City Desk

City Paper Owner Files for Bankruptcy

Creative Loafing Inc., the owner of Washington City Paper, announced this morning that it has filed for Chapter 11 bankruptcy. In a conference call with top company officials, Ben Eason, the company's CEO, said that the step would allow the six papers in the Creative Loafing portfolio to establish a greater online presence while the company reorganizes its operations.

A corporate memo released this morning captured the rationale for the move: "The term 'bankruptcy' conjures up all kinds of images and demons but it is essentially a legal proceeding designed to give an over-leveraged company the time, process and a safe harbor for which to reorganize its finances. Chapter 11 was the natural place for the Company to go to accomplish an orderly reorganization of our finances."

Creative Loafing owns papers in Atlanta, Tampa, Charlotte, Sarasota, Chicago, and Washington. It acquired the last two in July 2007. The company, however, disavows a causal link between those acquisitions and the bankruptcy filing.

"This filing has little to do with the acquisition and everyone should feel very proud of what we’ve accomplished," reads the company memo. "It hasn’t been easy but it has been successful. The assumptions we made have not turned out to be so successful. The print business has been under siege from all quarters with the exception of the one place that counts; audience."

Said Eason: "I do think that the Reader and Washington City Paper and Creative Loafing are all far better off today together, given the footprint and given what we've been able to accomplished digitally."

"This is all about a fresh start," stated Eason, who hastened to add that the filing entails no liquidation, no layoffs, and "no terrible, terrible things." All Creative Loafing employees and vendors will be paid on schedule, he said.

The move does contain good news for editorial departments in the chain. Eason announced that cuts to edit staffs at all the papers would be rolled back but stressed that all the papers should proceed with "Web-first" publishing strategies, in which writers and editors customize their content for the Internet and subsequently transfer that content into their print products.

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Comments

  1. #1

    That's one helluva Orwellian spin on the word "Bankruptcy".

    I hope the movement towards a greater "web" presence doesnt translate into a website design like other creative loafing sites.

  2. #2

    Ask for a federal bailout. It's all the rage these days.

  3. #3

    Funny, CL's website says the acquisition is a factor in the debt the company can't pay off:
    http://blogs.creativeloafing.com/freshloaf/2008/09/29/creative-loafing-files-for-bankruptcy/

  4. #4

    Damn. I knew from the Voice's cover story that things weren't all sunshine and rolls of hundred dollar bills at Creative Loafing, but I didn't think it was this bad.

  5. #5

    Dude, bilking the IRS out of employee withholding money is really serious stuff. Take a look at
    http://blogs.tampabay.com/media/2008/09/creative-loafin.html

    which lists the taxman as being among the list of the 20 largest creditors holding unsecured claims. These include the IRS, the Georgia Department of Revenue, and the Georgia Dept of Labor.
    I also think a serious rethink of this Web strategy is now needed. It should be clear to the brilliant minds at Creative Loafing that revenues from a Web-based City Paper won't be sufficient to sustain a staff for the paper. Going back to the days of print, when the City Paper was a must-read in Washington, is the only way that sort of revenue can be raised. Otherwise, no more City Paper.

  6. #6

    Barf bag.

  7. #7

    “I do think that the Reader and Washington City Paper and Creative Loafing are all far better off today together..."

    -What world is Ben Eason living in? The City Paper would have been far better off on it's own.

    And for Mr. Eason to deny that the purchase of the Reader and the City Paper had anything to do with this problem -- totally irresponsible.

  8. #8

    From the Fresh Loaf post:

    "The company will ask federal bankruptcy Judge Caryl Delano to stay any attempt by creditors to liquidate the assets or take control of the company."

    Sounds like the filing is more about staving off the vultures than trying to revamp the company.

  9. #9

    CL has bled the new hole dand many features from the City Paper to payoff the debt. Essentially it's a family business (that went through an ugly family split) that was based on appeling to Sunbelt audiences. The Reader and the City Paper were vastly more serious enterprises and they've screwed them. DC has a plethora of weekly and semi-weekly papers and it would not be difficult for someone to basically take over the old City Paper niche.

