Photo by Bank Phrom
Photo by Bank Phrom

Alaska Dispatch couldn't see the forest for the dead trees

4/15/2015 8:03 AM

A year ago, the Alaska Dispatch, a small but ambitious online-only news site, shocked many Alaskans by buying the Anchorage Daily News, Alaska's most widely read newspaper and web site. The sale was taken as further proof of the demise of Old Media and the rise of the New -- the inevitable triumph of digital publishing over print.

The reality was more complicated.

The Dispatch had for years been an unprofitable business with a small fraction of the audience and revenue of the Daily News, but it had one remarkable asset: An owner named Alice Rogoff, a generous and committed benefactor of Alaska Native arts, a well-connected society matron, and the spouse of David Rubenstein, one of the wealthiest men in America with a net worth of more than $3 billion. Rogoff was very, very determined to make a mark in her adopted home state of Alaska.

After launching a Manhattan gallery devoted to Alaska Native art in 2008,

The following year Rogoff acquired a majority interest in the Dispatch, a home-brewed news website launched in 2008 by local journalists and former Press editors Amanda Coyne and Tony Hopfinger. Owning and expanding the Dispatch meant Rogoff got to pay bills, not cash checks. She's never said publicly, but it's likely that by 2013 she was spending as much as a million dollars a year to keep the web site afloat, and there was no scenario -- except radically cutting expenses -- by which the Dispatch's red ink would turn to black anytime soon.

Except one -- and it had everything to do with the Daily News.

'We don't do dead trees'

By 2012, the Daily News had suffered years of hard times, as had every newspaper in the country. The paper's owner, the publicly traded McClatchy Co. based in Sacramento, had gone deep into debt to place a huge bet on the future of newspapers -- a bad idea, it turned out, on the eve of the deepest recession since the Great Depression. The combination of debt, a nationwide economic collapse, the permanent switch of classified advertising from profitable in print to free online, and the irreversible and accelerating migration of readers from print to online threatened to sink the entire company.

In Alaska, the Daily News remained profitable, but at a level far below that of a decade earlier, and that profitability had only been achieved through brutal cost reduction. A newsroom that once employed the equivalent of 104 staffers, with an annual budget of $5 million, had shrunk to 34 staffers and $2 million budget.

The shell-shocked survivors -- and that included me -- had endured pay freezes, reductions in hours, pay cuts and at least four rounds of layoffs. The physical newspaper was palpably smaller (from an average of 40 pages a day to 24, with much of the missing bulk being classified ads).

Still, by mid-2013, it appeared the worst of the storm might have passed.

At the same time, Rogoff was trying hard -- for the second or third time -- to convince McClatchy to sell her the Daily News. The first time she'd asked, McClatchy executives had told her she'd need more than $60 million to consummate a deal. But after five years of sliding newspaper valuations, a purchase was potentially within reach for half that.

By the end of 2013, Rogoff had put $34 million on the table. The newsroom of the Daily News had just completed a major redesign of the paper, including the addition of new sections, new features and even a couple of employees. The staff had no clue a sale was under consideration.

McClatchy executives weren't trying to sell the paper but, under the circumstances, Rogoff's offer was simply too good to pass up. (By way of comparison, in the fall of 2013 a Boston businessman bought two daily newspapers, one of which was the prestigious Boston Globe, for $70 million). Rogoff's $34 million bid for the Daily News almost certainly made it the most valuable newspaper close to its size in the country.

Why did an independently wealthy, 63-year-old Alice Rogoff want so badly to buy the Daily News? By then her New York gallery had closed for lack of continued funding, and the Alaska Dispatch, likewise, depended on her personal checkbook. Rogoff and the Dispatch needed to graft its name onto a viable business, like a newspaper. The irony in that was profound.

The Dispatch had once boldly promoted itself with bus signs proclaiming, "We don't do dead trees," over a photo of a maul stuck in a stack of newspapers. Now it saw "doing dead trees" as its only hope for a future.

Rogoff came close to acknowledging that on the day the sale was announced:

"When we at the Alaska Dispatch say we've come to realize the value of a newspaper in print," she said, "you better believe we've come to realize it."

