Creative Loafing gets some new owners

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When Creative Loafing Inc. first declared bankruptcy almost a year ago, I blogged about it a lot,
leading some to wonder why I was so obsessed. Easy. I had spent five
years as a reporter and editor there, and my affection for and
admiration of alternative weeklies, which combine an irreverent
attitude with hard-nose reporting of issues the dailies shy away from,
remains strong, even if I’ve moved on.

But I haven’t said much in the past few months as the case wended its
way through bankruptcy court in Tampa, where the company is based.
Today, though, Ben Eason, the company’s CEO, lost the war:
Judge Caryl Delano awarded the company to Atalaya, which had lent Eason
$30 million a few years back to buy alt weeklies in Chicago and D.C.
The purchase of those papers, funded by borrowed money, led to interest
payments Eason couldn’t make. Hence the bankruptcy. (Read Creative Loafing reporter Thomas Wheatley’s account here. For his part, Eason said he was done in by Craig’s List.)

I called a former colleague after the news broke late this morning.
Representatives of Atalaya, who say that no layoffs are planned, are
slated to visit the Atlanta offices of Creative Loafing later this
week. “I plan to greet them as liberators,” my former colleague said.
Indeed, it is pretty stunning that a bunch of investment bankers with
no experience at owning a newspaper (they’ve hired a passel of media
execs to serve on their board) should be welcomed with such open arms.
It says something about the good faith that Eason squandered during the
years he presided over the company founded by his mother almost forty
years ago.

“This is totally a matter of hubris,” said John Sugg when we spoke by
phone just now. “He’s incapable of understanding that he totally fucked
up.”

Sugg met Eason back in the mid-1990s when Sugg was an editor at the Tampa Tribune
and Eason was a young businessman on the rise, networking like crazy.
“I was attracted to his idealism, to his whole idea of civic
journalism,” Sugg remembered. He went to work for Eason at the Weekly Planet, an alt weekly in Tampa that Eason had founded.

In 2000, when I first joined Creative Loafing in Atlanta as
news editor, Eason had just bought the chain of weeklies (which
included papers in Charlotte and Sarasota, among others) from his
mother. By then, Eason’s reliance on a coterie of high-paid consultants
(who would fly up from Tampa to lecture us on management techniques)
was complete. An idea had merit, it seemed to us, only if it came from
someone Eason had met at a fundraiser or cocktail party.

“The corporate structure was big and it was bloated,” Sugg said. “And
Ben kept hiring people who were not competent. What else can you say?”
(I’m hoping, of course, Sugg wasn’t referring to me. I’m fairly sure he
wasn’t.)

In 2005, as Craig’s List was sucking up the paper’s classified revenue,
Eason’s involvement on the editorial side of the business became more
heavy-handed. After Hurricane Katrina, I remember him walking up to my
colleague Doug Monroe’s desk. Doug was writing a column about the
federal government’s handling of the aftermath in New Orleans. “Let’s
not have any Bush-bashing,” Eason said. Doug was dumb-founded. I think
he still is.

In 2007, after I’d left the paper, Eason borrowed $40 million to expand
his chain of weeklies. His board of directors, worried that the company
would be leveraged to the hilt, quit in protest. Later that year, Sugg
left the company. Meanwhile, falling ad revenues led to layoffs at
virtually every paper in the chain. The Atlanta paper, for example, has
three news writers, fewer than half of what it once did. When the chain
declared bankruptcy last year, rendering shares worthless, Sugg, like
others, lost his investment in the company, which he puts in “the
healthy five figures.”

Sugg is part of a loose affiliation of former CL’ers — such as former
Creative Loafing Atlanta publisher Scott Walsey — who have offered
their services to Atalaya to step in. (The Atlanta paper, for example,
has been without an editor for months, after Eason fired Ken
Edelstein.) I’m trying to reach Michael Bogdan of Atalaya to see what’s
next, but Sugg says that whether or not his group is called upon, he
will be Atalaya’s biggest cheerleader as they take over the chain of
newspapers.

“Creative Loafing today stands a much better chance of re-establishing itself.”

Eason, for his part, told the Tampa daily that he would start a new newspaper “tomorrow.”

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