  10. #10

    I don't understand what it means to declare bankruptcy. Does it work something like this:

    http://www.youtube.com/watch?v=HuGIgf-ICHM

  11. #11

    To paraphrase Homer Simpson: "We're just a little bankrupt, we're still good, we're still good!"

  12. #12

    Dudes, this sucks. I absolutely love the WCP, and as somebody who works in an online editorial situation, print and digital are never the same in quality.

    Lets just say fuck'em and make the WCP it's own entity... Who's behind me?

  13. #13

    Great. After turning Chicago's best newspaper into a one-section tabloid shadow of its former self, now the company declares bankrupcy? Capitalism strikes again.

  14. #14

    Creative Loafing FAIL

  15. #15

    God, Dobbsfox, you are exactly right. I still miss the old Reader.

  16. #16

    I'd blame the illegal aliens before I'd blame capitalism. Besides, socialism doesn't blend well with freedom of the press.

  17. Report from Chicago
    #17

    i haven't given the reader a thought in years. there's more competition for much of what the paper does...redeye and time out chicago in print and the local NPR station has beefed up its culture and local news reporting. i'm surprised New CIty is still around.

    http://www.newcitychicago.com/chicago/index.html

  18. #18

    A BAILOUT FOR U.S. CITIZENS.....................

    The Mark Plan (The dream of a Private Citizen)

    I'm against the $85,000,000,000.00 bailout of AIG.

    Instead, I'm in favor of giving $85,000,000,000 to America in a 'We Deserve It Dividend'.

    To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+.

    Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.

    So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

    My plan is to give $425,000 to every person 18+ as a 'We Deserve It Dividend'.

    Of course, it would NOT be tax free. So let's assume a tax rate of 30%.

    Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam.

    But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.

    What would you do with $297,500.00 to $595,000.00 in your family?

    Pay off your mortgage, housing crisis solved. Repay college loans, what a great boost to new grads. Put away money for college, it'll be there. Save in a bank, create money to loan to entrepreneurs. Buy a new car, create jobs. Invest in the market , capital drives growth. Pay for your parent's medical insurance, health care improves. Enable Deadbeat Dads to come clean, or else. Eliminates homelessness - more apartments and homes needed.

    Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces. If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!

    As for AIG liquidate it. Sell off its parts. Let American General go back to being American General. Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up.

    Here's my rationale. We deserve it and AIG doesn't.

    Sure it's a crazy idea that can never work. Maybe??? But can you imagine the Coast-To-Coast Block Party! How do you spell Economic Boom? I trust my fellow adult Americans to know how to use the $85 Billion

    ‘We Deserve It Dividend' more than do the geniuses at AIG or in Washington DC .

    And remember, The Mark plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

  19. #19

    Hey brainiac Spred da Woyd: $85 billion divided among 200 million people is just $425, not $425,000. Do math much?

  20. #20

    Karma's a bitch...

  21. #21

    Sorry to hear this. I've been reading the CP for 20 years and still think you guys are doing a great job in the face of serious adversity in your industry generally and this company specifically.

  22. #22

    GAME SET MATCH

    Now, somebody with some CASH buy the CP back from this stupid mother-fucker!

  23. #23

    Creative SHITLOAF

  24. #24

    SUCKS. Ben Eason is a dickwad.

  25. #25

    Anybody who knew anything about Ben Eason and his history would have figured out he was a train wreck. For example, he had a good crew in place at his Tampa alt-weekly -- solid news writers who were actually breaking news in the Bay Area. Then he sacked 'em. Now here's a question: Why in the world did the owners of the Reader sell their publication to this bozo? How could they not know that Creative Loafing would wreck the franchise? Why do all these once-idealistic Baby Boomer editor-publishers turn into greedheads in their dotage?

  26. #26

    20 years ago, I took an ad in The Reader to find a tenant for my two-flat. That was all you did. The Reader and a sign on the door. Now, I have to take out ads on Craiglist, various apartment.com sites, or pay several thousand to an apartment finder service to deliver lazy-ass yuppie candidates who are not qualified. This is progress. So, apartment and all sorts of local classifieds are a lost cause for The Reader, right? Music? Seems as if that section is pretty full. Maybe that floats the boat? Online, there's too much of everything The Reader, and every other newspaper, re-creates a day late and a dollar short. Including this lame comment.

