Alaska newspaper sale: a second look at money, logic behind purchase
The news out of Anchorage Tuesday afternoon had one of those story lines too good to check — plucky little digital upstart Alaska Dispatch is buying the legacy Anchorage Daily News for $34 million from The McClatchy Co.
Well, yes. But several accounts, including those of The Associated Press and Reuters, neglected to mention that Alaska Dispatch owner Alice Rogoff is married to multi-billionaire David Rubenstein, co-founder of The Carlyle Group private equity firm. The Dispatch, in its thorough takeout on Rogoff, noted that she is wealthy in her own right. Her father was an engineer and businessman who invented a key component of GPS systems and cell phones.
So the financial story is that another rich person has bought another hometown paper. A little twist was that the Anchorage Daily News was not for sale until Rogoff made her offer. McClatchy shares took a modest bump up the morning after the sale, indicating the stock market is good with this kind of sell-off. We seem to be entering a period where newspaper groups are quite willing to dispose of some titles as The New York Times Co. did with its regional newspapers and The Boston Globe.
Also, unlike other well-off buyers like John Henry in Boston, Doug Manchester in San Diego and Glen Taylor weeks ago in Minneapolis, Rogoff comes with her own news operation. It is a substantial one with about 30 employees overall and a newsroom of about 20.
The buyers said in their announcement that it will take at least six months to put the Dispatch and the Daily News websites together. That is only one of the intriguing questions as the acquisition goes forward. My email request to Rogoff asking for an interview was unanswered. So here are a few issues I think will be worth watching:
Who is in charge?
Rogoff will likely become publisher, and I am guessing that Tony Hopfinger, editor and the founder of Alaska Dispatch before she acquired a controlling interest, will be the top editor of the merged operation. But the pair will need to decide whether the print paper needs its own experienced leaders with daily print backgrounds on both the business and the news side.
A metro or a statewide focus?
Rogoff is a self-described enthusiast for the whole state, regularly flying her own plane to remote locations. The Dispatch has a section on Arctic Region news and Rogoff holds a yearly conference pulling in leaders of Iceland and other far north countries. Hopfinger has written extensively about Alaska's rural indigenous population and was co-author of a book about Big Oil's domination of the state.
That's not to say the Daily News doesn't have its own generous ration of state news like a series on Alaskans and alcohol. Ideally the merged operation will simply publish more good stuff. But I do wonder how the eclectic interests of the Dispatch will mix with the daily grind of cops, courts and sports news of the Daily News.
Conflicts of interest?
Pando Daily's David Sirota weighed in with a piece noting The Carlyle Group's huge presence in Alaska. So will how will Rogoff's paper and digital editions cover that story? If she is smart, and by all accounts she is, she will take pains not to mandate favorable coverage of her husband's firm.
John Henry, for example, has taken pains to say that The Boston Globe's exhaustive and often critical coverage of his Boston Red Sox should go on unchanged. That is probably an easier call, however, for a sports franchise than a big business with plenty of public entanglements.
My read is that Rogoff like others in the new wave of local owners is motivated by a passion for the place and the conviction that it deserves a first-rate, vital newspaper organization. But drawing the line between caring and pushing pet causes remains an occupational hazard for sole proprietors. Rogoff's background as a journalist and publishing executive (assistant to former Washington Post CEO Don Graham and a decade as chief financial officer of U.S. News and World Report) gives her an edge in making the right calls.
Wealthy owners can put investments both in journalism and in digital transformation ahead of high short-term profits in a way publicly-traded companies cannot. In announcing the acquisition, Rogoff said she will do just that.
Assuming the Daily News is like other McClatchy papers, it runs with a relatively high operating margin of 15 to 20 percent. Executives have been forthright in saying that they would prefer not to be making the cuts in news staff and news space to keep earnings up. But paying interest and reducing debt accumulated from the 2006 purchase of Knight Ridder has been essential to keeping the company out of bankruptcy and in family control.
Rogoff, the pilot, may want to embrace Washington Post owner Jeff Bezos' felicitous phrase that he brings "financial runway." She can reinvest as makes sense.
The $34 million sale is representative of the better prices being paid recently for newspapers, having improved from 3 times EBITDA (earnings before interest, taxes, depreciation and amortization) several years ago to 5 times EBITDA. It probably is a reasonable estimate that the Daily News is making an operating profit of around $5 million.
Print + digital or digital + print?
I subscribe to the view, articulated 18 months ago by Earl Wilkinson, executive director of the International News Media Association, that digital isn't going to wipe out print anytime soon (or vice versa). We are in a print+digital era, likely to last at least a decade.
The Dispatch/Daily News deal is entirely consistent with that principle. In this instance though, the digital side is challenged with making print work. Call it a digital + print venture. So maybe that initial story line, if misleading financially, is on target going forward. Add Rogoff's play to the list of notable newspaper experiments (Deseret News, Digital First, Advance) in trying to achieve a business and journalism model with just the right balance.