Off Line

The January 30 collapse of a wall at Northline Mall killed three people, but the tragedy breathed life into the Houston Daily News. The Internet-based newspaper that was supposed to offer the city a daily alternative to the Chronicle had officially launched operations two weeks earlier, but the mall disaster provided the first chance for the Daily News to show what an electronic newspaper could do for the customer.

Seizing the moment, the staff, led by news editor Sue Davis, worked long into the night, updating regularly from the scene. Davis herself pulled a graveyard shift, shooting some pithy footage with her video camera that was later fed into the Daily News's computers and placed on-line. The collection of offices that comprised the News was buzzing with reporters gulping coffee, banging on computers and hustling diskettes to the Internet production crew down the hall.

By morning, the staff was exhausted but giddy. Readers plugging into the Houston Daily News site on the Web had a more complete and updated version of the Northline story than radio, television or the Chronicle provided. For the employees, the results offered the first concrete proof that the concept of an on-line newspaper in Houston could work, that the Houston Daily News could offer a product other media couldn't. "We beat the shit out of the Chronicle," claims business editor Scott E Berrett. "We were all proud."

Within 24 hours, that sense of pride was gone. The staff's paychecks had not materialized on time -- again. And in a move that underscored the serious internal problems plaguing the operation, Daily News president Paul Allen had the paper's Internet provider pull it off-line. With a flick of the switch, the Houston Daily News was out of business.

Allen had the paper restored to the Net the next day, but by then the brief moment of euphoria had worn off, and the harsher realities of the Houston Daily News asserted themselves: inadequate equipment, few supplies and conflicting stories about who was in charge and where the money to pay the mounting bills was supposed to come from.

Ultimately, it didn't come from anywhere. The Internet provider, NeoSoft, eventually refused to do business with the News, as did other vendors with terminally past-due invoices. Reporters stopped showing up for work. The Daily News's vice president of operations, Dick Merrifield, whose wife was the paper's landlord, resigned from the company and then unceremoniously escorted Paul Allen from the office suite for failing to pay his rent. Barely a month after it first hit the Net, the Houston Daily News was lost in cyberspace.

The employees, some of whom quit respectable jobs to join the on-line paper, still hope to collect their back pay. But finding someone to take responsibility for the demise of the Houston Daily News -- and its several hundred thousand dollars of outstanding debts -- is harder than tracking Bigfoot. Though most fingers point at Allen, he says that he, too, has come out on the short end of the deal. "I've worked my ass off for two years, and I've got almost nothing out of it," he laments.

Some of the principals of the News, including Merrifield, are trying to resurrect the venture with a new name -- Houston Today -- and a snazzier new look. But the coffers remain empty, and as yet no investors have rushed to fund the latest edition, though Merrifield says he's lined up interest from various quarters.

"We're close on three different fronts," he says.
Others are skeptical. "We've heard all that before," says J.D. Luna, who left his job as a Channel 51 reporter to work for the News. "Show us the money."

Whether a daily Internet newspaper can make it in Houston -- or anywhere, for that matter -- is a matter of much debate these days. A number of people still devoutly believe that the Internet is truly the Next Big Thing and that the time is ripe for an electronic newspaper to succeed. "We're gonna ride this wave," vows Berrett. "It's time to do it. The time is now."

Despite a number of ongoing attempts by established media outlets around the country, however, no one has yet figured out how to do anything other than pour money down the Internet drain. "What people are doing now is clearly not working," says Denise Caruso, an interactive media analyst and New York Times columnist. "No one is profitable in this business."

Try telling that to the true believers who flocked to the Daily News, seduced by the combined lure of fast money and the chance to be in the vanguard of the Internet revolution. "We think that we're onto something," says Steve Herskowitz, the staff attorney for both the Houston Daily News and Houston Today. "This'll be the way that people will get their news in the future."

That may be, but it's unlikely that the characters who briefly brought the Houston Daily News on-line will be the ones providing that news.

"I have never seen such a bunch of clueless idiots," says NeoSoft president Ellen Jones. "What a bunch of lamers."

Paul Allen feels wronged. Doffing his large white cowboy hat to reveal a thinning hairline, Allen answers questions with the earnestness of a master salesman. He's eager to set the record straight, which means explaining how the Houston Daily News short-circuited, and why it isn't his fault, as everyone seems to think. "The thing is a mess," he says. "It's incredible how it got to this point."

