Friday, November 28, 2008
Opinion, In this Issue...

Creative Loafing’s death spiral: More newspapers, less news

The latest “strategy” is to rip off articles and blogs from real content producers and paste them onto CL Web sites

By John F. Sugg

There’s a famous scene in the 1946 movie “Key Largo” where Humphrey Bogart asks gangster Johnny Rocco (Edward G. Robinson): “(You want) more, don’t you, Rocco?” Rocco replies: “Yeah. That’s it. More. That’s right! I want more!” Bogey inquires if Rocco will ever get enough, and the mob boss muses: “Well, I never have. No, I guess I won’t.”

That dialogue might have occurred at recent conventions of newspaper publishers—until a couple of years ago, when the industry began its current gut-wrenching collapse. More, more, MORE! That was the catechism. Stomp out competition, buy each other up. And then an industry implosion that would have been beyond comprehension only a few years earlier wiped out fortunes and jobs—and we’ll soon see the disappearance of many once-fabled newspapers.

Publishers have many villains to blame—primarily the Internet and, in recent months, the floundering economy. But, in reality, the industry failed to read the tea leaves, hanging on to printed editions long after consumers were decidedly digital. Daily newspapers could rationalize their reluctance to enter the modern media age because of huge investments in printing presses. Alternative newspapers, such as Creative Loafing, had no such excuse. They were complacent, putting more faith in their print sex ads than in tomorrow’s technology.

The latest casualty in CL’s ongoing train wreck is editor Ken Edelstein, one of the best journalism “brands” in Georgia. After 10 years at the paper, he has a fan network of state and local heavyweights that is irreplaceable. He was fired last week for the fatal sin of disagreeing on the further dismemberment of the editorial section. 

Having said that, it would be sleazy of me not to admit that CEO Ben Eason not only hired me, he befriended me. He is a good man, a visionary. I invested in the company and became a shareholder; Eason gave me additional shares. The absolute most fun I’ve had in almost 40 years of journalism has been at Eason’s papers. There are some obligations that can’t be calculated in dollars, and in that sense, I’ll always be indebted to Eason.
 
But that doesn’t mean he knows how to run companies.

When he owned just one newspaper, the Weekly Planet in Tampa, he was a vigorous community leader and he largely left running the publication to others. That was a great working relationship, but it implicitly acknowledged that Eason wasn’t a wizard at hands-on operations. The paper had marvelous editorial—those are Eason’s words, backed by the evidence of tremendous community response. The business side thrived.

But Eason wanted to become a mogul by buying other newspapers owned by his family. It was the Johnny Rocco “more, more, more” thing, packaged with grandiose yet unproven claims that more is better. In the end, both the quality and financial health of all of the newspapers have been irreparably devastated.

In 2000, Eason paid far too much for his family’s papers. He was forced to borrow up to the full value of the company and then bring in Cox Newspapers as an “equity partner” to pay for the rest. When that marriage soured, Cox exited with a good return on its money, leaving CL swamped with debt.

Like his mother, Deborah, who founded Creative Loafing, Eason’s management style is erratic and impetuous. Strategies were hastily decided without research or reasoning, and then hastily forgotten and abandoned. Mistakes piled on top of mistakes.

The most grievous errors have been the people Eason has brought in to run things, both at a corporate level and at the group’s largest paper, Atlanta’s CL. Some of the corporate bosses have known little about the business, and still others have treated the staffs with aristocratic disdain. Some have managed to exhibit both qualities.

Atlanta’s CL has had seven publishers in about five years. One of the better ones, when he realized the bizarre nature of the corporation’s management, left after nine days. Another quit before he even got to town. The net result has been the near-total destruction of a once-extraordinary advertising sales team, which parallels the demolition of the newspaper’s once-outstanding journalism.

When Eason’s piranha-like investment advisers pitched acquiring the Chicago Reader and Washington City Paper to lenders last year, they wrote a glowing analysis that claimed, despite falling revenues, that the combined company would grow from $43 million in 2007 to almost $48 million in 2012. The company’s blue-ribbon board of directors clearly didn’t buy the pitch—the entire board, with the exception of Eason, quit.

Then the big “oops” happened. In the year that closed last June, revenues had fallen to about $36 million. They are now headed for less than $30 million, and may hit a $20 million annual level in the near future. Eason has had trouble paying the loans almost from the day the deals were done. The value of the company is in freefall.

Meanwhile, its management has had a bewildering disregard for why people read newspapers: great content. Eason’s management team has gutted the editorial departments. For a long time, there have been red flags about the company’s priorities. A few years ago, administrators fired all of the reporters at the Tampa paper—and thought no one would notice. While the company paid bankers $6 million in interest in the last fiscal year, total editorial expenses were only $5 million, testimony to the company’s philosophy that more is preferred over better.

Creative Loafing filed for bankruptcy on Sept. 29. Eason had pledged his controlling interest in the company to get $30 million in loans now held by an investment company called Atalaya, and there were additional pledges to a second lender, BIA Digital, which anted up $10 million. The deal was that if Eason defaulted on the larger loan, Atalaya had the right to take over the company. Eason did default, and then basically told the bankruptcy court in Tampa that he had his fingers crossed when he signed the pledges.

In the end, the big losers are the readers. As CL fired brilliant journalists at its papers, the content eroded to a state that can only be called pathetic. The latest “strategy” is to rip off articles and blogs from real content producers and paste them onto CL Web sites. Major “innovations” have included the creation of porn Web sites—just what the Internet needed more of.

These papers were born of dissent, and have a storied history over the last four decades. They challenged conventional wisdom, held the mighty (including mainstream media) accountable, and provided irreverent and often inspiring comment on our times. They were best when locally owned and operated. CL is now dying due to the avarice of “more, more, more.” SP

John Sugg was senior editor for the Creative Loafing group, as well as Creative Loafing here in Atlanta, until early 2008. He is a former editor of Creative Loafing’s Tampa newspaper.

Stephanie Ramage’s column will resume next week.