According to a case management summary (pdf) filed in Creative Loafing's bankruptcy proceedings on Monday, revenues are off at the six-paper alt-weekly chain. Atlanta Magazine's Steve Fennessy reports that when CL was looking for financing to purchase the Chicago Reader and Washington City Paper, it projected the expanded company would see revenues of $43 million in fiscal year 2008. But the court filing says that revenue in FY08, ending June 30, 2008, was $35 million, and predicts that sales in the first quarter of FY09 will be only $3.5 million. In other CL bankruptcy news, Washington City Paper has published a statement from one of the company's lenders, Atalaya, which says the bankruptcy filing was "unfortunate and unnecessary," and assures "all interested parties that Atalaya has no intention of attempting to shut down the business." MORE: City Paper editor Erik Wemple talks to the George Washington University student paper The Hatchet about the changes in store as the paper shifts focus.
Atlanta Magazine's Steve Fennessy reports that during Wednesday's bankruptcy proceedings, Creative Loafing's lenders "fired a shot across the bow" at CEO Ben Eason, "saying in court papers that the bankruptcy filing was a gambit by Eason to preserve control of the company and 'dodge' the lenders' 'bargained-for rights to have a say in corporate governance.'" The lenders, Atalaya Funding and BIA Digital Partners, filed a motion (pdf) to reverse the earlier court injunction against them, which prevented them from seizing CL's assets. However, according to Washington City Paper, the judge struck down that motion on Wednesday. "It was a legal maneuver they were doing to get more control," Eason says. "When we filed the bankruptcy, there was a concern that Atalaya or BIA might use the collateral as a part of the bankruptcy to come in the backdoor and use the shares to basically foreclose on the shares and function as the board of directors." MORE: Former Creative Loafing (Atlanta) publisher Michael Sigman weighs in.
On Atlanta Magazine's blog, former Creative Loafing (Atlanta) staffer Steve Fennessy talks to Ben Eason -- who he calls "a tireless networker with a love of jargon" -- and a few worried staffers about this week's filing. Eason reiterates a few points he's been making to the press this week, and adds that, despite his web-first strategy, he doesn't envision a time when his publications don't produce actual newspapers. MORE: Read more from Creative Loafing's John Sugg, Washington City Paper's Angela Valdez, Gawker, and consultant Mark Potts.
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 company, which owns Creative Loafing papers in Atlanta, Charlotte, Sarasota and Tampa, as well as the Chicago Reader and Washington City Paper, filed for Chapter 11 bankruptcy protection this morning, the St. Petersburg Times reports. City Paper editor Erik Wemple reports that CEO Ben Eason discussed the filing with top company officials in a conference call this morning, and said that the bankruptcy filing would allow CL's six papers to establish a greater online presence while the company reorganizes its operations. A corporate memo on the filing says it "has little to do with the acquisition" of the Reader and City Paper last year. Eason also said that the move entails no liquidation or layoffs. In fact, the Chapter 11 filing will roll back editorial staff cuts at the papers, Wemple writes. MORE: Read more about the move from Creative Loafing (Tampa), the Reader, Crain's and Bloomberg News.
The Georgetown Voice's nearly 3,000-word story on the alt-weekly looks at how it is evolving under the ownership of Creative Loafing, and how the paper is fighting to maintain its identity -- and market share -- despite having fewer resources. "You want to create a rich environment and then bring it down into the print," says CL CEO Ben Eason, who is currently focused on uniting the company's six papers as a national web presence. "Without a doubt, the web is a far richer environment than print." Editor Erik Wemple says he sees the paper a year from now as being "very, very, very much a web machine." But publisher Amy Austin adds that, while online advertising revenue is quickly growing for City Paper, it still only makes up approximately 5 percent of the paper's total revenue, which has been in decline. By 2006, the paper's net revenue -- traditionally around 15 percent -- had fallen to 4.7 percent.
That seems to be the opinion of Ed Avis, who looks at the challenges alt-weekly owners are facing in a piece for Quill, a magazine published by the Society for Professional Journalists. Not surprisingly, he says the biggest challenge to the business is the internet. He talks to the Austin Chronicle's Louis Black, Creative Loafing's Ben Eason, and Times Shamrock's Don Farley to see where they are at in relation to the internet, and, more importantly, where they're trying to go. Ultimately, Avis thinks that the challenge of the online market -- in concert with the aging of the original alt-weekly founders -- is what's behind the industry's increased consolidation. Northwestern University professor and Academy for Alternative Journalism director Charles Whitaker agrees. "I think the (older owners) have had difficulty adjusting and figuring out the new media landscape, particularly the internet and things like Craigslist," he says. "At the same time, a group of new owners said, 'We can do this as a chain. We still have our alternative press sensibilities, but by pooling our resources we can run these papers more efficiently than they had been run in the past.'"
"While it is easy to blame mean and nasty CEOs for trimming budgets, the fact is that our journalism, advertising and our content needs to be and are being re-conceived," Creative Loafing CEO Ben Eason says in a memo to employees leaked to Poynter's Jim Romenesko. In the memo, Eason tells his employees that most of the post-merger integration -- including staffing decisions -- of the Chicago Reader and Washington City Paper into the CL family is complete. "I'm very pleased with how the new company has come together," he says. "We are positioned well to take advantage of the future."
"Friday was a rough day at the Loaf, perhaps even rougher at our new brethren papers in Washington and Chicago," writes Creative Loafing (Atlanta) editor-in-chief Ken Edelstein. "In Atlanta, we laid off four sales people, a marketing assistant, a sales assistant and our wonderful assistant distribution manager." He adds that the six-paper company is going through the same sort of difficult transition that's hitting other media companies, before noting that his paper's online readership continues to grow. "How that audience growth translates into ad dollars is the business question that [CEO] Ben [Eason] and the folks on the sales side of our business are going to have to grapple with for a long time -- and continuously."
The Times columnist says that given all of the newspaper industry's woes, last week's Chicago Reader and Washington City Paper newsroom layoffs might not seem significant. But Carr, who was editor of the City Paper in the 1990s, thinks the cuts illustrate the larger issue of an industry-wide abandonment of investigative journalism. Creative Loafing CEO Ben Eason says that's not the case. "We are not trying to make any other statement here other than it is a competitive world out there and we are doing what we can to make sure we are putting out an excellent paper in the communities we serve," he tells the Times.
