in the Lower 48, and his mother was diagnosed with terminal cancer in 2014.
He’d also met another woman since getting divorced from Coyne, fallen in love and was making plans to remarry. The stars were aligning to push him south to be closer to family, and with Rogoff having already promised him $100,000 a year in payment over 10 years for his remaining 5 or 10 percent interest in Alaska Dispatch, it looked to him a good time to relocate.
Tears for the could-have-been
It was against this backdrop that Hopfinger attorney Jeffery Robinson on Thursday steered Rogoff back toward the question of why the Coyne shares promised to Hopfinger after Coyne’s departure never got to Hopfinger.
The attorney wanted to know how Rogoff viewed Hopfinger’s status; was he a 5 percent or 10 percent owner of the company when the Dispatch News went under?
“I wouldn’t have lost it if he’d been there,” she shot back, and then started to cry only to apologize.
“I’m sorry,” she said, “but it gets very emotional to me.”
She would later return to the same topic. More than once, she repeated that she wasn’t blaming Hopfinger for the bankruptcy of the Dispatch News. As the company owner, she said, that was her responsibility.
But again and again she appeared to be blaming Hopfinger for the failure of the Dispatch News.
“He left me in the lurch on the project that killed the newspaper,” she said at one point.
“Is that what this is about?” Robinson responded.
Is that why she was claiming the promise of $100,000 a year for 10 years she scrawled out on a cocktail napkin in 2014 was a performance incentive when all the available written evidence showed Hopfinger, lawyers for Rogoff and Rogoff (in an email she said she didn’t see) conferring on a Dispatch News “buy out” of Hopfinger’s remaining interest in Alaska Dispatch, the attorney wanted to know.
“I know what was meant by it,” Rogoff shot back. “Full stop!”
The napkin promise, she said, was “about employment. It was always about employment….I assumed we were partners for life.”
Why then, Robinson wanted to know, did Hopfinger negotiate a five-year employment contract instead of a 10-year contract, why wasn’t the $100,000 per year incentive payment written into that contract, and why did the contract allow Hopfinger to escape with a simple, 30-day notice that he wanted out?
“He’s not like imprisoned in Alaska, correct?” Robinson asked.
“I didn’t really focus on that,” Rogoff said.
She and Hopfinger, she has suggested, were so tight they never needed to talk about those sorts of details. When Hopfinger, who’d been working for close to six years without a vacation, said he needed some time to spend with his terminally ill mother, Rogoff said, she told him to take all the time he needed.
Hopfinger suggested they shift editorial responsibilities to David Hulen, a former Daily News editor, and transfer some of his salary to provide Hulen a raise, Rogoff said. Hopfinger, meanwhile, would continue to work remotely from Chicago and visit Anchorage regularly to help Rogoff try to get the company’s bleeding finances under control.
Soon, however, she began to worry he was spending too much time in Chicago with his new wife and too little in Anchorage.
“He was gone more than I thought he should be,” Rogoff said, and then “he sold his house, and he hadn’t told me.”
After that, it wouldn’t be long until they ended up in an argument in the Alaska Railroad parking lot and the one-time BFFs became FNM. Neither Rogoff nor Hopfinger have talked about that meeting yet, though Rogoff’s attorney, David Gross, claimed in his opening arguments that it ended with Hopfinger saying this:
“F— you. I’ll see you in court. I might as well quit.”
Rogoff contends that Hopfinger at that point did quit. Hopfinger has said he never officially quit, but got fired.
Bonus grab bag
What else was learned from the Rogoff testimony Thursday?
- David Rubenstein – a man worth an estimated $2.8 billion; a co-founder of the Carlyle Group, an investment firm; and a mogul famous for his ability to pick sound business investments – might have made his worst ever investment in Alaska. Rogoff testified that $5 million of the $6 million she’d earlier claimed to have put into the purchase of the Daily News was actually a Rubenstein investment. The Carlyle Group manages millions of dollars for the Alaska Permanent Fund.
- Rogoff does not like the $5 million a year that Rubenstein was paying her referred to as “income.” She bristled at the term. “That really offends me,” she told Robinson. She wanted the money referred to as an “infusion of cash.”
- Though neither the Alaska Dispatch nor the Alaska Dispatch News made a profit in Alaska over their combined eight year run, Rogoff was serious about being in the news “business,” she said. When Robinson asked her if what she was doing might better be considered a hobby than a business, she said, “absolutely not.” At some point, she said, she expected one of her businesses to break even. Rogoff is now the publisher of Arctic Today; it is unknown whether it is making money.
- Hopfinger and Coyne started Dispatch with the idea of proving online news could be made to work as a legitimate business, and Hopfinger kept asking Rogoff, who was technically in charge of the business side of the operation, to develop a budget so he could try to keep costs in line with revenue estimates. But, Rogoff testified, “it was just a thing to him.”
- “In my mind” was the Rogoff phrase of the day. She used it repeatedly. She said the confusion over the transfer of Coyne company shares to Hopfinger might have failed to happen because “in my mind” they were a unit. The $1 million payment to Hopfinger over 10 years was a performance incentive “in my mind.” A buy-out, she said, “in my mind, was an employment contract.” “In my mind, money was money,” she said.
- The companies Rogoff hired to assess the value and profitability of the Daily News before she bought it were PT Capital, an investment firm she started in Alaska, and the “Hourly Nerds,” a group of Harvard Business School students. They had a “model” into which one could put numbers and determine whether a company would be successful or not, Rogoff said.
- A newspaper valuation expert was never consulted on the Daily News purchase because “I didn’t need to,” Rogoff said. She knew people familiar with the newspaper business and talked to them, she said. She specifically called out legendary investor Warren Buffett; “we discussed all the financials on the phone,” Rogoff said.
- Hugh Short at PT Capital, which is vying to oversee some investment for the Permanent Fund, and former banker Rich Monroe, working at PT Capital in 2014, both advised against Rogoff buying the ADN. They said the cost of building a new printing plant would sink the business. They were proven right.
- Rogoff’s Alaska Dispatch email was an “alias address.” All of her email, she said, was processed through an East Coast server and pinged back to her. She blamed the service for missing one of the early emails from Kathy Black, an attorney at Birch Horton Bittner and Monroe, outlining a Hopfinger buyout plan.
- Rogoff agreed that Hopfinger’s communications with Black about a buy-out plan would indicate a buy-out wasn’t some idea Hopfinger came up with after the famous napkin note was written. “As I read this memo now,” she said, “this is totally what Tony is saying.”
- A day before Rogoff wrote out that now-famous, $1 million pledge on a cocktail napkin, Suzanne Alexander – an attorney at Birch, Horton, Bittner, Cherot – emailed Hopfinger a “conflict of interest letter” and copied Rogoff. In it, Alexander noted the firm represented Rogoff and advised that Hopfinger might want to retain his own counsel to aid with three things: his new employment agreement, his membership in the new company that would run the Alaska Dispatch News, and settlement of his interest in Alaska Dispatch Publishing, which was being drained into the News. “I wasn’t aware she was going to send this,” Rogoff said. “In my mind, none of them were distinct….She never set me down and said we are doing these three distinct things.”