Earlier this month, Atlanta Magazine blog writer Steve Fennessy broke the news that there was an offer to purchase Creative Loafing, Inc., which owns six of the country's largest alt-newsweeklies. The proposed buyer? Knoxville real estate mogul Brian Conley, also former publisher of the Metro Pulse from 2003-2007 before selling it to E.W. Scripps.
Conley, who's already a majority shareholder in Atlanta's other, more tabloidy weekly the Sunday Paper, has put in a $13.3 million offer to purchase bankrupt Creative Loafing, Inc. The company owns the four CL alt-weeklies in Tampa, Fla., Sarasota, Fla., Atlanta, and Charlotte, N.C., as well as the venerable Chicago Reader and Washington City Paper—making it, with a circulation of 425,000, a readership of more than 3 million, and a staff of 275, the second-largest alt-weekly chain in the country behind Village Voice Media.
The issue for CL right now — whether or not Conley will be able to purchase the chain at all — is up in the air. Indeed, even whether Conley would be purchasing it from CL CEO Ben Eason or from one of its debt-holders isn't known for sure right now. Since the company is bankrupt, a lot of these decisions will be made in the U.S. Bankruptcy Court in Tampa. As reported by Wayne Garcia in Tampa CL's blog "The Political Whore," Eason has twice — in December and January — had to go to court to stop the company from being handed over to its largest debt-holder, Atalaya Funding, which financed the 2007 sale of the Reader and the City Paper. The next court date is March 11.
The $13.3 million offer is based on $4.4 million in projected Yearly Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA — basically, cash flow) that Conley says CL put into its initial October court filing. But, Conley says, that offer could go down. The latest numbers project 2009 cash flow at $1.7 million, with $25 million in revenue for the year. "I have inquired as to why there is a discrepancy between the October numbers and the latest numbers," Conley says. "I have not been able to ascertain an answer regarding that."
Eason says it's because there was no $4.4 million projection.
"That offer was apparently based on an EBITDA that was supposedly filed in our October statement," says Eason. "But frankly, none of us has any idea what he's referring to."
The company's October statement does, in fact, contain information as to its total fiscal year 2008 revenues, as well as the first quarter of fiscal year 2009, but no mention of cash flow.
Another point of contention between Eason and Conley is regarding criticism Conley indirectly leveled against Eason in the Atlanta Magazine story.
The article cites a prior interview with Eason in which he is quoted as saying that 10 percent of company revenues go to its editorial department.
"That's out of line with industry standards," Conley is quoted as saying, adding that he would put 15 percent of revenues into editorial.
Eason has been criticized for firing Atlanta Creative Loafing editor Ken Edelstein in November, reportedly as a result of a difference of opinion regarding proposed editorial cuts. But in the 2009 projections, filed in court in December, Creative Loafing lists the chain's editorial budget at $4.4 million, just over 15 percent of its projected total revenues of $29 million.
"It sounds like he does not have a good enough handle of our plan to be making some of the comments he's been making," says Eason, who has not spoken with Conley personally.
To the rest of the country — especially in the cities served by CL — this became a new-economy-meets-new-media story. In this economic climate, why would anyone want to buy the second biggest chain of old-fangled alternative newsweeklies in the country, one that went Chapter 11 last fall, crushed by a $40 million debt it can't pay off?
To many in Knoxville, though, it was a Brian Conley story. During his four-and-a-half years as owner and publisher of Metro Pulse, Conley may have put the paper in the black for its first time ever. ["I took a paper that was losing $300,000 a year and by the end it was making $300,000 a year," he says.] But he also earned a reputation among many longtime readers as a publisher who didn't show much concern about editorial quality and whose actions sometimes damaged the newspaper's integrity.
For his part, Conley says that if the CL purchase goes through, he will be a relatively hands-off publisher as far as editorial content is concerned. He says he would evaluate and perhaps replace some of the high-level editorial staff, but he would leave them to their own devices. He cites his involvement in the Sunday Paper as proof.
"I've been very proud of our editorial content so far. We are very politically involved at the local level," he says, pointing to a recent article in the paper called "City Hall, Are You Listening?" which is critical of the Atlanta Police's lax response to high crime rates in certain neighborhoods. "That was not something I suggested or had anything to do with from the editorial end."
He says that his reason for buying the papers has largely to do with enhancing their editorial quality, saying "that is your product. That is why people are reading and advertising.
"Whether you're talking about corporate ownership — like Scripps buying Metro Pulse — or whether you're talking about Mr. Eason — who has taken on a $40 million debt without being able to service it — I think our goal as publishers here is to enhance editorial content," he says, adding that he is "very proud of what we accomplished editorially."
Not everyone thinks he should be, though. Among some circles in town, Conley is infamous for his antics at Metro Pulse.
The most widely reported incident occurred when KnoxViews' Randy Neal, then writing anonymously as "South Knox Bubba," criticized a June 2005 Metro Pulse Gamut feature, "Two Knoxville Party Girls Peer into Nashville's Night Life," saying it glorified drunk driving. Conley sent Neal an e-mail threatening to expose his identity as well as any dirt he could find about him by publishing it in the paper. Neal preempted him, exposing his own identity and then taking down his blog. Conley now says he was "defending two writers from personal attack."
"He might have had too thin a skin toward the beginning there," says then-editor Barry Henderson.
Conley also disputes claims that he micromanaged the editorial staff.
"I attended a few editorial meetings just to pitch ideas," Conley says. "I wrote maybe about one in 10 of those unsigned editorials."
It's those unsigned editorials that occasionally caused accusations of conflict of interest.
In July 2005, for example, Metro Pulse published an editorial called "Eminent Domain Isn't All Pernicious," in response to a letter to the editor that criticized the paper for its support of the city's proposed South Waterfront project. The editorial was unsigned and many thought Conley — a real estate developer — was behind it.
"Or then again, maybe the article was ordered, written, or influenced by Metro Pulse publisher and real estate developer Brian Conley," wrote conservative blogger Terry Frank. "Does Conley have an interest in any possible eminent domain seizures? I'm looking. Any way you slice it, the Metro Pulse is not an independent voice."
Conley, Henderson, and current associate editor Jack Neely have no memory of who wrote it, but Conley defends himself.
"I have never benefitted from eminent domain," he says.
Eason says he has "no clue" about Conley's reputation, but that "coziness, even the appearance of coziness, between real estate and development interests and editorial content can cause major, major problems."
Neely says that the criticism that Conley's interests as a businessman was at odds with the paper's editorial independence came up a lot back when Conley was publisher, even though, he says, it usually wasn't true. "He's a businessman. He never made any promises about avoiding conflicts of interest," Neely says. "He was rarely present in the office, usually wasn't involved in editorial decisions, and only rarely tried to push reporters in a certain direction. I remember only once that he pushed a story that might be seen to serve his business interests, and in that case the editors didn't agree to do the story, because of the appearance of conflict of interest."
Many of CL's employees are just eager to see the bankruptcy situation resolved. Washington City Paper editor Erik Wemple says he, like Eason, doesn't know much about Conley, but he's trying to concentrate on his own product for now.
"We've been in this bankruptcy situation for several months now, and I think we've learned to be concerned only about the things that we can control," writes Wemple in an e-mail. "For me and my colleagues in the editorial department at Washington City Paper, that means just doing our journalism."