CL employees to judge: What about us?
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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