Alaska Dispatch News sued by GCI after presses outstay lease
The state’s largest newspaper is facing a lawsuit from the owners of its former building, who claim that the paper has left its printing presses there more than 18 months longer than originally agreed and refused to pay higher rent charges agreed to in a contract.
General Communication Inc., KTVA’s parent company, filed a lawsuit Friday in state District Court against Alaska Dispatch News publisher Alice Rogoff, the Alaska Dispatch News and Alaska Publishing. The Alaska cable TV and Internet provider is seeking more than $1 million in damages, as well as assistance in removing the paper’s property from the former Anchorage Daily News building on Northway Drive which now houses KTVA’s studios.
Alaska Dispatch News executive editor David Hulen referred a request for comment on the lawsuit Friday afternoon to Rogoff’s office.
GCI spokeswoman Heather Handyside said Friday that the suit won’t immediately interfere with the ADN’s delivery. Newspaper employees haven’t been barred from the building, and GCI will continue to pay the ADN’s utility costs at Northway Drive.
According to the filing, the ADN hasn’t paid any rent in July or August for the space occupied by its presses, and hasn’t covered its utility costs since February. The paper owes a total of nearly $1.4 million to GCI in back rent and utility costs.
The latest filing comes as the Alaska Dispatch News already faces two existing lawsuits over unpaid bills, including one from M&M Wiring Service Inc. saying it was behind about half a million dollars on payments for work at the site where it planned to print the paper on Arctic Boulevard. A Canadian paper company is also seeking relief for a $51,000 bill from the ADN.
The lawsuit claims Rogoff, the wife of hedge-fund billionaire David Rubenstein, is personally liable for all of the ADN’s fiscal obligations. Rogoff first entered the Last Frontier’s media scene by backing the news website Alaska Dispatch, but purchased and rebranded the Anchorage Daily News for $34 million when it was sold by previous owner the McClatchy Company in 2014.
Part of that deal involved selling GCI the newspaper’s nearly 197,000-square-foot headquarters in East Anchorage. According to the lawsuit, GCI agreed to pay $500,000 up-front for future advertising in the Alaska Dispatch News, funds which were a part of the purchase price Rogoff paid McClatchy.
Although GCI stated from the outset that it planned to fully occupy the building, it offered Rogoff a short-term lease agreement for about 89,000 square feet of office and warehouse space. The office space was originally leased for nine months, and the warehouse space for twice that long.
“Rogoff was aware at the time of lease execution that GCI intended to use the premises for its own purposes, and was not interested in entering a long-term leasing arrangement with the ADN,” GCI counsel wrote.
As part of that understanding, the two parties agreed that a rent rate of two and a half times the base rent would be charged for any time beyond the original term of the lease. Rogoff exercised an option to leave the office space in October 2014, but the nearly 62,000 square feet of warehouse space occupied by the ADN’s presses had to be vacated by Nov. 30, 2015.
When the presses stayed in place beyond that date, however, GCI claimed that the ADN paid only the base rent. The newspaper also claimed that it “could not and would not pay” over $200,000 of invoices for work GCI had done at the ADN’s new offices on 31st Avenue in Midtown Anchorage.
GCI offered the ADN terms on both the invoices and the lease, including the chance to pay the invoices in-kind as advertising in the paper. Two one-year holdover terms would extend the original lease for the office space, and GCI offered to abandon its claims for holdover rent if the paper paid its regular rent in-kind as advertising credits.
The ADN told GCI in July 2016 that it was exercising a clause to end its lease at Northway Drive on Dec. 15 of last year, relaying in a series of meetings that it was making “active progress” in removing the presses. The paper again overstayed the lease, however, and refused to pay the holdover rent.
At the end of 2016, according to the lawsuit, the ADN continued hiring contractors for initial work on removing the presses – a job whose cost GCI estimated to be at least $1.5 million. Two of them, including M&M Wiring, took out liens against the Northway Drive property for work not paid for by the paper.
During negotiations in February, GCI offered to accept in-kind advertising for the holdover rent costs incurred since December, as well as let the ADN’s presses remain through April. Those talks fell apart within weeks, however.
The ADN also violated a clause of its lease requiring it to install a separate electrical meter, GCI claimed, to track what its lawsuit alleges have been rising electrical costs this year -- up from about $29,000 a month in February to more than $46,000 in June.
“Assuming continued electrical usage by ADN at the July 2017 rate, each day that ADN remain in the premises GCI pays in excess of $1,500 in ADN utilities,” GCI counsel wrote.
Notices of default were delivered to the ADN by GCI in March, April and July 2017, but have been ineffective.
“Since February of 2017 GCI has presented alternatives to Rogoff to enable ADN to continue operations and to prevent forcible eviction,” GCI counsel wrote. “None of these alternatives were acceptable to Rogoff.”
Editor's note: GCI is the parent company of KTVA.
Liz Raines contributed information to this story.