  27. #27

    Sorry, any meat-head should have known this was coming. Look, this was destined to happen once the paper was sold. The employees got screwed. This is what happens when you get greedy and you are a fucking douche bag, Ben Eason.

    ***Note: Anybody left over at CP should get the fuck out. Don't think that you are "saved" or that editorial cuts are rolled back. BULLSHIT! This motherfucker is desperate that you don't leave so he won't go even further into debt. Find a new job and screw this bastard!

  28. #28

    Well, Charles Raymond, don't tell anyone, but the owners of the Reader were bozos, too.

  29. #29

    UH>>>>>>HELLO ERIC.

    Jim Romenesko points us towards an post from Washington City Paper editor Erik Wemple in which he announces that Creative Loafing, his paper's parent company, has filed for Chapter 11 bankruptcy protection.

    According to Mr. Wemple, it's really not that big a deal—in fact, it might be a good thing—since, according to Creative Loafing C.E.O., Ben Eason (whom Mr. Wemple paraphrases), the fiing "would allow the six papers in the Creative Loafing portfolio to establish a greater online presence while the company reorganizes its operations."

    Mr. Wemple goes on to quote Mr. Eason as saying:

    'I do think that the Reader and Washington City Paper and Creative Loafing are all far better off today together, given the footprint and given what we’ve been able to accomplished digitally... This is all about a fresh start... no terrible, terrible things.'

    In August, Mr. Wemple told DCist's Sommer Mathis:

    'Like a lot of media companies, we are going through an exceptionally rough period, and indeed we are discussing how to cut expenses. I don't want to cite any figures at this point because we are trying our best as a company to minimize the impact. But yes, layoffs are part of the discussion.'

  30. #30

    Uh....please read below...

    Among the largest unsecured creditors is Fayetteville Publishing Co., which prints the Atlanta paper and some of the other papers in the group. The Georgia Department of Labor, the Georgia Department of Revenue and the IRS are also among the creditors.

    Okay, WAKE THE FUCK UP>>>>Does Eason really think the IRS is going to just walk away? This douche bag with his smarmy smile and greed has succeeded in fucking up whatever he took from his mommy and daddy.

    The judge in this case should let this whole thing collapse. He can't run a business and he certainly should not be allowed to get away with writing off bad debt. Sad to say, but unless somebody can come back and buy CP it should be allowed to die and die right now.

  31. #31

    Thank god.Charlotte's CL has been a continuing joke since Kurt Cobain's face lift.

  32. #32

    Is the staff now on strike? Not a single new blog item since the bankruptcy announcement. Hope all is well.

  33. #33

    The fundamentals of our newspaper operations are strong...

  34. #34

    "nothing is fucked here, dude." - Creative Loafing

  35. #35

    WCP is a very entertaining and informative paper. I only read it, the NYT every day, and the Sunday Post now. Ok--and Salon.

    Desperate times call for desperate measures: What if you quit posting content online, for free, and instead sold copies at newsstands for a low price? If people couldn't get it for free online, I bet they'd pay at least 2-3 bucks for it. Don't get me wrong--I love reading stuff online, but I'd rather read it in print than not at all. There's a real demand for DC-oriented news, and I think you could even get subscribers if you played it right. Maybe you could, gasp, partner with the Post and offer WCP subscriptions for $10 a year when people subscribe to the Post.

    Or maybe paper costs are eating up what you make on ads. In that case, you could go with a model like that of Consumers' Checkbook--online subscripions with password-limited online access. And then ditch the paper versions.

    Either way, I think you gotta start charging us.

  36. #36

    Wow, that's crazy. I love the City Paper.

  37. #37

    The word 'bailout' immediately springs to mind.

  38. #38

    Chains like CL and Village Voice Media will be the downfall of the alt-weekly industry as we know it. Hopefully the pubs that survive will be supplemented by online mags with a focus on local news. You can't cover DC from Atlanta, or NYC from Phoenix (or wherever VVM is based). It's only a matter of time before readers realize they're being shortchanged, even if the paper is free.

