Looking for clues to future of Creative Loafing through eyes of new owner Atalaya Capital
Wake up and good morning. Now that the Creative Loafing alternative newspaper empire is out of the hands of the Eason family in Tampa and into the hands of secretive Atalaya Capital Management what's next?
Some glimpses of the future appear in a Chicago Tribune story based on an interview with Atalaya hedge fund manager Michael Bogdan. Atalaya loaned $30 million in 2007 to Creative Loafing Inc. to finance its takeover of the struggling Chicago Reader and its sister Washington City Paper. Unable to keep up on its debt payments, Creative Loafing went Chapter 11 and Atalaya won the company's assets -- its alt papers, including the Creative Loafing weekly in Tampa Bay -- in a bankruptcy court battle last week. Here's the blow-by-blow from the bankruptcy hearing.
From his New York office, Bogdan told the Chicago Tribune that despite former Creative Loafing CEO Ben Eason's claim that Atalaya only seeks to liquidate the company, that's not the case. "There's very little liquidation value for these papers," Bogdan says. "There just aren't that many buyers right now." Bogdan wants to grow the alt papers, then see what happens.
As the Tribune notes, plenty of perils await. "Experts say papers like the Reader face enormous odds. Circulation has been falling for several years, and the paper faces new competition for its core classified and entertainment listings from the Internet, as well as from print rivals such as Time Out Chicago and the Chicago Tribune's RedEye."
A similar argument can be made in the Tampa Bay area with the rising circulation success of tbt-Tampa Bay Times, the 5-time-a-week free tabloid offered by Times Publishing, which also publishes the St. Petersburg Times.
Bogdan, 33, joined Atalaya in 2006 after graduating from the University of Pennsylvania and working for several other financial firms, mostly in private equity. He tells the Tribune that building up the company's Internet presence will obviously be important, but he doesn't pretend to have all the answers. He's hired a new team of print and online experts, including James O'Shea, a former managing editor of the Chicago Tribune and editor of the Los Angeles Times, who will be an editorial adviser and board member. Richard Gilbert, former president of the Des Moines Register and chief executive of Glenview, Ill.-based Pioneer Press, who will take over as interim CEO.
Bogdan seemed more candid in remarks to the Chicago Reader's Michael Miner, who reported the following:
"We're not going to say we'll own you guys forever," Bogdan told Miner. "That is not what investment funds do. But we'll be living with you guys for a while."
So who and what exactly is Atalaya (that's Spanish for watchtower, by the way)? It was founded in 2006 by Ivan Q. Zinn, who now serves as chief investment officer. Atalaya says it specializes in investing in "opportunistic purchases" of private, senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity -- in other words, troubled companies.
What else does Atalaya seek to invest in? Last year it bought the franchise rights out of bankruptcy of Bennigan's restaurants, as well as Steak & Ale. It's tried recently to buy coal-fired power plants in North Carolina.
-- Robert Trigaux, Times Business Columnist