Thursday, February 5, 2009
News / News Bites Creative Loafing offer reported
Posted by Michael Miner on Thu, Feb 5, 2009 at 6:34 PM
An offer has reportedly been made for the entire Creative Loafing Inc. chain of six alternative weeklies, which includes the Reader. Atlanta magazine blogger Steve Fennessy, who used to be a CLI writer and editor, writes that Brian Conley, a Knoxville real estate developer, has offered $13.3 million. That's just a third of the total debt that drove Creative Loafing to file for Chapter 11 bankruptcy last September, but it's based on CLI financial figures from last fall so it could conceivably come down.
Fennessy writes that Conley, former owner of the alt weekly in Knoxville, says that Creative Loafing CEO Ben Eason is short-changing his papers: "[Conley] cited a discussion I had with Eason, in which the CLI chief referenced devoting 10 percent of revenue to editorial. 'That's out of line with industry standards,' Conley said. 'Traditionally it should be in the 15 percent range. You're selling the product, the writers, and the quality journalism, and if you don't spend the money on that, you're going to atrophy. . . . The revenue follows the quality.'"
Does that mean that Conley's promising to raise the editorial budget by 50 percent? I'll tell you if that happens.
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And in the meantime, Cyrus is out.
this is probably the best thing that would happen to the Reader. i mean, considering the way things are going now...
It's interesting that the "10 percent for editorial" is coming back to slap Ben. In 2001, I attended the Association of Alternative Newspapers convention. Over the years, I'd been compiling financial information about alt newspapers, and I gathered even more at the convention. One of the more surprising findings was that papers that devoted 13+ percent to editorial had larger profit margins than those that spent about 10 percent for editorial. When I reported that to Ben, he wouldn't even listen and called it "John's spin on the numbers." It wasn't spin at all. Ben predicted his model of squeezing editorial would produce more profits -- despite the clear experience his Tampa paper had enjoyed, one in which its growth and success were preceded by vastly improved editorial. Of course, Ben later came up with an even stranger model. Last fiscal year, he spent about $6 million paying interest on loans while editorial expenses totaled about $5 million. I'm sure all of those interest payments (which he eventually defaulted on) won legions of new readers to the papers.
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