Thursday, December 23, 2010

Mail | Newseum could be a 'worthwhile venture'

Regarding my recent post about the Newseum's operating costs rising to $92 million in 2009, and straining its funder, the Freedom Forum foundation, Andy Bechtel writes today:

I took my son to the Newseum last summer. He's 10. It was our first visit there.

We liked a lot of what we saw, particularly the collection of historic front pages and an interactive exhibit about ethics.

Less impressive were the Elvis exhibit and the one about the FBI. I didn't see how these matched the mission of the museum. The gift shop was full of items related to these two exhibits as well as ugly Newseum sweatshirts and T-shirts.

The museum also feels a step behind where the media are going. A section on social media and Twitter (with a photo of Rick Sanchez -- is that still there?) were tucked into a corner.

For all of that, I'm glad that I went, and my son said it was better than he expected. I hope the Newseum can get its finances under control and stay open. Done well, it would be a worthwhile venture.

Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.


  1. After the Elvis debacle, they dumped the museum director and began a search for a professional who knows museums and newspapers. The $20 admission fee is still a big hurdle for tourists, and need to find some way to attract more. The other problem Jim didn't address is they never sold the really tiny condos they built in the back overlooking a homeless shelter. Whatever architect decided to build condos that small should lose any future contract to design a building.

  2. 9:09 You are correct about that condo tower. I wrote about that issue on Jan. 8, 2009, in a post called, Mystery: Luxury Newseum condos became rentals. In it, I wrote:

    "Freedom Forum may have abandoned the original condo idea well before the real estate bubble collapsed. Surely, by summer 2007, the deflated housing market would have led to a rental switch. No sense losing all that equity selling condos when demand is low.

    "I'd like to know a lot more about how the move to apartment rentals changed the Newseum's business model. For example, isn't the project now carrying more debt -- since those residential units weren't sold to pay down any construction loans or bonds?"

    And I just noticed a reader comment on that post that answers an important question about the Newseum's financing. It appears to be investors who bought up to $300 million in revenue bonds from the D.C. government.

    From an August 12, 2002, article in the Common Denominator, which calls itself "Washington's Independent Hometown Newspaper." Here's the text:

    The D.C. government has agreed to provide up to $300 million in revenue bonds to finance construction of the new Newseum in downtown Washington.

    The deal, approved July 2 during D.C. City Council’s last pre-recess session, requires the nonprofit Freedom Forum, which operates the Newseum, to repay the bonds over a 35-year period. A Freedom Forum spokesman said the bulk of the bonds will be paid back from the group’s endowment and from revenue generated by the news museum.

    The group’s endowment, estimated at about $1 billion in July 2000 when plans to move the Newseum from Arlington County, Va., were announced, was valued at $651 million at the end of 2001. A spokesman for the group said that estimate does not include the value of the Newseum’s future D.C. site.

    The Freedom Forum bought the property at Sixth Street and Pennsylvania Avenue NW from the D.C. government for $100 million, displacing the city’s Department of Employment Services. Of the $100 million, $75 million went directly to the purchase of the site and $25 million went into a fund to finance low-to-moderate-income housing.

    When completed, the 550,000-square-foot building will include the Newseum, the Freedom Forum’s headquarters and international conference center, restaurant and retail facilities, and approximately 100 housing units. The $250-million project, scheduled to be completed in 2006, is within walking distance of other museums on the National Mall.

  3. Well, since they claim tax deductions as a charity, it certainly would be a charitable act to open those apartments to Washington's legions of homeless. Homelessness has gotten so bad in this recession that they are out around the suburban malls this Christmas season and the alongside the highways around the Crystal Palace.

  4. One comment on a Washington apartment rental site about the Newseum's offerings:
    "Cheap cheap cabinets and fixtures and carpet etc. Office staff has been minimally competent although requests are always filled/responded to wrongly. Overpriced on the inside, great location on the outside."
    Rental is $1,600 a month for a really tiny 450-square foot studio, $2,300 for one bedroom and $3,500 for a two bedroom apartment. If you want a glimpse of the National Gallery with a corner room, the cost is $6,500 a month.

