Q&A with David Milstead about the death of the Rocky Mountain News and the future of the Denver Post
The most dogged and enterprising journalist to write about the Rocky Mountain News' closure saga came from the Rocky's own newsroom. Business columnist and reporter David Milstead broke story after story. For example, he unearthed a confidential letter from executives at E.W. Scripps, the Rocky's former owner, revealing that the Denver Post borrowed $13 million from the Denver Newspaper Agency to fund its newsroom -- but the DNA couldn't repeat this feat because banks wouldn't loan it any more money due to its own tenuous financial condition.
Earlier this week, Milstead took part in a wide-ranging interview, accessible below, in which he gives his take on recent Rocky-related events. In his view, Scripps feels certain it won the recently concluded fight by getting out of Denver and leaving Dean Singleton's MediaNews Group to deal with mountains of debt. He also suggests that the aforementioned article may have cost him a chance to write for the Post -- a possibility touted by Westword in December -- and critiques the Post business section, which he feels has been used as a place to put reporters with other expertise rather than a department where the focus is on excellence since Greg Moore took over as editor of the paper earlier this decade.
Click "Continue" to read the Milstead interview.
Westword (Michael Roberts): How did you hear about the announcement on Thursday?
David Milstead: Well, I've been writing about this, obviously, for the paper, and I'd been joking that I was at a disadvantage, saying that people didn't want to tell me things because I might put them in the paper. So I was given not a lot of advance notice of this. It was sad that, kind of like in the Seattle situation, the news began to leak out in other media before it got to us. You can understand why the Denver Post would get a heads-up -- because of [MediaNews Group CEO and de facto Post owner] Dean Singleton. But nonetheless, there were a lot of rumors that week. It was coming to the end of February, and it was reasonable to think that some development would happen that week because of rumors about the Denver Newspaper Agency having cash-flow problems.
And so, Wednesday night, I was e-mailing [Scripps CEO] Rich Boehne and Tim King, the Scripps spokesman, with some marginally relevant questions just to see if they had an out-of-office auto-reply in their e-mail -- and they did not. They were too smart to do that. And so, on Thursday morning, after the [KHOW talk-show host] Peter Boyles show aired the rumor, I e-mailed Tim King again and told him that these rumors were circulating. His response was, "Well, aren't there rumors every day." And I e-mailed him back and said, "I'm going to stop being coy. Are you or any other Scripps executives in Denver or going to be in Denver today." And I'd say about ten or fifteen minutes before the formal announcement today, he replied and said, "Yes." And I stood up in the business department and said, "It's happening." That was the first formal word that I think a lot of my colleagues had.
WW: Tell me about those cash-flow problems you mentioned...
DM: When the December 4 announcement was made about Scripps putting the Rocky up for sale, we ran a frequently asked questions box that said, "Will Scripps declare bankruptcy" and "Will the Denver Newspaper Agency declare bankruptcy?" And I thought those were silly questions -- and for Scripps, it was. But it turns out not to have been that silly for the Denver Newspaper Agency. I couldn't imagine why they would be having that many problems, because they don't fund the newsrooms directly. All they have to do is print the papers, employ the back-office staff, and the agency is supposed to produce enough cash... We could understand if it didn't generate enough cash for the newsrooms, but to not even generate enough cash for themselves? That seemed highly improbable.
What I didn't know at the time is that the Denver Post newsroom had been subsidized for a significant chunk of 2008 by the agency. The owners of the Denver Post owed at least $13 million to the agency for unreimbursed newsroom expenses. And of course, the newspaper business was crummy anyway, and January is always a terrible months. And so there were rumblings internally that the agency might run out of cash in February. That's what led me to ask the question of Dean Singleton at the press conference: "How close was the agency to Chapter 11?" At first, he said it was never close. And then he said, "Well, if we hadn't gotten the union concessions and blah-blah-blah." But the Scripps letter that I wrote about in January from the Scripps executives to the Denver Post executives that said the banks have cut off the line of credit... That was back in early December. So you could see there was a potential cash problem, and it was going to come to a head in February.
WW: One of the questions that was asked pretty frequently in the couple of months before the Rocky closed was: Is there a connection between the final decision by Scripps and the negotiations about salary at the Denver Newspaper Agency and the Denver Post? And every time I asked that question, or saw that question asked, the answer was "no" -- they're completely unrelated. But there was a preliminary labor agreement with the DNA on Wednesday, and the announcement that the Rocky will be closing comes on Thursday. Were these things related, for some of the reasons you laid out a moment ago?