Allen has likely repeated that line many times before. A burly man with a linebacker's shoulders, he was recruited by Texas A&M to play football but injured his knee after just ten days on campus and had surgery -- the first of more than 50, Allen says, rolling up his trouser leg to reveal an ugly checkerboard of scars. Conscious of his pronounced limp, he says he is awaiting yet another session under the knife.

After dropping out of A&M, Allen worked for 13 years in the postal services business, climbing the corporate ladder to operations manager for Friden-Alcatel. But a leg infection related to the surgeries put him in the hospital for ten months, and when he got out, his job was gone. After taking a sales job with a local copier company, Allen was possessed by the entrepreneurial spirit and teamed with a friend to form Americana Leasing Corporation, which consolidated lease portfolios for businesses much like credit companies consolidate and restructure assorted debt.

Despite having little up-front money, Americana took off, and in just three years Allen accumulated the finest executive trappings: A 1991 profile in DBA magazine showed him leaning on the hood of his Rolls Royce, a Rolex prominently displayed on his wrist. His was a regular Horatio Alger success story, the profile gushed.

But Alger's characters didn't usually wind up in prison, which is where Allen landed in 1994 after pleading guilty to money laundering and bank and wire fraud charges. For his scheme to defraud the Butler & Binion law firm with an inflated leasing contract, he got two years. Though Allen acknowledges that he "paid for what I did," he still denies he flat-out broke the law. "It was never clear that there were gray areas I was in," he says.

While he was in prison, Allen's run of bad luck continued. His wife divorced him, and when he received a special medical leave to get another knee operation, the warden withdrew the leave after his wife objected. (Though divorced, Allen has since moved back in with his ex in order to be close to his kids. "That's a whole story in itself," he says.) Asked the fate of his Rolls, Allen hooks his thumb skyward. "The government," he says.

"As you may have noticed," Allen concludes, "I've had a lot of struggles in my lifetime."

Finally paroled in 1995, Allen got a call at the end of that year from Don Forester, an attorney who had represented Allen in a worker's compensation case. Forester had been mulling various ways to tap into the spiraling popularity of the Internet, and he recruited Allen for his marketing skills. "Paul has great marketing abilities," Forester says.

Allen, naturally, concurs. "Even the FBI at one of my detention hearings said Paul Allen is the best salesman in the world," he recalls.

Allen also has the same name as the famed Microsoft co-founder, a coincidental if somewhat surreal cyber-connection. "I used to get his mail," he says of the Seattle-based Allen. "I've been confused [with him] several times."

The project Forester and Allen decided to sell first was a local Internet business directory and resource guide they called CityBeat. To fund the project, Forester lined up a group of investors, though he won't reveal their identities. "I'm not at liberty to say," says Forester, though he does allow that the list changed as investors came and went during the first few months of 1996.

The idea, according to marketing materials developed by Allen, was to harness the confusing array of Internet options into a manageable set of web sites specific to Houston. "The current Internet is chaotic to the average user who attempts to utilize it," Allen wrote. "In fact, the Internet resembles an anarchy in the philosophical sense of the word. CityBeat, Inc. provides for a sense of order by focusing on a local area, via a local database which can be searched quickly and efficiently."

For the privilege of being listed in the directory, businesses would fork over a fee, the amount depending on the size and level of exposure. But the concept failed to excite local advertisers, and the CityBeat concept changed several times in a chameleon-like attempt to find a market niche. The idea of tying in with area universities was explored and discarded. Then Allen introduced the notion of a daily on-line newspaper to be linked with the directory, and his infectious enthusiasm won the day: The late Houston Post would be reborn in cyberspace!

Not only would the Post be resurrected on-line on May 1, Allen announced dramatically in March, but four months later the paper would appear in print form on weekends, followed by the final phase of the second coming on New Year's Day 1997 as both a print and electronic daily.

It didn't take long for that plan, too, to hit the shelf. Three days after Allen's announcement, the Chronicle's lawyers wrote a letter to the new Post, pointing out that Chronicle owner the Hearst Corporation still owned the Post name and demanding that Allen and his backers quit stealing it. "If you do not," threatened the letter, "our client will have no alternative but to institute legal action against you."

That legal action was not long in coming. And despite Allen's contention that Hearst had essentially lost control of the name after the media giant bought and shuttered the Post, Forester shipped various surrender documents to the lawyers within a few weeks.

