Journalism’s Broken Business Model Won’t Be Solved by Billionaires – The New Yorker

Ever since Donald Graham, the heir to the Washington Post, decided to
sell the family’s newspaper for two hundred and fifty million dollars,
in 2013, to Jeff Bezos, the founder of Amazon and one of the world’s
richest men, the preferred solution for a financially struggling
publication has been to find a deep-pocketed billionaire, with other
sources of income, to buy it and run it more or less as a philanthropic
endeavor.

That seemed to be what the Wenners—Jann, the father, and Gus, the
son—had in mind, too, when they put Rolling Stone, the iconic magazine
founded by the elder Wenner, fifty years ago, up for sale recently. He told the Times that he hoped to find a buyer who understood the
magazine’s mission and who had “lots of money.”

But the story of Alice Rogoff and the Alaska Dispatch News is a
cautionary tale that shows the limits of what a wealthy owner is
willing, or able, to do for a struggling newspaper in the digital era.
Rogoff is the wife of David Rubenstein, the billionaire co-founder of
the Carlyle Group, the publicly traded, Washington-based private-equity
behemoth. Rubenstein, with a net worth estimated by Forbes at nearly
three billion dollars, is no stranger to lost causes. He provided $7.5
million to rebuild parts of the Washington Monument, after the 2012
earthquake, as part of his ongoing and iconoclastic “patriotic
philanthropy” effort. He provided $18.5 million to restore the Lincoln
Memorial. He provided twenty million dollars in cash to restore two
buildings on the property at Monticello, the home of Thomas Jefferson,
as well as to restore two floors of Jefferson’s home itself. He owns
original copies of the Magna Carta, the Declaration of Independence, and
the Constitution. He has a copy of the Emancipation Proclamation and the
Thirteenth Amendment, which abolished slavery. He is the chairman of the
board of Duke University (my alma mater, too) and the chairman of the
board of the Kennedy Center. He is a co-chair of the board of trustees
of the Brookings Institution and the chairman of the Council on Foreign
Relations. He has an interview show on Bloomberg TV. He has agreed to
take the Giving Pledge and donate half his wealth to charity.

By all accounts, though, the Alaska Dispatch News was Rogoff’s baby.
She reportedly fell in love with Alaska after a trip there in 2001,
according to the Los Angeles Times. She explored the Arctic, hunted
moose, and flew her own plane. A graduate of Connecticut College and
Harvard Business School, Rogoff spent ten years as the chief financial
officer of U.S. News & World Report and was also an assistant to
Graham, when he was the publisher of the Washington Post. She bought
the Alaska Dispatch News in March, 2014, from the McClatchy Company,
for thirty-four million dollars, when it was known as the Anchorage
Daily News. She promptly changed its name and bought a new printing
press to leave little doubt that she was committed to continue to print
the paper. “I don’t see an end to print,” she told the Los Angeles
Times last year, explaining why she bought the paper and the new
press. “If I could see it, I’d be preparing for it. We’re not.” She said
that she hoped to continue publishing the paper, which had a paid
circulation of about forty-two thousand, for “decades to come.” After
buying the paper, she sold certain assets for some fifteen million
dollars and used the proceeds of that sale to reduce the purchase price.
She put in six million dollars of her own money and borrowed another
thirteen million dollars from Northrim Bank.

But Rogoff’s dream of running a local newspaper in her beloved
Alaska—she often lived there apart from her husband—slammed into the
economic realities of the newspaper business. In August, the Alaska
Dispatch News
filed for bankruptcy protection. Rogoff had been trying
to sell it for months, without success. According to the bankruptcy
filing, the paper was losing an average of a hundred and twenty-five
thousand dollars per week and owed its venders some $2.5 million. She
still owes Northrim Bank around $10.2 million, the security for which
is the regular payments that she receives as part of a “marital settlement
agreement” with her husband, as well as her Wells Fargo investment
accounts and the remaining assets of the paper. (The couple are not
divorced, though they have mostly lived apart—on opposite coasts—for
many years.)

