CL employees to judge: What about us?

March 18, 2009 by Ken Edelstein
Filed under: MEDIA/TECH 

I have a hard time figuring out whether Ben Eason and closest circle of advisers are dishonest, or just plain nuts. Or both.

The fate of the Eason family’s 37-year-old newspaper chain now lies in the hands of a bankruptcy judge. After three recent days of testimony in Tampa over the issue of Creative Loafing Inc.’s value, Judge Caryl Delano said last night that she’ll rule within a week in a conference call on a motion to, in effect, turn the company over to a New York City hedge fund. At issue is whether CLI has gained or lost value since CEO Eason took the company into Chapter 11 protection on Sept. 29.

If Delano rules that Eason’s continuing to run the company aground while in bankruptcy, she may allow Atalaya Capital of New York to take control. If she finds he’s turning the ship around, she could permit him to continue operating CLI — for now.

It’s hard to imagine how anyone could arrive at the conclusion that the company hasn’t lost value since September. Atalaya’s valuation expert — a Deloitte heavyweight — testified last week that CLI’s value dropped from $19 million on Sept. 29 to $11.4 million on Dec. 31. A home-boy valuation expert (Tampa’s Michael Ward Mard) testified on Eason’s behalf Tuesday that CLI had nearly doubled in value since the bankruptcy filing (from $7 million in September to $13 million last month).

Home Boy’s valuation is difficult to square with the incredibly shrinking ad lineage at CLI’s seven six newspapers. The Atlanta operation, for example, which until recently had been the company’s cash cow, published a 56-page paper in February and has been running pretty consistently over the last three months at 64 pages. Page counts like that hadn’t been seen in Atlanta since the 1980s. In September, in fact, CL/Atl was publishing around 100 pages. Meanwhile, the Atlanta paper’s main competitor has been increasing its ad lineage — something it wasn’t doing before the CLI bankruptcy.

My understanding is that other newspapers in the chain have suffered similar shrinkage since the filing, though not quite as dramatically. Here’s an easy way to settle the debate: Just put a stack next to each other of all the papers from February of last year, September, December and this February. It will look like a stairway to the basement.

Never mind reality, though. Mard’s argument essentially is that the promise of online business growth — based on Eason’s most recent epiphany, which he calls the “Digital Transformation Strategy” — makes the company more valuable. A comment on Wayne Garcia’s latest post on the bankruptcy drama raises an important counterpoint, however. Eason has been cutting web personnel. As “Loaf Employee Says,” uhm, says:

Since the bankruptcy filing, Eason has gutted the tech personnel who handle/design the company’s websites. We [now] have a web staff of two. That’s two employees to design web pages, shoot and edit video, and maintain the blogs as well as trouble shoot the problems with our site that regularly come up.

I wonder if Eason was questioned about that. He claims the future of Creative Loafing is on the web. Yet after the bankruptcy filing he’s lost three web employees–having fired two of them. These are just the ones I know about.

Oh yeah, they were both fired on the day of our staff X-Mas party. Classy.

Here’s where I disclose (in case you haven’t noticed) that my perspective on this drama isn’t exactly objective. Eason fired me as the Atlanta newspaper’s longtime editor in November after I urged him to spread his cuts more evenly — to, for a change, include his Corporate and administrative staffs in his cuts and to temper his plans to deepen reductions in front-line departments, such as Editorial and Sales. I should have spoken up for the Online Department as well, but had no idea that it, too, would be cut before Ben cut his bureaucracy.

The notion that Eason’s latest eccentric vision — the “Digital Transformation Strategy” — should be considered a silver bullet toward success serves as a kind of deja vu for CL employees. It’s consistent with the regrettable approach that’s gotten the company where it is today. Grand visions — replete with bells and whistles, whirly-gigs, Rube Goldberg machines, and consultants (Lord knows, plenty of consultants) — are favored over hard-headed, real-world, in-the-trenches work and over the organizational support that journalists, technologists and salespeople need to keep a media company growing in today’s tough environment.

As long as Eason controls the company, there is no reason to believe this dysfunction will end. Even if you don’t believe that, the prospect of Eason continuing to control the company is worrisome: If Delano rules in Eason’s favor, Atalaya will not go away. CLI will continue to be hampered by the expense of the bankruptcy attorneys and financial consultants it will need  to ward off the creditor’s push to gain control. In this business environment, a small firm with weak leadership can’t afford such a financial distraction. It’s a recipe for cycling downward.

The only silver lining is that Eason’s mis-leadership must now be focused on the bankruptcy case rather than on constantly amending his vision and placing unreasonable expectations on his employees.

I’m told that the Eason family has come together to show support for the business that Ben’s mom, Debby, founded in 1972. They sit in court behind Ben and his attorney, surely (and understandably) worried that the family sits on the brink of losing her legacy and the family fortune. It’s good that they’re supporting each other through this. It really is.

There are other people, however, who are unable to view the hearings or to speak openly about the company’s future. As blog posts and comments from Chicago to Tampa testify, the vast bulk of those people would sit on the Atalaya side of the courtroom. They are the CLI employees whose sweat, intelligence and creativity really built each of the chain’s respective papers. Do their life’s work and their financial security — so long under-appreciated by Ben and his revolving-door of executives — not matter at least as much as the aspirations of one family?

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Comments

11 Comments on CL employees to judge: What about us?

  1. Cassie on Wed, 18th Mar 2009 10:19 am

    2. Sounds to me that the writer of this article is just bitter and resentful from being fired. I think firing Ken Edelstein was one of the best moves Ben Eason made.

    People get tired of cry babies! GET OVER IT! And move on! Find something productive to write about. Oh, and check your facts HACK!

