When Creative Loafing filed for Chapter 11 bankruptcy protection yesterday, the news was widely reported. AAN News scoured the wires, separated the wheat from the chaff, and collected some of the pertinent information and opinion.
The bankruptcy filing wasn’t the only court action taken by Creative Loafing yesterday. The St. Petersburg Times reports that the company filed suit against its primary investors to prevent a default that might have allowed the creditors to take control of the company.
The suit claims the worsening media economy made it tougher for CL to pay down its $40 million in debt, including a $30 million loan taken in part to buy the Chicago Reader and Washington City Paper last year.
CL had negotiated agreements to modify the terms of those loans with the backers, Atalaya Funding and BIA Digital Partners, the Times reports. But last week, Atalaya said the company was in default.
Eason tells the Times that the economic circumstances had drastically changed since they made the deal to expand last year. “If the economy was the same now as it was when we put the deal together, we would have hit all our financial objectives and we’d be Wall Street’s darling,” he says.
Meanwhile, Creative Loafing (Charlotte) publisher Carolyn Butler tells the Charlotte Observer that the reorganization won’t immediately affect her paper. “We’ve kind of been left alone because we’ve done well in Charlotte,” she says. She also tells the Observer that CL’s company-wide internet revenue has risen in the last year or so from $200,000 to about $1.2 million.
Birmingham Weekly editor Glenny Brock clears up her paper’s connection to Creative Loafing, and how the bankruptcy filing will impact the Weekly. “CL Birmingham has been defunct since 2000 and Birmingham Weekly is owned and published by Magnolia Media, LLC,” Brock writes. “Creative Loafing is a minority shareholder in Magnolia Media but Birmingham Weekly has not sought bankruptcy protection and, according to publisher Chuck Leishman, has no intention of doing so.”
Eason tells the Tampa Tribune that ad revenues have plunged, especially in the housing and furniture sectors. But a lawyer for CL notes that the company’s papers remain just as popular as they were. “There has not been a drop in readership,” says Dave Jennis. “It’s simply the economics of print publishing.”
Speaking to DCist.com, City Paper editor Erik Wemple confirms that the previously reported editorial staff cuts that were in the works would be put off for now, but says the company’s strategy for the paper would remain the same. “Creative Loafing has made a strong decision to squeeze every last drop of revenue out of the internet, so the directive is to deploy our people to the greatest extent possible toward the web first, with the idea of backing that stuff into the paper when deadline time rolls around,” he says.
Out on the other coast, L.A. Weekly‘s Matthew Fleischer is skeptical of the new web-first strategy, saying that it “sounds ominous.”
Editor & Publisher‘s Mark Fitzgerald says that CL is acting like a mainstream newspaper chain. “If alternative chain publishers wanted to be like the big boys in mainstream newspapering, Creative Loafing is showing them the way,” he says. “Just like The McClatchy Co., just like Lee Enterprises, just like GateHouse Media, the alt-chain has found that biting off more than you can chew isn’t a viable business model.”
Lastly, St. Petersburg Times business columnist Robert Trigaux ties the Chapter 11 filing back to the economic meltdown currently gripping the country. “It’s hardly a leap to say Creative Loafing Media, whose alternative newspapers help make Tampa Bay and other metro areas more interesting places to live, would not have gone Chapter 11 Monday if the credit faucet from banks had not been turned off,” he writes.