The episode evidently convinced Forester that his involvement with CityBeat and its mystery backers was no longer productive, and he formally bowed out of the company. Today, he won't discuss the particulars, beyond the vague acknowledgment that "relationships between people fell apart."

Don Forester's exit didn't slow Allen, however, who issued a garbled press release at the end of April heralding the impending debut of the Houston Daily News on July 4. "The CityBeat Ltd. investor group claims to, 'have done proforma's [sic] which have clearly proven the viability of our project given the Internet technology availability as a ramp up to a marketable product,' " the release read.

Allen managed to persuade at least some people that the rechristened paper, still paired with the CityBeat directory concept, would be a smash success, and they signed on as investors. As with the previous batch, Allen says, the new ones didn't want to be identified, a wish backed by a confidentiality agreement.

But one of them did go public -- Richard Wahl, a Mercedes salesman with Star Motors who knew Allen from his Americana days. Wahl and Allen formed a partnership, CityBeat Net Ltd., with Wahl listed as registered agent and sole director, and Allen as president. Allen, the agreement stated, would get $500 a week and a percentage of the net income, and Wahl would have complete control of the finances.

Just how much money the investors were willing to spend on the company is unclear, though Allen has maintained that the group, which he claimed consisted of 13 anonymous lawyers in addition to Wahl, guaranteed up to $5 million in funding. Allen, who had no money of his own to invest, apparently had reason to believe that the group's pockets were deep, because for several months he explored the possibility of buying an office building on the North Loop to house the company.

But the purchase never came to pass. Neither did much of anything, though Allen sold several CityBeat ads to owners of executive suites, floors of buildings that sublease office space and provide secretarial and other services to small-business tenants. One connection in that endeavor was Dick Merrifield, president of the Executive Suite Association, who met Allen and was taken by the salesman's pitch. At an association meeting, Merrifield extolled the virtues of the virtual world and urged the members to sign up with CityBeat.

Unfortunately, there was no CityBeat, nor did one ever materialize. Lee Ann West, office manager for A Suite Service, says she paid $632.88 up front for a spot in the electronic guide. She's called Allen and others a number of times to settle her account, but so far, she says, "I've gotten nothing."

Nor will she. Somewhere between July and December, Allen lost enthusiasm for CityBeat and refocused his attention on the Houston Daily News. Concerned about complaints he was fielding from executive suite owners, Merrifield called Allen in November about CityBeat. According to Merrifield, Allen said there was a hang-up: "He said, 'I can't bring CityBeat up until there's a newspaper to put it in,' " Merrifield recalls.

Apparently, that explanation was good enough for Merrifield. Believing that an on-line daily could be a winner, he invited Allen to move into the Galleria-area executive suite owned by his wife, whose major tenant had moved out in September. In return, Allen named Merrifield vice president of operations. A start-up Web company, Apex Internet Design, was conveniently located in the same suite and agreed to design the newspaper and get paid as the revenues came in. A year after it first appeared on the drawing board, the Houston Daily News was finally ready to roll.

Beginning in December, Paul Allen went on a hiring spree. The Houston Daily News would have only the best writers available, he decided. To that end he recruited former Post managing editor Martha Liebrum for the same job at the Daily News, which he felt gave the paper instant credibility.

"In one sense, you could look at me and laugh: 'He's a clown, he's got a record,' " says Allen, who would often introduce himself to new employees as the coffee boy. "In another sense, you couldn't argue with Martha Liebrum."

A gaggle of ex-Posties besides Liebrum joined the crew, including reporter Robert Stanton, who had been working at Channel 11, sportswriters Jim Molony and Jim Carley, opinion columnist Robert Newberry and editorial cartoonist Lambert Der. From Channel 51, Allen hired Sue Davis as news editor, reporter J.D. Luna and Scott E Berrett as business editor, though Berrett continued to work part-time at the station. And Davis hired several young reporters who were eager for jobs at a big-city daily.

