CL sale nearly finalized; control stays in family
Cox to be minority owner in alternative newspaper chain
THE OWNERSHIP AND CONTROL of the nine newspapers that comprise Creative Loafing Inc. was changing hands in a stock purchase being finalized as Creative Loafing/Atlanta went to press Tuesday afternoon. The deal keeps control of the company in the hands of the Eason family. Founders Deborah and Elton Eason, along with the Atlanta paper’s longtime co-publisher Scott Walsey, have agreed to sell majority control to a group led by son Ben Eason and daughters Jenny and Taylor Eason. The Atlanta-based chain is to be merged with Tampa-based Weekly Planet Inc., a smaller alternative newspaper company led by Ben Eason.
Cox Newspapers Inc. part of the Atlanta-based media company Cox Enterprises, which operates The Atlanta Journal-Constitution and WSB TV and WSB 750-AM radio, along with other media outlets, has invested in the deal, making Cox a minority shareholder. Cox also will be represented on the company’s board of directors.
The deal marks the departure from the company of chairwoman and co-publisher Deborah Eason, who with her husband, began the publication in 1972. “Tomorrow is my last day in the office,” she said Monday, reflecting on what has been a contentious process since the deal was first made public this summer.
Though the family began talks in February concerning the succession of ownership, Deborah Eason says she was unhappy with the details, but felt she had little choice but to sell. Individually, Deborah and Elton Eason each owned nearly 40 percent of the company, while Walsey controlled nearly 15 percent.
When Elton Eason and Walsey accepted the bid, their combined shares created a majority. Deborah Eason says she was faced with going along with the deal or running the risk of being left with a minority share and no voice in operations, as well as the possibility of no payout.
“If I didn’t sell the shares I’d be out anyway,” she says. But she is not leaving empty-handed. Deborah Eason will retain ownership of the chain’s Savannah paper, an online music site called Jam South, and parts of Creative Loafing Ntwrk, Creative Loafing Inc.’s online subsidiary. She says she has plans to create worldwide linkage of publications through the network, and wants to start a foundation under the Creative Loafing name for college scholarships.
“Change is good sometimes, I guess, and I think a lot of good things will happen,” she says.
The sale includes four other Atlanta-area papers, Creative Loafing Gwinnett, Creative Loafing Topside, Motorsport America and The Scene, as well as papers in Raleigh and Charlotte, N.C., and Greenville, S.C., and minority interest in The Birmingham Weekly.
Under the new ownership led by the Eason children, those publications will be added to The Weekly Planet in Tampa and Weekly Planet Sarasota, which operate under Weekly Planet Inc. The Tampa paper, originally called Creative Loafing and part of the chain when it launched in the late 1980s with Ben Eason as publisher, was sold to Ben by the parent company in 1993, which Eason renamed The Weekly Planet
Walsey will become publisher of the Atlanta publications. The Eason children were raised in Atlanta, but all now live in Tampa and will retain the great majority of stock based on the sale and previous holdings. Ben Eason will be president of the expanded company. The Creative Loafing Inc. papers have been generating about $20 million in annual revenue.
Other minority investors include Weekly Planet employees and some Florida-based advisory board members of the paper, the latter of whom will become members of the new company’s board of directors. Weekly Planet co-editor John Sugg also has invested in the deal.
“The fear is how corporate and how bottom line the company is going to be,” Sugg says. “You would expect us to be streamlined and leaner, but I do feel comfortable. Ben has shown remarkable integrity and in parts of the deal he went to great lengths to assure the editorial autonomy of the paper. I don’t think that will change at all.”
Creative Loafing Managing Editor Ken Edelstein says, “It does raise some concerns about consolidation, but Cox has no editorial control as a minority shareholder. It’s still in the family. There’s always a consideration when money people, meaning the investment bankers or whoever, own enough shares to exert influence, but what I’m hearing is a stronger commitment to editorial.”
The investment by Cox, one of the nation’s largest media chains, establishes an indirect business relationship between Creative Loafing and the Atlanta daily, with which Creative Loafing historically has competed for ad dollars and editorial scoops. Ben Eason notes that the Atlanta paper’s have had a longstanding printing deal with Cox, and says leap to equity partner status is primarily a financial arrangement.
“Our relationship with Cox gives us a strategic partner that understands our business and certainly understands what family ownership of newspapers is all about,” he says. “We intend to continue to be vigorous competitors in the Atlanta market. We just want to continue the family tradition and keep strengthening editorial and increasing readers and our advertisers.”
Jay Smith, head of Cox Newspapers Inc., the Cox Enterprises division under which the investment will fall, could not be reached for comment.
Earlier this year, the Eason parents and Walsey rejected a $19 million bid by the group of investors that controls The Village Voice, LA Weekly and several other high-profile alternative weeklies. Even earlier, Ben Eason’s group had tried but failed to buy even those newspapers for $150 million.
Now, with greater capitalization, the possibility exists that Ben Eason and partners may want to take the company even further.
The sale is the latest in a series of moves that have led to the consolidation of alternative weeklies around the country. The New Times chain, for example, based in Phoenix, owns 11 weeklies in major cities around the country, and just last week purchased FW Weekly in Fort Worth, Texas, though that deal has not technically closed yet. In Tennessee, the Voice group recently purchased the weekly Nashville Scene. Creative Loafing Inc. will be the third-largest alternative newspaper group in the country.
In a 1999 transaction similar to but more sweeping than the Creative Loafing deal, The Hartford Courant, owned by media giant Times-Mirror (which has since been bought by the Tribune Co. of Chicago) completely purchased the The Hartford Advocate and other alternative weeklies in New England. That deal sparked protest by some publishers and editors. There was even an unsuccessful move to throw the Advocate out of the Association of Alternative Newspapers.
Former CL media columnist Greg Fulton works for Time magazine.