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Purchase of News-Miner, Kodiak Daily Mirror the first major move for Fairbanks foundation

  • Author: Annie Zak
  • Updated: September 30, 2016
  • Published December 25, 2015

News broke Dec. 21 that the Fairbanks-based Helen E. Snedden Foundation would purchase the Fairbanks Daily News-Miner and the Kodiak Daily Mirror. The sale of the papers for an undisclosed amount is expected to close in early 2016.

The foundation was created and funded by the estate of Helen Snedden in 2012, the year she died. The Snedden family owned the News-Miner from 1950 to 1992.

Virginia Farmier is the sole trustee, executive director and only full-time employee of the foundation. The intention is to preserve locally controlled sources of news in the two Alaska communities, she said.

But there are still questions around exactly what the foundation's involvement in the newspapers will be as a result of the deal.

Helen Snedden was close friends with Farmier, who worked at the News-Miner as its chief financial officer from 1984 until 2002. Farmier also held other jobs at the paper before that, in the advertising department.

"I guess I have authority, but I don't feel like I am the personal owner of (the papers)," she said. "In some ways, I will take ownership in trying to make good quality decisions, but the publishers need to do their jobs."

Officially, the Snedden Foundation's mission is to "enhance the quality of life in Alaska." It's a grant-making organization that doesn't accept donations, but you won't find that information on its website -- because it doesn't have one. Farmier said she hasn't wanted a website because she doesn't want people soliciting the foundation for grants.

Since its founding, the nonprofit has spent just a small fraction of its $9 million in net assets. It only has one other employee, who works part time.

Farmier also said that because the foundation is so new, there are a lot of things that still need to be worked out in terms of where it will spend its money.

"We've been in existence really for a year and a half, and during that time it's been a lot of gearing up," she said. "We're planning some larger projects in the future because we're finally fully funded to do that."

Farmier also owns an accounting firm in Fairbanks called True North Business Services, where she is the only full-time employee. She is also a certified public accountant.

So far, the Snedden Foundation has mostly worked on small park projects in the Fairbanks area, but nothing much larger.

In 2013, the Foundation spent $5,141 of its $2.6 million in total net assets, according to financial documents filed with the IRS -- about two-tenths of 1 percent.

In 2014, its net assets jumped from $2.6 million to $9 million, after the IRS officially gave it the stamp of approval to move money from the family's marital trust to the foundation.

When the Snedden Foundation buys the newspapers, it will create a limited liability company to operate each one. The nonprofit will then own those LLCs.

The News-Miner and Daily Mirror will continue to sell advertising and subscriptions. They will still aim to generate a profit.

"I think the foundation hopes it doesn't have to support the papers," said Farmier's attorney, Marc Owens, a partner at Washington, D.C., law firm Loeb & Loeb.

"Putting these newspapers into the hands of the foundation means there won't be shareholder pressure to create a market-rate profit," he said. He added that the newspapers are profitable now, and "the foundation is hoping the papers are able to continue to run in the black, but it doesn't expect them to be a huge financial success."

Another change is that the newspapers will not be allowed to endorse candidates, under IRS rules for nonprofits.

Marti Buscaglia, publisher of the News-Miner, said that she thinks the new arrangement will "take a lot of pressure off" the newsroom and that employees were happy to hear about the change.

Daily print and digital circulation for the News-Miner is 13,442 (up to 15,526 on Sundays). For the Daily Mirror, Farmier said print circulation is 1,081. The publisher and circulation department at the Mirror could not be reached for comment or to confirm that figure.

Going the nonprofit route has become a more popular business model for the media industry in recent decades. In a 2013 report, the Pew Research Center found that 172 digital nonprofit news outlets have launched since 1987 in the U.S. Meanwhile, annual newspaper ad revenue from digital and print streams has been falling since 2006 -- from $49.3 billion to $19.9 billion in 2014.

Many newspapers in the country have changed hands in recent years due in part to declining revenue. But overall, nonprofits are not the typical buyers.

"What's been more common is newspapers going up for sale and being bought out for another chain or more recently being bought out by private investors who are hedge fund types, professional investors or wealthy business people," said Jeff Sonderman, deputy director of the American Press Institute. "Newspapers are certainly more likely to be bought out by a billionaire than taken on by a nonprofit."

One recent example is billionaire casino magnate Sheldon Adelson's purchase of the Las Vegas Review-Journal.

Amazon founder and CEO Jeff Bezos bought the Washington Post in 2013.

The Anchorage Daily News was purchased in 2014 by Alaska Dispatch Publishing from the McClatchy newspaper chain. The new owner, Alice Rogoff, is married to billionaire David Rubenstein, co-founder of private equity firm The Carlyle Group.

"A few startups have begun as for-profit and switched to nonprofit, but I am not aware of any established newspapers moving to nonprofit in recent years," said Michele McLellan, a senior program consultant at the Knight Digital Media Center at the University of Southern California.

Still, the News-Miner and Daily Mirror are different in that they will be LLCs, similar to a for-profit corporation, not nonprofits themselves.

Times Publishing Co. in Florida -- which publishes the Tampa Bay Times newspaper -- is a for-profit corporation that has been owned by the nonprofit Poynter Institute since 1978. The NJ Spotlight, a news website, was founded as an LLC in 2009 within the Community Foundation of New Jersey.

The Texas Tribune, MinnPost (in Minnesota) and the Voice of San Diego are all 501(c)(3) nonprofit news sites. There are also examples at the national level, including ProPublica and Mother Jones.

Owens said that creating LLCs that will be owned by the Snedden Foundation is cheaper than converting them into 501(c)(3) nonprofits themselves.

Farmier said she believes in the management teams in place at each newspaper and doesn't foresee much need to intervene.

"I don't see right now that I'd have to pour a lot of money into it," she said. "I don't know if I'd want to step in and build it from scratch. That's a lot of work for a small foundation to do."

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