DM: They weren't completely unrelated. I don't see how you can say that. The results that ultimately occurred, which was mainly MediaNews and Denver Post Corporation assuming control of the Denver Newspaper Agency, meant that they were assuming the full liability for that $130 million bank loan that was outstanding - the money that was used to buy the new presses and consolidate the printing facilities. With Scripps claiming in December that the banks had cut off the access to that line of credit, that suggested that there were talks that needed to take place with the bankers. In fact, Dean Singleton acknowledged that during the press conference -- that they were working to a resolution with the bankers, and they were trying to recapitalize the Denver Newspaper Agency. So it seems that the union concessions were important in terms of presenting a plan going forward as to how that loan would be paid back. Given all that - and this is speculation at this point -- but I think it would be in Scripps' interest to at least see if MediaNews was making significant progress to all those financial issues before it closed the paper and reached an agreement to exit the agency, and signed that deal. So I don't see how you can say that any of those things were unrelated. They're all related, and that's what made this so complicated...
I don't think there was an explicit plan that said, "Okay, the unions reach agreements, then Boehne books ticket on the next early-morning flight to Denver." But the events were related in the sense that for Scripps to negotiate a deal to hand over the DNA to MediaNews, MediaNews had to have a plan in place going forward.
WW: Another theory about why Scripps had delayed the decision to close the Rocky for so long is that there was some kind of end-game negotiations between Scripps and MediaNews. But the impression I got from the news conference is that Scripps didn't want to have anything to do with Denver at all after the Rocky closed. They gave away everything just to get out. Was that your interpretation, too? Were there actual negotiations between Scripps and MediaNews going on? Or was Scripps just waiting for the labor talks to be resolved so they could pull the plug?
DM: There had to be some level of negotiations, because this was a partnership. As Dean noted rather frequently, if Scripps unilaterally closed the Rocky and stopped providing content to the agency, that would pretty clearly be a breach of the partnership agreement. And so there had to be a negotiated exit. Now, as for the financial terms of that, I think it reflects the very different outlooks these two companies have about the future of the newspaper business. As I've noted a couple of times in my column, Dean believes that much of what's going on right now is cyclical. It's economic, and there will be some degree of rebound - perhaps a large degree of rebound when the economy rebounds.
I don't think Scripps believes that. I think Scripps is far more pessimistic about newspapers as a whole. And if Dean wants to assume $130 million of debt that he frankly was not on the hook for before at all, and Scripps can walk away without any cash payment. That end deal reflects the differences in their views about the future. Dean said they don't have the obligations, but they don't have the upside either, so it's a fair trade, or something to that effect. And Scripps would agree, because they don't think the upside is worth very much.
WW: When Scripps decided to break out the newspaper holdings from the rest of its corporate portfolio, some observers thought that Scripps was essentially giving up on newspapering and wanted to minimize the damage to its more profitable assets. What's your interpretation of that?
DM: That change was long overdue, and in fact, I asked the management of Scripps a question along those lines several years ago, when we were in the old building: "Why do you have this company in one piece like this?" Initially, the newspapers and the broadcast-television stations provided a large amount of cash-flow that enabled Scripps to invest in these new concepts -- these cable networks, these websites. And there was a subsidy there, basically. But very quickly, things like The Food Network and HGTV -- the cable-network properties... At a certain point several years ago, they began to provide more profits to the company than the newspaper division did. They were the single largest contributor to the profits. So it reached a point where Wall Street was looking at this company and saying, "You've got half the company growing revenue at a double-digit rate, and the other half is flat and now beginning to trend downward."
They went out onto Wall Street, and it wasn't a newspaper company, and it wasn't a cable company; it was an amalgamation of media companies, half of which were growing quickly and the other half were stable cash-flow properties. And it just didn't make sense as a corporate collection anymore. So I was pleased to see that it was split in two pieces -- because in normal circumstances, that would be a plan to create the most value for the shareholders. What happened next, of course, was the complete disaster that struck traditional newspaper and broadcast media.
WW: But does splitting up these properties make it easier for Scripps to, at some point, wash their hands of their newspaper holdings?
DM: Frankly, there's not a lot left in the company. They do have major-market broadcast television stations. But the newspaper division, it's largest properties now are Memphis, Knoxville, Tennessee and Ventura County, California. I believe those are the only three newspapers that are at or even close to 100,000 in circulation. It's really a very small newspaper company now. I really don't know what their strategy is for growth going forward. It's quite possible that they could be in a wind-down mode. But of course, broadcast television is having problems, too. So I don't really know what the long-term future of the company is.