The Dispatch's news coverage of the transaction spun in a somewhat different direction, one consistent with its own mythology: for them it was a David-and-Goliath story, the tale of a newspaper giant felled by the courageous, never-say-die underdog in a head-to-head battle between competing brands of journalism.

In an embarrassingly overwritten profile of Rogoff, Dispatch reporter Craig Medred adoringly explained how the plucky heiress from Washington, D.C., despite her short residency in the north, embodied the very spirit of Alaska (she flies her own plane, for God's sake!) and would now take her place as a woman, like former Daily News publisher Kay Fanning, forging a trail to great journalism on the Last Frontier.

Excuse a digression

Before I continue, I want to briefly explain something about myself and my relationship to this story. For 16 years before the Daily News was purchased by Dispatch Publishing, I was the newspaper's editor. By the time I retired in May 2014, I had worked at the Daily News for more than 34 years. As an editor, I've supervised almost every person whose name appears here -- except for Alice Rogoff and Kay Fanning (and it was Fanning who first hired me at the Daily News). I was the editor who created We Alaskans magazine and the one who killed it. I managed years of expense reductions in the news department, which included deciding which of my valued colleagues would lose their jobs and which would not. I edited the series that won the Pulitzer Prize in 1989, as well as the "State of Intoxication" series. I am not a disinterested party reviewing these events. The story of Rogoff and her purchase of the Daily News very much overlaps my personal story, so please keep that in mind as you read on.

The dog catches the bus  

Rogoff and minority partner and editor, Tony Hopfinger, announced the acquisition of the Daily News on April 8, 2014, with proclamations of print and online innovation and outstanding journalism. So a year later, let's review what we've seen.

First of all, it's no longer the Anchorage Daily News. In a decision I described at the time as an act of vandalism, the new owners discarded the name of the paper in favor of the tortured and arguably redundant Alaska Dispatch News.

Alaska Dispatch News is a name you would adopt only if feeding your ego were more important than building on an established brand with a national reputation for quality journalism, and one you paid $34 million to get your hands on.

Because the Daily News' online traffic dwarfed that of the Dispatch, the Dispatch News wanted to keep the URL and brand, adn.com, but substitute its own web site for that of the actual adn.com. In the future, adn.com would stand for Alaska Dispatch News, not Anchorage Daily News.

The awkwardness of the new name was underscored by ugly new typography. A Daily News nameplate designed by one of the country's top typographers has been transformed into something resembling a three-word ransom note. Yes, that's a cosmetic issue, but it says something about the judgment, newspaper experience and business smarts of the new owners. Not an auspicious beginning.

Other aspects of the launch of Alaska Dispatch News were none the prettier, although that was hardly surprising. Rogoff and company had chosen a very big mountain to climb.

Because a newspaper is easy to read, some people think it must be easy to produce. But a newspaper is a complex enterprise: an event-driven, talent-dependent research and communications team, manufacturing and packaging plant, sales organization, marketing business, storage and distribution network and an information systems company, operating 18 hours a day, 365 days a year.

Think about a small group of people, none with actual experience running a newspaper, suddenly thrust into a complicated newspaper deal worth tens of millions of dollars, along with the sale of almost $15 million worth of real estate, negotiating contracts, calculating revenues and establishing budgets, merging two staffs who had long been publicly antagonistic toward each other, and all on a frighteningly short timeline. It would be a daunting challenge for even the most seasoned, multi-talented newspaper executive.

A smooth transition required a miracle. And there was no miracle.

Chasing 'great journalism'

Rogoff had the determination and money to buy the newspaper, but what did she want to do with it? I've heard her say several times her goal is to produce "great journalism," but I've never heard her explain what that means. She may be thinking about stories on rural Alaska and "The Arctic," two topics that fascinate her. She seems to rely completely on Hopfinger to define "great journalism" and know how to produce it, but Hopfinger's record as editor of the Alaska Dispatch raises big questions about whether he deserves that confidence.

Despite years of working with a publisher with her checkbook handy, little pressure to produce profits, no cranky subscribers, unlimited space and the freedom to cover any subject in any way he wanted, Hopfinger's Dispatch rarely produced stories of remarkable quality or impact, the kind of nationally recognized journalism that would justify Rogoff's faith in him. By comparison, Kay Fanning's Daily News, with a staff smaller than that of the Dispatch, won the 1976 Pulitzer Prize Gold Medal.