Allen and Merrifield also were after a certifiable "name" journalist from the old Post -- sports columnist Mickey Herskowitz, who had secured contract employment for a once-a-week column at the Chronicle after the Post was closed. They wanted Herskowitz as publisher of their on-line venture. Even as Allen and Merrifield tried to negotiate a deal with the columnist, they were telling other employees of Herskowitz's impending arrival. "They said he was gonna be publisher," recalls reporter Laura Stromberg, a recent UT grad who was lured to the Daily News from Austin. "[They said,] 'He's waiting for the right offer from us, and he'll be on board.' "

Though most of the staff was attracted to the glamour and pioneering spirit of the Net, there was a bigger draw -- money. Or at least the promise of it. Allen was offering salaries well above scale, almost $30,000 for an entry-level reporter. Sue Davis had a guarantee of $70,000, about double her Channel 51 pay, with the possibility of a bonus if the paper attracted lots of readers. "I thought I'd died and gone to heaven," says Davis. "Instead I'd died and gone to hell."

Warning signs abounded that all was not well on the financial front. Stromberg worked in a cramped office with two telephones, four desks and four computers -- for five reporters. The few computers available weren't networked, meaning the writers were constantly trundling diskettes back and forth from Apex's suite. The prototype paper was unattractive and a navigational nightmare, a constant source of conflict between Allen and the Apex designers. Even getting office supplies was a hassle: Davis had to spend $655 out of her own pocket for file folders and other basics.

Throughout, Allen blandly assured the staff that they shouldn't worry. Instead, he talked of expanding the paper to Austin, Dallas and other sites around the country after the Houston edition took off. "He said that he had 13 attorneys who had very deep pockets, and that money would not be a problem," says Merrifield, repeating the accounts of numerous other staffers.

Privately, Allen says, he was concerned, and he claims he was regularly phoning Richard Wahl and firing off letters to the investors about the cash crunch, but without much success. "I wasn't happy with the situation," he says. "They'd pay for things sporadically, but it took an act of Congress."

It remains unclear whether those investors actually existed. Wahl, Allen and Don Forester say they did, though they won't name names. But all of the attorneys mentioned by various sources as possible investors vehemently denied any knowledge of the Houston Daily News, CityBeat or other on-line entities. "I know nothing about any such venture," says Bruce Jamison of the law firm Jamison & Associates, though he did acknowledge buying a Mercedes from Richard Wahl and representing him in a personal injury case. "I have never been involved in any such thing."

Of course, as NeoSoft president Ellen Jones notes, few people would readily admit involvement with such a star-crossed enterprise. "If I had any part of that show," Jones says, "I'd be ashamed to let anyone see my portfolio."

At any rate, when the alleged investors failed to come up with the funds for the January 1 payroll, Allen approached Maxine Shannon, the owner of Apex Internet Design, and asked for a loan to cover the paper through the following pay period. After that, he suggested, revenues from advertising would be sufficient to meet future obligations. In exchange for a small stake in the company, Shannon fronted Allen $60,000, to be repaid in six months at 20 percent interest. Though the paychecks came a few days late, the Daily News staffers pressed on.

Steve Herskowitz, Mickey's son, started work as general counsel for the Houston Daily News on January 15, the paper's debut date -- as well as another payday. Allen and Merrifield had approached the younger Herskowitz to handle the company's legal affairs, and offered him a tidy sum to do it. (The prospect of helping lure Mickey from the Chronicle also crossed their minds, according to Allen.)

Herskowitz didn't question why the nascent enterprise needed a full-time attorney. His practice was thin, and the prospect of breaking new legal ground on the Internet appealed to him. And the money was hard to ignore. "To some extent, I wasn't looking a gift horse in the mouth," he says.

When the paychecks didn't arrive that day, Herskowitz says, he was curious about the problem. "I'm thinking, whatever's broke, I hope they get it fixed," he says. But because Allen had told him that the identity of the investors was a secret, there was little he could do to resolve the problem. "To a large extent, my hands were tied," says Herskowitz.

Eventually, the employees got their paychecks, but they didn't bear the name Houston Daily News. Instead, they were cashier's checks from Wells Fargo Bank.

Meanwhile, relations between Paul Allen and Dick Merrifield were deteriorating. The Apex loan was depleted, and the bills were mounting. A set of computers from Dell that Merrifield's wife had ordered through another business arrived, but instead of distributing them to the staff, Merrifield locked them in an office, even hanging a Do Not Enter sign on the door in Spanish so the cleaning people wouldn't go in. "This became known as the 'hostage crisis,' " muses reporter Alan Choate. "I thought it was very strange."

On several occasions, the two execs got into shouting matches with each other over the money. Merrifield began exploring ways to raise capital on his own, which Allen interpreted as a coup attempt. "I knew Dick was doing an end-around," he says, "and was gonna cut me out eventually."

