Journalists celebrate purchase of staid local newspaper by plucky rival. (Overlook plucky rival's ties to Carlyle Group)

By David Sirota , written on April 9, 2014

From The News Desk

The announcement that the Alaska Dispatch has purchased the Anchorage Daily News has been met primarily with celebrations about the out-of-nowhere triumph of the underdog. "Salmon swallows whale" blared the Seattle Post-Intelligencer's headline. New York University's Jay Rosen declared this a "crossing point" in which an "online news start-up grows successful enough to buy the local newspaper." And Business Insider's Henry Blodget cheerily agreed with Rosen, chiming in: "Love this. More to come..."

No doubt, Blodget's "more to come" prediction is accurate, because what happened in Alaska isn't entirely new. Yes, this may be the first time, unless you count AOL Time Warner, that an outlet that started online bought its terrestrial competitor - and yes, business-wise, that should be quite encouraging to online media outlets everywhere. However, for journalism - as distinct from the media business - this isn't novel, nor is it necessarily encouraging.

For one thing: the money for the deal came from Alice Rogoff, a journalist and the wife of Carlyle Group's billionaire founder and co-CEO, David Rubinstein. Rogoff first bought a majority stake in the Dispatch in 2009 and then used her resources to engineer the merger, meaning she now singularly controls what will likely be Alaska's dominant journalism outlet. As the Dispatch notes, she has "has solely run Alaska Dispatch and will continue to do so" after the merger.

If in the midst of all the underdog triumphalism you missed that part of the story, don't blame yourself. The Alaska Dispatch's financial connection to the Carlyle Group - one of the world's largest financial conglomerates - was only fleetingly mentioned in most coverage. And that particular conglomerate's deep financial stake in Alaska was almost entirely absent.

Carlyle has a huge financial stake in Alaska economics and policy, and thus in shaping the news Alaska voters receive. For example, just a few months ago, the state-owned Alaska Permanent Fund Corporation inked a deal to let Carlyle manage up to $750 million of taxpayer cash, half of which will go to the firm's private equity fund. Alaska's move to put so much money in such high-fee "alternative investments" comes a time when fee-less index funds are often generating better returns for investors. It also comes just as the SEC is investigating such fees. Yet the Carlyle deal means the Alaska public's money will be, in part, generating fees for Carlyle executives. That means Carlyle potentially has a huge financial interest in making sure there's as little journalism scrutiny as possible of said fees.

Similarly, Carlyle is right now raising funds for a $7 billion energy investment fund and has had a stake in natural gas storage facilities. Those investments could be affected by regulatory, pipeline citing and tax policies in fossil-fuel-rich Alaska. This may explain why, according to McClatchy Newspapers (which the Dispatch is purchasing the Anchorage Daily News from), a Carlyle Group executive was at a dinner with Alaska legislators sponsored by an oil industry lobbying group. That dinner was part of a lobbying campaign to try to convince those legislators to lower Alaska's oil tax.

Carlyle also reportedly has an interest in an Alaska-based port as oil conglomerates seek to extract more fossil fuels from the Arctic region. To that end, Rubinstein appeared at a 2012 economic conference in Alaska that focused, in part, on the idea. Likewise, Rogoff herself has been enthusiastic about the potential economic upside of melting ice caps for Alaska. Meanwhile, Carlyle has been an investor in the very shipping industries that operate in Alaska and that could benefit from Arctic-focused development. Additionally, the firm has lately been trying to get into the port business.

Add in those pieces of information and the Dispatch's story doesn't seem very new at all: There's a long history of billionaires buying up media properties that are supposed to be objectively covering the very news areas in which those billionaires have a financial interest.

You may have heard of Washington Post owner Jeff Bezos's financial stake in the very federal government contracts the Washington Post is supposed to objectively cover. Alternately, you may have heard of San Diego UT owner Doug Manchester's financial stake in the San Diego real estate market his paper is supposed to objectively cover. There are many such stories. Or you may have heard of the Chevron-owned Richmond Dispatch launching in the city that domiciles one of Chevron's biggest refineries.

The announcement of the Dispatch deal includes a statement from Rogoff who says: "I’m doing this because I believe the more journalism in a place, the better the place becomes, it’s just that simple. I view this state and the Arctic beyond it as one of the most undercovered places in the world, and I don’t think that makes for good civic discussion.”

The Dispatch announcement also asserts that Rogoff will run the merged company "without Rubenstein’s involvement." PandoDaily contacted the Dispatch by email and phone asking if such assurances were contractually cemented in the terms of the deal. We also asked what assurances readers should have that reporters at the merged company will be free to aggressively and adversarially cover Carlyle's sprawling business interests in the state. As of press time we have not received a response to our request.

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Of course, reviewing Carlyle's relationship with Alaska and Carlyle's connection to Alaska's major news outlet isn't to preemptively assert that there will automatically be direct newsroom interference from Carlyle. There may, indeed, be controls in place to prevent that kind of thing. However, as I explored in a 2012 investigative report for Harper's magazine, the danger in deals like this and all the others in recent years is in the singularity of ownership and how that can unto itself create a self-censoring culture.

Unlike a portfolio/investor model of ownership at outlets like, say, ProPublica (and Pando), the Citizen Kane model of the sole owner/publisher runs a higher risk of unchecked editorial power being deployed to shape unspoken newsroom dos and donts. That can end up sculpting news to fit said owner/publisher's ideological or financial goals - and it can do so without direct orders from the top.

In my Harper's piece, former Denver Post columnist Susan Greene explained how it worked under Colorado's own Citizen Kane, Dean Singleton:

“Staying true to the Denver Post brand required a certain type of Stockholm syndrome,” she said. “It meant internalizing what you figure your boss and your boss’s boss might deem inconvenient to print, say, before they hop on the train to Frontier Days with a posse of politicians and advertisers.” Survey data from the Pew Research Center confirm that this kind of self-censorship has long been a problem in newsrooms—in this new Citizen Kane era, the problem is clearly getting worse.
Again, none of this may occur in Alaska, and if the new company expands investigative journalism in the state, then it will be worth celebrating. But it is wrong to assert without question that a successful business deal will automatically be great for journalism, especially when the business behind the deal has a financial stake in the content of the journalism.