To the degree the Dispatch did have a reputation for producing something more noteworthy than the occasional better-than-average newspaper story, it had Tea Party flag-bearer Joe Miller to thank. In 2010, Miller's toppling of incumbent U.S. Sen. Lisa Murkowski in the Republican primary became a story of national interest.

During Miller's campaign, Rogoff and Hopfinger spent $115,000 suing to open records about the candidate's employment with the Fairbanks borough. When they prevailed, the records played a crucial role in Miller's final loss to Murkowski's write-in campaign. By any measure, the lawsuit demonstrated a commitment to public service journalism, and the story was an important one for Alaska.

Also, while attending a campaign event and attempting to question Miller, Hopfinger was subdued, handcuffed and "arrested" by Miller's bodyguards. Stories about the incident further damaged Miller's candidacy. The sensational story of a reporter assaulted by the entourage of a potential U.S. senator made national news and burnished the Dispatch's reputation as a scrappy journalistic up-and-comer.

Like every Alaska news medium, the Dispatch suddenly developed a national following during the spectacular rise and fall of Sarah Palin. That certainly helped introduce the site to readers who might never have found it otherwise.

The Dispatch wore the mantle of the future of Alaska journalism based primarily on its rising profile against the backdrop of a Daily News in decline. The Dispatch web site was attractive and serviceable, but seldom truly innovative, and far less dynamic, complete and creative than adn.com, the state's unchallenged online news leader.

Assembling the new team

In April 2014, as he prepared to assume his new role as president and executive editor of the Alaska Dispatch News, Hopfinger made a smart, far-sighted decision, one that might have seemed surprising given the Dispatch's history of animosity toward the Daily News, but one that almost certainly avoided turning an impending difficult transition into an unmitigated disaster. He retained David Hulen, the Daily News' top remaining editor, as his managing editor, putting Hulen in day-to-day charge of the Dispatch News newsroom.

Hulen is one of the most experienced and widely respected journalists in Alaska. Earlier in his career, as the rural affairs reporter for the Daily News he traveled the state extensively, covering everything from giant stories like the Exxon Valdez oil spill to the offbeat, only-in-Alaska pieces he and the paper relished. He was on the reporting team that won the 1989 Pulitzer Prize Gold Medal for Public Service. More recently, under McClatchy, he ran the paper's daily coverage and online efforts.

The announcement that Hulen would remain as managing editor was welcome news to Daily News staffers anxiously awaiting the new regime, though not all of them would survive the transition.

Strangling good journalism

As one of his first acts as new editor, Hopfinger announced plans to kill an ongoing Daily News reporting project called "State of Intoxication," as soon as possible. The project, by reporter Kyle Hopkins and photographer Marc Lester, was a year-long look at the social costs of alcohol use in Alaska.

Though it was arguably the best journalism being done in Alaska at the time, Rogoff, Hopfinger and Medred had all denounced it. They claimed the project was unethical because some expenses were paid by Alaska non-profit organizations concerned with alcohol abuse, a major public health issue in the state. (Non-profit support for public service journalism, at newspapers like the Sacramento Bee and Washington Post, has become more common as reporting resources have diminished.)

Hopkins and Lester had more alcohol-related stories planned and under way. Hopfinger grudgingly declared that he would permit "Intoxication" stories to be published for two more months, until the paper's contract with non-profit funders expired. Medred went out of his way to personally tell Hopkins, an exceptionally creative reporter and online contributor, that the Dispatch placed no value on him or the series on which he'd worked so long and hard.

About that time, the Alaska Press Club named "Intoxication" the outstanding public service journalism series of 2014. In the first months of 2015, the series is still being recognized as outstanding national-caliber journalism.

"Intoxication" placed second -- bested only by the The New York Times -- in the Schneider Journalism Award for Excellence in Reporting on Disability earlier this year. (The Kansas City Star, another McClatchy newspaper, came in third.)

And later this month, the series will receive a national award from one of the country's largest journalism organizations. (Look for a formal announcement on April 24.)