The portents of doom didn't seem to deter the staff, who dutifully filed stories that Apex posted on the Daily News site. A state of collective denial about the finances seemed to grip the offices. "I think it was partly our secret desire that we not learn anything different [than what we'd been told]," says Steve Herskowitz, a rather strange admission for someone in the newspaper business.

But when Allen pulled the paper off-line on Friday, January 31, the day after the Northline Mall incident, reality impinged. That day, the paychecks again failed to appear. On Saturday, Merrifield, Martha Liebrum, Dalton Mullins of Apex Design, Mickey and Steve Herskowitz and others attended an emergency meeting at the paper's offices. Mercedes salesman Richard Wahl made his first appearance before the group, disclaiming any knowledge of -- or responsibility for -- the problem. (Somehow, various staffers came away with the impression that Wahl owned Star Motors and was worth $135 million, but no one can remember who told them that.)

Allen was also invited, but fearing a setup, he declined to show.
At the meeting, the group discussed ways of restructuring the company and raising funds to pay expenses. Various parties staked claims to future revenues: NeoSoft, the Internet provider, was due $38,000. Between the loan and services rendered, Apex had about a $100,000 claim. Merrifield's wife wanted her rent. Wahl stated that he'd sunk about $75,000 into the project.

At the same time, everyone agreed, the long-term prospects for the paper were greater than they'd ever been.

That Monday Allen called a general meeting of the staff, who grilled him about the finances and his conflict with Merrifield. Allen told them he'd disconnected the paper as a strategic move to show he had control, but that the investors and Merrifield still wanted him to continue as president. Afterward, most of the employees remained optimistic that the players could work through their differences and salvage the project. Most went back to work.

Tuesday was a decent day for the News. A handful of kids had ripped off a house on the east side and scattered into the sewer system, and Spanish-speaking Laura Stromberg got some information from the Latina victim that other media missed. J.D. Luna produced a solid mall follow-up. Allen met with Davis and Liebrum and insisted he was going to work everything out. "He compared himself to Abraham Lincoln trying to hold the Union together," Davis says.

That afternoon, though, the word trickled through the office that Merrifield had resigned and Apex had defected. The sportswriters, who first heard the news, bought some booze and threw a "crisis party" at the office. "I stopped writing, went down the hall and grabbed a beer," says Alan Choate. "Pretty much, the paper was dead."

That paper, anyway. Merrifield announced that he'd formed a new company, Houston Today Inc., to pick up where the Daily News left off. Apex had designed a new page, which looked sharper than the old graphics. All employees from the old paper would be welcome to join the new.

Except one. Thursday morning, Merrifield ordered Allen to leave the building, citing non-payment of rent. Allen gathered his belongings and left.

For once, however, skepticism began to infect the masses. Merrifield spoke with the old confidence, but it wasn't taking root.

"He told the entire news department, 'You will get your back pay, we have investors and you will get your jobs back,' " says Laura Stromberg. "What's so funny is, there are still people there who think it's gonna fly."

Dick Merrifield sat in the ample office that used to be Paul Allen's, the mahogany shelves and desk vacant except for a thin row of books, including The Rush Limbaugh Story. A jowly, unthreatening presence, he related his 30 years' experience in the newspaper business, which consisted of a brief stint as a college and high school wrestling reporter for the Des Moines Gazette and a number of years on the margins.

The new venture, Houston Today, was going well, Merrifield said. In particular, investors had shown keen interest in the offering of founder's stock and the $2 million level of secondary financing, though the money wasn't in hand yet. "I don't expect to start getting money till tomorrow," Merrifield said confidently.

That was a month ago. And though the promise of money remains constant, no one has yet jumped at the chance to invest in the on-line paper.

It's hard to imagine who would sink money into the company, given that, except for Allen, it's the same bunch that ran the Daily News into the ground -- including Richard Wahl, who holds a seat on the board of directors and has been awarded a nice slice of the company by virtue of his threat to sue if he wasn't. "They have given him a percentage of ownership to avoid litigation in the future," says Constance Wasson-Barrett, who served as Allen's secretary and stuck with the company after he left. "I find it all very questionable."

Wahl denies holding a lawsuit over anyone's head, but Merrifield has confirmed the fact with others, including the Press. "According to our attorney, it was the safest way [to proceed]," Merrifield says.