  2. Two former Creative Loafing journalists blog about its bankruptcy battles | The Political Whore on Wed, 18th Mar 2009 12:07 pm

    3. [...] of hearings recently, so he also reports in the blog post. Writing from afar is Edelstein, who has this opinion about what the outcome of our bankruptcy hearings should be: As long as Eason controls the company, there is no reason to [...]

  3. Jim Harper on Wed, 18th Mar 2009 2:08 pm

    4. Cassie, I dare you to use your real name. Your post is a perfect example of an unfortunate Eason Family mentality: Cleave fiercely to your own flawed set of facts; turn the argument into something personal instead of a debate on the merits; and, finally, dismiss anyone who disagrees. Most of us who worked in senior management for one or another of the Easons knew this day would come eventually.

    Bitter? No, we’ve found other work, in healthier places.

    But sad and concerned? Absolutely, for everyone involved:

    For the family whose hubris and repeated (repeated!) inability to work with business partners and professional colleagues may cost them a business they built over decades;

    For all the CL/Reader/City Paper staffs, including many fine people who remain, whose hard work is being dismantled to pay off increasingly bad debts each time Ben has to change strategies and/or business partners.

    And most of all, for the readers, who no longer get much of the robust, in-depth, independent journalism they had come to love.

    As a former CL editor in Tampa, I’m actually neutral on whether the Easons or a hedge fund in New York should run the company. (A hedge fund! What an alternative!) But I do think all of us benefit from a discussion such as Ken’s that focuses on facts and analysis, while clearly disclosing his own background and bias — instead of the puerile name-calling such as the anonymous “Cassie’s” previous post.

    Ken’s blog strikes me as the kind of courageous personal journalism that the Easons used to claim to support.

  4. Current and former Creative Loafing employees comment on the bankruptcy « Will Report for Food: Tales of an unemployed journalist on Wed, 18th Mar 2009 4:40 pm

    5. [...] the hearing with balance and facts. Former Creative Loafing Atlanta editor Ken Edelstein wonders if Creative Loafing’s management are on drugs, and also provides an interesting gauge of CL’s value by stacking 2008 and 2009 papers next [...]

  5. Arielle Sanders on Thu, 19th Mar 2009 11:25 am

    6. Ken,

    For such a smart guy, how is it that you STILL don’t understand why you were fired?

  6. Jim Harper on Thu, 19th Mar 2009 1:02 pm

    7. To be fired by certain types of owners is a great honor, I think.

    And again, do these posters have no better argument than that Ken ought to shut up because he was fired?

    What about the facts and analysis he presents?

  7. John Sugg on Thu, 19th Mar 2009 2:26 pm

    8. Bravo, Jim. And Ken, of course. I was at CL for more than a dozen years. I left to pursue some other media adventures, but also because I correctly foresaw (as did Ben’s entire board of directors) the likely disastrous outcome of the Chicago and DC purchace. (The board members never said why they resigned, probably because of non-disclosure agreements; however, Ben himself told me that they did not support the acquisitions. It’s reasonable to deduce they didn’t want to risk liability if and when the ill-conceived deal tanked.)
    Ben could have owned the Tampa establishment if his ambitions, combined with the most abysmal lack of business acumen and management expertise I have ever witnessed, hadn’t doomed him. Ben was great at vision, but always lousy at operations. He didn’t start off with the elitism that was his mother’s hallmark, but he soon acquired it. In a threatening phone call to me, it was clear his only concern was about himself and his family. All of the peons working on his plantations? Just lines on a budget, not really people to the Easons.
    I disagree with Jim on one thing. The best option is with the “hedge fund.” They have pledged to invest money and build the product. Frankly, they’re more believable than Ben.
    Ben claims he can raise $10 million in new capital — but give us a break. Who would give more money to a deadbeat? Ben borrowed $40 million, pledged his stock as collateral, and then used bankruptcy court tricks to attempt to renege on his pledge and try to screw the people who trusted him out of $30-or-so million. And he had the gall to ask shareholders (like me), after he had just wiped out our investment, if we’d like to give him more money to play with on grandiose schemes. Sorry, I’ll pass.
    The big question for CL is whether Atlanta can survive. The paper has been so battered by Eason mismanagement (7 publishers in 4 or 5 years, including one year of horrible losses when Ben appointed himself publisher) that the brand may not be able to recover.

    [From the editor: The word not (in italics above) was added later at the commenters requests.]

  8. Tom Roe on Thu, 19th Mar 2009 4:23 pm

    9. Ben fired me too, year ago. Ken, the folks that attack you don’t argue with any facts. How can they? Cutting web staff when that is the basis of the argument that the company is doing better? I think all the papers who are so dumb they are just now coming up with a web strategy should fail. This is the best bit of your story, true from my time at CL Tampa in the late ’80s/early ’90s:

    “Grand visions — replete with bells and whistles, whirly-gigs, Rube Goldberg machines, and consultants (Lord knows, plenty of consultants) — are favored over hard-headed, real-world, in-the-trenches work and over the organizational support that journalists, technologists and salespeople need to keep a media company growing in today’s tough environment.”

    Good work, Ken.

  9. Creative Loafing: a lesson for news staff « Virtualjournalist on Fri, 20th Mar 2009 2:14 pm

    10. [...] this recent passage from fired CL Atlanta editor Ken Edelstein: The notion that Eason’s latest eccentric vision — the “Digital Transformation Strategy” [...]

  10. DaleC on Mon, 23rd Mar 2009 9:13 pm

    11. Cassie – put the pipe down…. please

  11. CL ruling today | Atlanta Unsheltered on Tue, 31st Mar 2009 10:46 am

    12. [...] may come off as a bit biased — Eason fired me as part as Creative Loafing editor in Atlanta over cuts he wanted to make to Editorial [...]

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