WW: One of the most interesting parts of the press conference for me was the essential admission, if you read between the lines of what Rich Boehne and Dean Singleton said, that MediaNews could just as well have given up on Denver and left Scripps in charge of the market as the other way around, but Scripps simply wasn't as interested as sticking around as Singleton was. This recalls a comment that was made around the time the original sale announcement was made. April Washington, one of your colleagues, asked, "Why does Scripps always blink first?" From your background on this story, is that what happened? Did Scripps simply blink first?
DM: Yes, but both sides will tell you -- and it's fair -- that Scripps public shareholders: thousands of people and institutions all across the country that are buying the stock on the public market. That's a really broad constituency. MediaNews has only a handful of shareholders, and Dean Singleton and his partner, Richard Scudder, are the majority shareholders of that company. Scripps may have wanted to win in Denver under certain circumstances, but they also can't just take on unlimited losses or make financially questionable decisions to do so, because they very easily could have been sued for breach of fiduciary duty. If Dean Singleton's the CEO and a major stockholder, and you've got just a handful of stockholders on board to commiserate with, you can make your decisions a lot differently. So yes, it was a matter of corporate will, and Dean Singleton had more will. But he had the luxury of having more will.
WW: So the folks at the Rocky who are frustrated at Scripps have a reason to feel that way -- and yet Scripps had a good reason for what it did, too, and can justify it?
DM: I think so. But I'm included among the people who felt that before the December 4 announcement, that there was a positive potential outcome -- that Scripps would hang on and Dean Singleton's high indebtedness would cause him to have sufficient problems, and he would have to explore an exit. I understand their frustration, and I share it. I was not working there with the belief, before December 4, that it was a foregone conclusion that the Rocky Mountain News would be the paper that would close in this market. Many of us were aware about how highly indebted Dean was. It didn't take a finance reporter to understand that. I think a lot of people thought, this time around, we're going to wait it out. And I think, financial considerations aside, there were some Scripps executives who would have preferred to quote-unquote win and redeem themselves after dubbing us the failing newspaper in the JOA. But our circumstances didn't allow it. The public shareholders, the bigger and bigger losses: It just didn't happen that way.
WW: As you know, shortly after the announcement about the sale of the Rocky, we published a feature article that included the five folks we thought it made the sense for the Post to bring aboard, and you were among the five. In thinking about why you weren't hired, one thing keeps coming to mind. You, out of every reporter I know of in the country, was toughest on MediaNews and Dean Singleton. This is sheer speculation on my part, but do you think it was a factor?
DM: We'll never know. What I know for sure is that I was approached the week of January 12 by Greg Moore to gauge my interest in working for the Post. I met with him very briefly -- and when I say "briefly," it was three or four minutes in total, I think. My message was twofold. At that time, I wasn't soliciting my sources in the financial sector for jobs, because I didn't want the issue of writing about somebody and also trying to get a job from them. And it occurred to me that the same should apply to the Denver Post. I told Greg Moore -- and this seems funny in retrospect -- "I don't want anyone to accuse me of going soft on MediaNews in order to curry favor to get a job at the Post." And I think he understood that explanation. But then I also told him it had not occurred to me in the past to work for the Post, because I really didn't like the quality of their business coverage, and I was unclear about his commitment to the quality of their business coverage. I told him that while a lot could change and I wasn't going to say I'd never speak to him, I was not going to have any conversation at that time. And I think he was gracious. He said he understood that, and that's where we left it.
Of course, over the subsequent weeks, I wrote a column and a number of stories that I know were disliked by the leaders of MediaNews. That's obvious because the statements they issued.
WW: There was a press release after the article about the letter from Scripps executives that prompted a very sharp statement on MediaNews' part...
DM: Yes -- and let me point out that we continue to stand by that story. The letter is legitimate. It's genuine. It's disappointing that in their response, they chose to pretend it wasn't. And it's disappointing for them to describe the reporting as inaccurate when what they have issues with are the allegations by Scripps. It was perfectly accurate reporting of what Scripps is alleging, and if they have issues with the executives running Scripps, they should target their ire at the executives running Scripps and not take it out on the reporter who wrote about the letter. So I found their public statements to be very disappointing. Let's just say I can't see how they could possibly bring on a reporter to the Denver Post who they publicly labeled as being so inaccurate.
WW: I felt like the last issue of the Rocky was a spectacular success -- not just in the nostalgic sections, but there was actually breaking news in there as well. One of those articles was a piece you were a big part of -- naming a Texas investor who had seriously considered making a run at the Rocky. From what you understand, was this a legitimate attempt to purchase the paper, or was it more exploratory?