According to Hopkins, Hulen tried hard to keep him at the paper, including offering him a new position in Washington, D.C. Hopkins would have taken it, he said, but, among other reasons, he didn't want to work alongside Medred. He eventually took a job as online director for Channel 2 News.

Before he took over, Hopfinger let award-winning Daily News writer Julia O'Malley know he didn't value her column work but she could remain at the paper as a feature writer. She decided to stop writing the column and started helping out as an editor during the transition. After a planned maternity leave, she didn't return to the paper and is now a freelance writer.

Like other staffers, O'Malley resented what became a de facto, two-tiered salary structure -- with higher pay for former Dispatchers, and lower pay for Daily Newsers --which is apparently still in place, at least for some.  

Hopfinger had a personal score to settle with another Daily News reporter, Casey Grove. Grove had left the Daily News to work for the Dispatch, found it too dysfunctional to stay and took a pay cut to return to the newspaper. That was a slight not to be forgiven. Grove was sent packing.

Another Hopfinger target was ex-wife Amanda Coyne, an independent blogger who wrote a popular weekly political-insider column for the Sunday paper. Coyne was a former partner in the Dispatch. She too went overboard.

While Hopfinger was doing his best to see that exceptional journalism did not get into the paper, other long-time Daily News veterans -- familiar bylines like Zaz Hollander, Rich Mauer, Michelle Theriault and Lisa Demer -- waited to see what the new boss had in mind for them, while Hulen did his best to hold his team together.

Despite Hulen's steadying hand, the challenges of integrating staffs, adopting new computer and publishing systems, preparing to relocate into new office space and adjusting to new management and systems were monumental.

The demands of it all, on top of the normal strain of daily deadlines, took an obvious toll on the entire news operation. The first six months of the Alaska Dispatch News were a mess. Most days the paper suffered from an excess of insignificant, superficially reported, badly written, poorly edited stories.

I personally found the paper and website to be almost unreadable. I also recognized that the staff's efforts in just getting out a paper every day, under the circumstances, were nothing short of heroic.

Like a dream come true

Rogoff followed through on her commitment to expand the size and resources of her newsroom. The increase was primarily accomplished by merging the two staffs, but she also supported the hiring of new journalists. Hopfinger and Hulen mostly held on to the core of experienced Daily News staffers, integrating them with roughly a dozen Dispatchers. The result was a staff increase approaching 40 percent, something the Daily News' editors before the sale couldn't have dreamed of seeing.

The paper opened a fulltime bureau in Bethel, and pumped up its travel budget to provide wider coverage of rural Alaska. It recently added a Washington, D.C., reporter and a business reporter in Anchorage. During the current legislative session, with its looming state revenue crisis, the paper has had as many as three reporters writing from Juneau.

The Dispatch News regularly has a lot more stories each day than the Daily News did before the sale, and more stories from outside Anchorage. The quality of the writing, reporting and editing remains spotty, but is slowly improving. The paper's Juneau coverage this year has been energetic and indispensable to following events there.

While it is unlikely to ever achieve Rogoff's lofty goal of providing "a level of (Alaska) coverage never before seen," the Dispatch News seems capable of fulfilling its role as an important source of dependable journalism about Alaska. And were it to develop a real vision of the future of local news, exceptional journalism might come.

On April 9, Rogoff made the unexpected announcement that Hopfinger would step down from the executive editorship just days short of his first anniversary. He is moving to Chicago to care for his gravely ill mother. He'll retain the title of president and "editor at large" and will return to Anchorage periodically to help manage the company.

Hulen becomes the executive editor.

End of an independent voice

One of Rogoff's and Hopfinger's handfuls of substantive changes so far has been to eliminate unsigned editorials expressing the newspaper's institutional opinions. They explained the change as "letting readers have their say" in more columns and letters to the editor, and said the newspaper would no longer "tell readers what to think."

Choosing not to editorialize on public issues makes the Dispatch News unusual among American daily newspapers.

