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.