  5. 12:19 The cheap cabinets, etc., would suggest the Freedom Forum, as developer, decided mid-construction to turn planned condos into the current rentals.

    At some point, they might gut the apartments, add higher-end finishes, then sell them as almost-new condos -- then pay down debt.

    But that will require a robust real estate market. We're OK out here in San Francisco; I don't know the market in D.C., however.

  6. Stephen Hunt12/24/2010 4:58 AM

    Can I point out the phrase "ugly Newseum sweatshirts" becomes even uglier thanks to the typo that omits the r?

  7. Ooops. I've corrected the sweatshits.

  8. Heard that some of the Freedom Forum and Newseum brass have free apartments - nice perk to ask them about, Jim.

  9. 3:20 When I visited the Newseum in 2009, I stopped by the apartment building, where I recall seeing the names of several Freedom Forum executives -- including Overby's -- on the list of residents. And I wondered the same thing about possible sweetheart deals on rent. But I have no evidence that's the case.

    The Freedom Forum and Newseum tax reports include a dollar value for employee benefits in the compensation table. I assume those benefits are mostly retirement accounts. The dollar figures may also reflect the value of rentals.

    A traditional, publicly owned business like Gannett ordinarily discloses the value of such perks in a footnote in the executive compensation tables that are part of U.S. Securities and Exchange Commission filings.

    The reporting rules for so-called 501(c)(3) non-profits such as FF and the Newseum are different, however.

  10. When all said is done, the chapter about Neuharth of this saga on the Fourth Estate will be especially interesting because it shows someone who had the potential to leave a lasting legacy. Perhaps not with USA Today, but with that big wad of cash he unceremoniously stole from the Gannett Foundation. Yes, it's pretty clear that he stole that money.

    Instead of building a lasting organization that would protect and encourage free speech he got greedy and chose to use the money to build a monument to himself, the Newseum.

    Once the Newseum is gone, I wonder what will end up occupying that structure?

  11. Stole is too strong. Gannett management allowed Neuharth to hijack the old Gannett Foundation when he threatened to sell the $650 million in GCI stock on the open market, potentially inviting an investor unfriendly to management. In the 1980s Wall Street, this was known as greenmailing.

    The effect was to dramatically subvert the foundation's mission, while simultaneously allowing Neuharth and his cronies to enrich themselves at the expense of Gannett communities that were the source of those millions in the first place.

    Where were the trustees when this was going in? Thats the subject of my follow-up post, planned for Monday.

  12. Can't wait. When you put all of the pieces together, call the New Yorker. Some very solid reporting there. You'll hit your revenue goal for sure. Nicely done.

  13. I agree with 5:38 and note that since you have done much of the spade work, a free-lance magazine piece would be in order. Backwoods charity taken over by image conscious city-slickers and turned into a museum monstrosity funneling funds to friends and relatives, while food shelters the charity used to fund are foundering in the midst of the worst recession in a half-a-century.

  14. I would like to see if a magazine would pick up this story. I'm skeptical The New Yorker would do so.

    But keep in mind that Jim has damaged his credibility with a few posts here and his appearance at the stockholders' meeting. Those bruises and his clear anti-Gannett agenda will affect his chances to be taken seriously.

  15. Done well, Gannett could be a worthwhile venture.

  16. Think what you may of Jim, but the facts speak for themselves. As a former long-time Gannett employee I can say he's right on target.

    Big Al hijacked not only the money that went to charitable causes in the communities where Gannett properties were located, he also stole away the good will that annual local donations provided.

    Neuharth and Overby represent the worst of Gannett. Their ego-fed avarice is truly disgusting.

    And yes, this story deserves to be presented to a national audience.

  17. Just think how many people have to go the Newseum at the $20 rate to pay for the overhead.

    Never happen!


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