DM: I think it was legitimate, but my sense is that he and his group of investors didn't match what Scripps thought of as the buyer of the Rocky Mountain News. I think Scripps expected that any buyer would have to be willing to step in and subsidize tens of millions of dollars of losses in the interim period - and therefore, the buyer would have to have exceptionally deep pockets and be well-capitalized. I don't know if he and his group met that definition or had the same plan in mind. They seemed to have worked quite a bit. They expressed their interest before January 16, and I don't think that fell apart until around Valentine's Day. That's my guess. I think that their talks went into February. I think they worked on it for several weeks.
WW: On the day the Rocky's closure was announced, I happened to see B-roll footage of you packing boxes on one of the local TV stations. Did the staff have any privacy? Or were you always under the media microscope? And did that make it more difficult to feel closure?
DM: I was actually surprised at the number of TV cameras in the newsrooms. For some reason, I didn't think that was going to happen. At least on December 4, I thought the cameras and outside media were kept out of the newsroom on that day. Maybe I just don't remember it that well. But it was obviously very different on that Thursday. But ultimately, so what? As journalists, we basically make our living by invading people's privacy. And for me to complain about TV cameras on that day would be hypocritical of me. So I'm certainly not going to do it.
WW: Did you attend the quote-unquote wake at La Rumba on Saturday?
DM: Yes, I did.
WW: How would you characterize that gathering?
DM: There were people who were going around getting people to autograph the back page, with the staff list. I think people were moving forward. There wasn't a lot of overt anger being displayed. A lot of former employees were there, so there was time to commiserate. I have to be careful of my analysis, because I told the New York Times that on Friday, the anger was below the surface, and one of my colleagues told me they felt people were more angry on Friday than they were on Thursday, which I hadn't detected. So I need to be careful about characterizing the mood of the entire newsroom. But I think people were visiting and hugging and helping get to closure.
WW: Is one reason it's so difficult to see the anger in some people is that everyone understands the industry at large is in so much trouble that even if some of the specifics in Denver may have led people to believe that closing the Rocky was premature, we all know what's happening nationwide -- and if the Rocky hadn't closed last week, it might have closed next year or the year after?
DM: I think I understand the question. Are you asking, "Are people more understanding of what happened because of the overall financial circumstances"?
WW: That's it - badly phrased by me, but yes.
DM: No, that's okay. I'm notorious for incoherent questions far worse than that (laughs). We'd do these investment round tables, and once during my time at the Rocky, we got four people together in one room and taped it and transcribed it. We ultimately gave up on that -- but once, I asked this question that went on for a third of a page in Microsoft Word, and the first response was, "Come again?" (Laughs.) But with the exception of [sports columnist] Dave Krieger, I think everybody understands (laughs).
WW: Dave Krieger's comments were very pointed, to say the least... [Read Krieger's remarks about Scripps executives crying "crocodile tears" amid this collection of observations from Rocky veterans on the Columbia Journalism Review website.]
DM: I just go back to my comments. I was quoted in the Post by Kevin Simpson as saying, "No one wants to lose their job, but they can't ask someone to lose $20 million a year for me to keep it." And my column said, you can be skeptical of what CEOs say, but when both CEOs say you can't support two newspapers here, you've got to believe them. Or would you prefer that they lose $50 million here this year to prove it to you?
Some people asked why Scripps didn't take more measures to save us: more buyouts or layoffs, or asking us for wage concessions, which I think is an interesting question. And their answer to it was, look out how much you have to cut at this point to get to profitability even if there are no more revenue declines. You're talking about half the payroll. And I didn't want to work in a Rocky Mountain News with half the people, and I didn't want to work for half my paycheck...
We have all grumbled about the Rocky not being what it was five years ago, or whatever time period we've chosen, and there is something to that. But there's another part of me that's glad the Rocky at its dying point still resembled itself at its peak. It wasn't a hollow shell of what it had been, which is what it would've had to be if we'd made any serious attempt to get back to profitability.
WW: The inevitable question now is, what are you looking at doing in the future? Are you hoping to stay in journalism? Or are you considering other career options?
DM: I think it's highly unlikely that I will be doing journalism for another corporation, another large corporation. I think that's just the way it is. I am much more likely to be exploring opportunities in the financial sector. As I've noted in print, I'm in the chartered financial analyst program. I passed level one of the exam in December of 2007. I'm taking level two in June. That's an element of what I've been doing at the Rocky for a number of years that I've enjoyed: financial analysis. And there are other avenues for me to do that. They won't necessarily have the public stage -- the ability to reach so many people. But it's an element of what I've done that I've enjoyed, and that's the most likely path that I'll take. But right now, this is my first day off from the Rocky, and my full-fledged job search has not yet begun.
