I read the news today, oh boy | Bleader

Friday, November 28, 2008

I read the news today, oh boy

Posted By on 11.28.08 at 01:52 PM

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"For a long time, there have been red flags about [Chicago Reader parent company Creative Loafing, Inc'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."

Looks like I picked the wrong day to stop doing tryptophan.

It's a chilling read, but for me the key graphs were:

"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."

and, later:

"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."

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