It's a decision I believe will have real consequences for the community. It silences the one powerful institution regularly willing to argue for public policies contrary to the interests of Alaska's political and economic establishment. Among details Medred failed to note in his comparison of Rogoff to former publisher Fanning, was the courage Fanning repeatedly demonstrated by taking controversial editorial stands on issues like oil taxes, environmental protection and Native rights, with the paper favoring the interests of ordinary Alaskans over those of big economic and political players.

The loss of that editorial voice strikes me as a case of Rogoff and Hopfinger not understanding or not taking seriously the responsibility of owning the state's preeminent newspaper. But maybe it was a pragmatic decision to protect their investment by not antagonizing the people who buy ads. Or perhaps Rogoff hopes to make a comfortable place for herself among the state's burghers.

Time will tell.

Another Hopfinger initiative was the resurrection of We Alaskans, a weekend magazine the paper first launched in 1980. Faced with declining readership, scant advertising and a thinning staff, the Daily News had stopped publishing the section 15 years ago. Now it's back, much as it was. It's obviously a benefit to readers, but it's hard not to see the return of a 35-year-old feature section as less a forward-looking innovation than a wishful cry that "the old Daily News is back."  

In January, Rogoff announced to a chamber of commerce crowd that the paper would soon offer a new service: letting businesses chose specific stories and photos to be written to their liking and published in the quarterly slick magazine produced by the advertising department and distributed around Anchorage. From her presentation, it seemed that selling "advertorials" was the paper's primary strategy for growing revenue. I hope not, but it's the only one I've ever heard her discuss.

A battle far from finished

While the Dispatch News almost certainly still enjoys much of the profitability it purchased with the Daily News, the troubling trends that battered the Daily News are now stalking the Dispatch News. The paper's readership numbers, reported to the national Audit Bureau of Circulations, show the same slow, steady loss of paying print readers. (The wasting away of the print audience is not peculiar to Anchorage; daily newspapers across the country face similar trends.)

The Dispatch News' total paid readership is down significantly for two reasons. The first is a risky decision Rogoff made almost immediately upon taking the reins of the paper. Not long before the sale, the Daily News had gone through the painful process of converting part of its online audience into paying customers. Doing so allowed the paper to count them as paid circulation, and they became a source of new revenue.

Rogoff reversed that decision: writing off the additional paid readership, revenue and effort that had gone into convincing online readers to start paying for content. Eliminating the paywall will certainly allow the unpaid, online audience to grow. In effect, she's betting that she'll be able to pay for expensive content by enlarging her online audience and leveraging it to increase online advertising revenue, without charging online readers directly.

It's a gamble and maybe it'll pay off, but it's worth noting that both McClatchy and The New York Times, among other big players, are looking to get a larger share of total revenue directly from readers to offset declines in advertising revenue.

Another reason paid circulation fell is the slow, steady leak of customers who don't renew subscriptions or stop buying single copies -- either because they're reading less frequently, reading for free online or not reading at all.

After a year, the Dispatch News' print and online advertising volumes don't appear to have changed much.

The 2014 election was a bonanza for local TV and online, but not so for print. The scramble for advertising dollars in general is tougher than ever. Not only are there fierce competitors in the Alaska market, but a proliferation of national online ad sellers can now reach into local markets that were once the exclusive preserve of newspapers and TV stations. At the same time, local businesses are more comfortable using the internet to reach customers without the intermediary of paid advertising. These trends will get worse for the newspaper.

Print newspaper trends now are crucially important, even if you believe online is the future. As the Dispatch discovered, online readers are not nearly as valuable as print readers. For the immediate future and perhaps longer, the money the print newspaper generates will be indispensable to the profitable delivery of news.

If the Dispatch News is going to survive, much less thrive, it needs a quiver full of smart, aggressive, coordinated strategies. It should put at least several hundred thousand dollars into a sophisticated, on-going and well executed marketing campaign, married to a series of significant content improvements. Such plans should have been roughed out and ready to launch shortly after the Dispatch took over, but it's been a year and nothing like that has happened. That's a lot of missed opportunity the paper can't afford.  

Transition troubles not over

One key to Rogoff's financing of her purchase was an agreement to immediately sell the newspaper's real estate to GCI, Alaska's largest cable and telecommunications company. The Daily News headquarters was valued at roughly $14.5 million, so selling the building generated a big piece of the $34 million price of the paper. Rogoff might not have been able to afford the paper without selling the building, but now that deal is coming back to haunt her.