  39. #39

    Okay folks, here is the lowdown from one who worked at Creative Loafing BEFORE, during and after the Dynasty-style takeover of Ben-dover Eason.
    Hubris was the name of the game since 2001, when (as a kind and family-oriented son would) Ben and his 2 siblings (all of whom work at the Loaf - nepitism much?)combined all their shares of CL that they had been gifted by their parents through the years. Yes, folks - Ben wasn't happy with suing his mother for the Tampa Creative Loafing - then called the Weekly Planet; with dollar signs in his eyes, he called in his siblings, the then co-publisher of CL, Scott Walsey, and his own father to combine their shares and push out Debbie Eason.
    Of course, the story was that her health was poor, but didn't want to retire. SO, for her sake, they pushed her out. Yeah, we all believed THAT.
    Then the fun began; over the course of the next year, Ben and his cronies made cuts in staff. It was hell on the staff that didn't get cut. Stress and worry abounded among the ranks - as no one knew who would get axed next.

    Many left on their own accord, convinced that Ben was trimming up the company so that he could sell the papers to another Alt Weekly chain.

    As the next couple of years went by, staff suffered many indignities and smack-downs - there was no company loyalty, as the staff realized that the days of a happy and respectful work environment were over.
    Ben even sold the company beach house in Tybee Island - Savannah, Georgia. This was the founder, Debby Eason's, way of showing how much she respected and loved her company and staff. The house could be used whenever staff members felt they needed a break. Nope, Ben took that away, too - as well as trimming salaries multiple times.
    One colleague of mine had her pay rate change 3 times in one year! How fucked up is that?

    As Ben trimmed staff salaries, he spent those savings on unnecessary salaries - friends of his who knew nothing of publishing. These friends were/are not respected by the staff - as the general consensus is that they are soul-sucking, self-serving, ass-kissing demon spawn created by Ben's fucked up business ideas.

    Then came the hubris driven purchase of the Chicago Reader and the Washington City Paper.
    With money the company didn't have - and the staff worried yet again.
    The Chicago Reader, a fine example of an alternative weekly, was reduced to a shadow of its former self - and again, staff cuts at the CReader has its staff nervous and scared for a while.
    Reading the posts on their site indicated their lack of respect for the new owner - as his ego-driven personality trumped his false friendly front.

    I believe there was a dictionary of Ben-isms created by both CL staff and CReader staff. I forget most of them - but damn, it was funny, accurate and very unforgiving:)

    Those of us who no longer work at the Loaf (and even some of those who do) knew this would happen.

    I quote a colleague, still employed with CL, "Oh, my god - he's (Ben)ruined us!"

    Bankruptcy? Not at ALL a surprise - in the Greak tragedies we learned that HUBRIS was always rewarded with a god-driven smack-down.

    I laugh a little, but feel badly for my friends still working in that hell-hole.

    Again, I quote another ex-Loafer,"What goes around, comes around"

    And yes, it sure has.

  40. #40

    It would seem that this was hardly a surprise to anyone.

    The City Paper has been on a decline ever since David Carr left, and Erik Wemple was given the keys to the editor's office to just "let it rip"

    No surprise here that Erik is now whoring for his new boss. This blog post of his is like a p.r. release for his new bosses.

    Just a reorganization and not a bad thing? Huh!

  41. #41

    “This is all about a fresh start,” stated Eason, who hastened to add that the filing entails no liquidation, no layoffs, and “no terrible, terrible things.”

  42. ben knows the interwebs
    #42

    Good point Matthew. Good point.

  43. #43
  44. #44

    Well Ben I guess what goes around really does come around. You were so busy setting everyone else for a
    fall that you were too stupid to prevent your own.
    I am so glad this happened you most certainly deserve it.

  45. #45

    Interestingly, Ben Eason and family ousted thier Mother, and founder, of Created Loafing back in 2000 because "she had squandered company money on unfocused Internet initiatives that did not pan out".

  46. #46

    How lucky they are to escape from bankruptcy. Dear Ben that happened is good but that is going to happen in future is far more better, I wish. Good Luck!

  47. #47

    Bankruptcy is such a powerful means of turning around a financial future. Can make things much better.

  48. #48

    Newspaper is difficult to manage for normal business. Seems it would put city in compromising position.

  49. #49

    Print media is losing its battle to hang in. Very few chapter 11 cases have been sucessful.

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