WW: Looking back on your time at the Rocky, for you, what were the most memorable moments?
DM: I would say the whole arc of Qwest and how it was still a well-regarded company... Well, a lot of people didn't like Joe Nacchio no matter what the company's stock price was doing, so I've got to be careful about how I say that. But Qwest was a well-regarded company on Wall Street when I arrived, and it almost immediately began to decline. One of my worst articles at the Rocky Mountain News was a couple of months after I arrived. It was called "Is Joe Nacchio Underpaid?" I subsequently wrote a column retracting that column and apologizing - and not every journalist is so willing to wallow so publicly in their mistakes like that. But I did, because I had to. I think the headline was, "Qwest Must Restate -- and So Must This Columnist."
But all the way through to the Nacchio trial, it was a very interesting drama. That was very memorable. And I have enjoyed my work on Colorado PERA, the Colorado pension system, even though PERA and many of its members have not. I think I got a reputation through that coverage as being one of Colorado's most prominent conservative journalists -- which I'm not, actually. But my criticism of the pension plan fell right into the hands of the right-wing ideologues who hate pensions and want to see everyone in 401(k)s. And I don't believe that at all. I just believe that if you promise people a certain amount of benefits, you ought to be able to pay for it. And their financial position for much of my time here hasn't shown the ability to pay for it. That's what concerned me about PERA several years ago, when I began looking at them -- these projections that showed them going into insolvency in about thirty or forty years. But yet at the same time telling the members there was nothing to worry about. If the member was 80-years old, that was true. If the member was 30-years old, it wasn't. That has been, I think, an important part of my work here.
And less known but also important was the CAPCO program. It was a venture-capital program authorized by the legislature, where they basically handed over $100 million to a bunch of companies that go around from state to state persuading the legislatures to pass these programs. And after a string of articles several years ago, the legislature actually yanked the second $100 million's worth of funds. That's probably the most tangible damage I've ever done to anybody with my reporting in Colorado -- cost this small group of reported venture capitalists $100 million. That was very gratifying.
WW: Earlier in our conversation, you'd mentioned that you haven't always been impressed by the Post's business coverage. In your view, what does the Post have to do to step up its game?
DM: I think the peak period they had during my time here was when Jeff Taylor was here. I'm not sure what his exact title was. [He served as managing editor/news.] He was a Wall Street Journal guy. I think strong leadership from a smart journalist goes a long way -- and I think [business editor] Steve McMillan is a great guy, and there are a number of good things going on in the section. But I notice the absence of Jeff Taylor. And there have been a number of people transferred into the business department from the city desk for reasons that have been unclear from the outside. I'm not sure any of those people asked for a transfer into business. Maybe they did. I don't know. But nobody at the Rocky Mountain News was ever transferred into business to get them off of something that was perceived as more important -- at least not in my time there.
Business at the Rocky Mountain News was a section where the people there wanted to be working there. They were generally career business journalists. We hired experienced business journalists from the outside. We had three people who'd been at Reuters. I had been at the Wall Street Journal. And we had another person who'd been at Bloomberg. We had people who took business journalism seriously and were making it their first priority career choice. And I just think that's been missing at the Post under Moore. I don't think it's a big puzzle as to how to fix these things. If you have serious, smart, career journalists working in your business section and you treat it like a real section, then it's going to be good. I joke that there were bad old days of business sections, where if you were too drunk to be a sportswriter, they put you in business. And that has not been the philosophy of the Rocky Mountain News during my time there. And that pleased me, and that's what kept me there.
WW: For you, then, being a good business reporter is a matter of training and expertise -- rather than assuming that if someone's a good metro reporter, he'll definitely be a good business reporter...
DM: I think that's correct. There are a lot more numbers in business, and I'd like to think I'm example of someone where, just because there are lots of numbers, it doesn't mean that the writing is deadly. And also, when you get out of the realm of public companies that have to file their financial results, it's a lot more challenging in source relationships, because people really don't have an obligation to tell you much of anything. You can always file an FOI request with your local government and fight over something they're obligated to disclose. You don't have nearly as many luxuries in business. It is a special animal, and it has its own special challenges - but all of those can be overcome if you actually want to do it. If the reporter wants to do it, if the editor wants to do it, and they embrace business and begin to think like businesspeople.