When a GCI subsidiary bought KTVA-Channel 11 in late 2012, it leased space for the station in the half-vacant Daily News building. The newspaper welcomed the rental income because it helped avoid additional expense cuts. GCI wanted to buy the building outright, but McClatchy didn't want to sell it.

Rogoff and the chief executive of GCI, Ron Duncan, have known each other for a long time. They attended Harvard Business School together. They both fly and co-owned the aircraft hangar at Merrill Field near downtown where the Alaska Dispatch had its offices.

Rogoff wanted the paper; Duncan wanted the building. They both got what they wanted.

The terms of the building sale required the Dispatch News to relocate its offices by the end of 2014, which was no small chore during an already chaotic transition, but which the company completed successfully. (From Mountain View to Midtown.) The sale terms also gave the Dispatch until the end of 2015 to finalize the move and relocate its two-story printing press.

Installing a press is a complicated, time-consuming job. Presses are cemented into the floor and not designed to be picked up. They can't just be put anywhere; space has to be designed for them. From start to finish, moving the Dispatch News' press is a six- to 12-month project. As of April 14, about eight months before the deadline, Rogoff still doesn't have a place to relocate her press. Meanwhile, GCI is determined to hold the Dispatch News to the December 2015 deadline.

If this is not yet a crisis, it will become one soon.

A possible solution is to outsource the press work to Anchorage Printing, the largest commercial printing company in town. But Anchorage Printing has previously said it's not willing to print the Daily News. Taking on a daily newspaper client would likely require significant investment and a long-term commitment by Anchorage Printing's owners, who previously expressed their skepticism about the Daily News' long-term prospects.

How Rogoff will resolve this is unclear. With each passing day, the time she needs to get her press out of the building is slipping away, as is her ability to negotiate favorable terms with a contract printer.

Her friend Ron Duncan could come to her rescue, though if he did, she would be further in his debt -- not a newspaper owner's ideal relationship with the chief executive of one of the state's richest and most politically connected companies.

A long way to the top

For a smart and sophisticated woman, Rogoff has shown a surprising reluctance to hire the kind of top-tier publishing, marketing, financial, advertising and technical expertise she needs. The right hired guns could have made the takeover less of a train wreck and better positioned Dispatch Publishing to develop and launch a long-term strategic plan.

Rogoff occasionally shares tidbits of newspaper advice from her friend Warren Buffett, but mostly she seems to rely on a small circle of loyal confidantes and friends, none of them with the kind of newspaper experience she needs. They may have her interests at heart, but at best they constitute a minor league team trying to hit big league pitching. In baseball and most other endeavors, that's not a formula for success.

The Manhattan art gallery is closed. The Alaska Dispatch had to swim for a life raft to avoid drowning. Let's hope the Dispatch News fares better, because Alaska needs a good daily newspaper, one that's financially strong enough to produce courageous, conscientious journalism well into the future. That there will be one is not a given, regardless of who owns it.

Rogoff and company still have a long way to go to the top of the mountain.

Post script: In the end, my feelings about the Dispatch's purchase of the Daily News are mixed. Other than an inability to see the future, the problems of the Daily News were not the fault of McClatchy, which managed the paper as well as it could under very difficult circumstances, and is still struggling to do the right thing for 29 other papers. Nevertheless, despite the glimmer of a turnaround in late 2013, I saw little hope of a major financial rebound or the return, ever, of the truly great paper I once worked for.

I don't think the news department could be in better hands than those of David Hulen. I know he'll produce the best journalism that time and resources allow. The big challenge is on the financial and business side of the Dispatch News, and there I see little to inspire confidence. Perhaps Alice Rogoff is a visionary, new kind of newspaper entrepreneur, but it seems more likely that she is a nice, well meaning but naive woman, ultimately unprepared to build a future for Alaska's most important journalistic institution.

Patrick Dougherty is the former editor of the Anchorage Daily News, a fly fishing addict and an occasional writer and strategic communications consultant. Email him at pat.dougherty@anchoragepress.com or follow him on Facebook and Twitter @pdougherty.

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