Nor is that the only inconsistency in Wahl's story. The Mercedes salesman claims he invested in CityBeat, the directory, and knew nothing about any newspaper venture. His money ran out last November, he says, and whatever Allen did with the Houston Daily News, he did alone. "There would be no reason for me to be aware of it," he says.

But aside from the barrage of news accounts on the new on-line newspaper, beginning with coverage of the ill-fated stab at resurrecting the Post, Wahl might have had more than an inkling of the newspaper's existence: According to Constance Wasson-Barrett, he and Allen conversed regularly from the day she was hired in mid-December until well into the new year, as often as five times a day.

Wahl acknowledges speaking with Allen, but claims the subject of the newspaper never came up. Asked what they talked about, Wahl is evasive. "I don't remember," he says. "He just called."

Wahl's presence in the new company may make investors leery for another reason: A number of the former employees are looking for someone to sue to collect their back pay and possibly damages. As the official check signer of the Daily News, Wahl is a likely target. And while few have kind words for Paul Allen, Wahl comes in for his share of criticism. "Both Paul Allen and Richard Wahl deserve to be in the same jail cell," says Scott E Berrett, who is one of several people trying to line up financing for Houston Today.

But the lure of a fast buck can overcome the most dogged logic, and Merrifield insists that even conservative estimates put Houston Today in the black after seven months or so. In that respect, at least, he and Allen are in agreement. "The bottom line is, it's very feasible to make money," Allen says. "Big money, real quick."

The evidence Allen, Merrifield and others proffer as proof of such optimism is more speculative than anything. The immediacy of the Internet allows for constant story updates that print newspapers or television can't match, and new technology adds such attractive features as real-time video and audio to the mix. That same technology creates new opportunities for advertisers: A real estate firm, for example, can conduct a virtual walk-through of a house on the Net, instead of a tiny little exterior photo in print.

In addition, readers were accessing the Daily News even in its infancy, as many as 100,000 a week, according to Apex Design's Dalton Mullins. And those readers, tired of living in a one-paper town, are anxious for the second coming. "We're still getting e-mail daily," Mullins says.

But all that won't translate into income, says interactive media analyst and New York Times columnist Denise Caruso, who points to the idea that readers can tap into the most up-to-date versions of stories as a typical myth. "Who has money for that?" Caruso asks. "It takes people and time and electricity and money to do those constant updates. [Advocates] have a tendency not to pay attention to the dogshit realities of what it takes to do it."

More importantly, Caruso says, the notion that advertisers will soon be leaping onto the Net in droves and will pay outfits such as Houston Today for the privilege is simply a wild guess with no foundation.

"Advertising support is a dying concept on the Web," she says. "Lots of people are throwing money at the Web in the obviously mistaken belief that there's a market waiting to happen."

Even if Houston Today corrals some investment capital, it will have no shortage of competition for advertising dollars. The Chronicle's well-heeled web site has been operative since April 1995. Microsoft is preparing tounveil its on-line Sidewalk magazine in major cities around the country, including Houston, in the next few months. OtherHouston-specific on-line publications are in the development stage, including onespearheaded by Paul Allen, though hedoesn't want to share the details just yet. "I don't wither and die very easy," Allen says."I keep coming back."

Prospects for success will also depend on whether Houston Today can sustain the interest of whatever readers visit the site. Though a few Daily News stories stacked up favorably against the competition, the content of the paper was generally quite thin. "It was like a skeleton of a newspaper," Martha Liebrum admits.

And Houston Today may have trouble rounding up a competent group of reporters to produce anything worth reading in the first place. Most of the original staffers have found other jobs, including Sue Davis and Martha Liebrum. Mickey Herskowitz, who never officially joined the fold, leveraged a lucrative full-time columnist's job with the Chronicle from his dalliance with the Daily News.

But regardless of their experiences, some of those journalists say they'd consider returning to the fold if and when the money comes in. They remain convinced that the fate of newspapers lies on the Internet, that in time the economic kinks will work themselves out. "It's still something I want to be a part of," says reporter Alan Choate. "It's the medium of the future."

Given the sorry history of the venture, that may seem hard to understand, but Steve Herskowitz has an explanation. "Faith," says Herskowitz, who is helping with the new company's legal affairs. "It's the answer. It may be foolish, but once in a lifetime you have the opportunity to get in on the ground floor of something that becomes part of virtually every household in the world.

"In spite of all the missed paychecks and all the turmoil and all the problems, that's why we're here.


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