In announcing the bankruptcy filing to readers, on August 12th, Rogoff
struck a poignant and bittersweet note. “I think by now that most of you
know owning this news organization has been a labor of love for me,” she
wrote. “The body of work done in our time has been as good as we could
hope for. We’ve worked hard to help illuminate the issues of our day and
provide a platform for points of view from across Alaska. Yet like
newspapers everywhere, the struggle to make ends meet financially
eventually caught up with us. I simply ran out of my ability to
subsidize this great news product. Financial realities can’t be wished
away.”

Last month, a bankruptcy judge in Alaska approved the sale of
the newspaper to a new group of buyers, led by the Binkley family of
Fairbanks, for a million dollars—the amount of the loan that the family
had made to the paper a month earlier to keep it going. Very little, if
anything, of that million dollars will go the paper’s existing
creditors. “Obviously, this is not the outcome I would prefer,” Rogoff wrote in a court filing, “but the reason I agreed to these terms is that
my primary desire is to see that the newspaper continue in operation.”
For their part, the Binkleys made their fortune over five generations by
taking tourists and freight up the Yukon River. They are determined to
keep the paper going. “Newspapers across the country are in distress and
operating independently in remote Alaska adds to the challenge,” Ryan
Binkley wrote to the paper’s readers. “We will be working with the
talented and dedicated team here at the company, building a winning
organization. The ADN can’t be allowed to go away. It’s too important to
the city of Anchorage and to the State of Alaska.”

In the three years that Rogoff owned the paper, its value declined
ninety-seven per cent. Sure, she had deep pockets, but not deep enough,
it turned out. (Certainly, had she had full access to her husband’s
multibillion-dollar fortune, or had he been interested in this
particular lost cause, she likely could have kept running the paper,
which lost $6.6 million in 2016, a million dollars more than it lost
the year before, according to the financial statements filed in
bankruptcy court.) She will likely end up losing the six million dollars
that she invested, plus whatever portion of the $10.2 million that she
still owes the bank, as part of the more than seventeen million dollars
she told the bankruptcy court that she invested in the newspaper and the
new printing press, which, according to the bankruptcy filing, remains
unused and sitting idly in an old building in Anchorage. As for Rogoff
herself, the Los Angeles Times reported that she left the bankruptcy
hearing last month virtually unnoticed “and disappeared down the
street without further comment.” Her Alaska attorney, Cabot
Christianson, told the paper that she would continue to live in Alaska.
(He declined my request to be interviewed about how it went wrong for
Rogoff. She stopped tweeting last November.) “It is extremely painful,”
she told the bankruptcy judge about the paper’s dénouement.

Of course, Rogoff’s debacle is emblematic of a much bigger financial
crisis in American journalism. Even with the arrival of a handful of
rich owners—Bezos, at the Post; the Sandler family, at ProPublica; and
Laurene Powell Jobs, at The Atlantic—the broader industry has failed
to find a viable digital-news model as traditional forms of
revenue—advertising and subscriptions—continue to evaporate like rain in
the Sahara. (Even Condé Nast, the owner of The New Yorker, is not immune to the macroeconomic forces affecting the industry.) In an era when
the Presidency demands more and better reporting than ever (and there
has been much fabulous reporting), newsroom staffs continue to shrink.
According to the annual survey conducted by the American Society of News
Editors, thirty-two thousand nine hundred full-time journalists were
employed in newsrooms across the country in 2015, down from fifty-seven
thousand in 2007. (The organization has since modified the survey.)

It’s difficult to see where all this is going. ProPublica just announced
a program to pay for investigative reporters in local newsrooms across
the country. That’s a positive step for journalism and our democracy.
But the Alice Rogoff saga is a reminder that sometimes deep pockets are
not enough to save a local newspaper. Creating indispensible
journalism—whether at the local or national level—is not without cost.
It does not want to be free. If people aren’t willing to pay for it,
like they pay for the Internet or cell-phone service, then it will
surely disappear, sometimes right before your eyes.

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