TAMPA — A New York hedge fund wrested control of the Creative Loafing newspaper chain Tuesday, promising to keep the weekly tabloids running in Tampa, Sarasota, Atlanta, Chicago, Charlotte, N.C., and Washington, D.C.
In a bankruptcy auction in Tampa, Atalaya Capital Management's $5 million bid blew away the field. Creative Loafing's longtime owners, the Eason family, opened the bidding by offering $2.32 million, but didn't counter when Atalaya upped the ante.
Ben Eason, effectively removed as chief executive of the chain Tuesday, vowed to start afresh this week with a new online publication based in Tampa. Eason had run family publications for close to 20 years.
"I've started three newspapers in my time," Eason said as the two-hour auction broke up around noon. "I'll start a fourth."
Atalaya was Creative's Loafing's largest creditor when the Easons declared bankruptcy in September. In 2007, Ben Eason borrowed about $30 million from the New York investors to buy the Washington City Paper and the Chicago Reader.
The company quickly sunk into default as advertising dried up, particularly bread-and-butter classified ads that migrated to free online sites such as craigslist.
On Tuesday, Creative Loafing's attorneys argued Atalaya's bid wasn't the best bid since the hedge fund might dismantle the company and sell off the chunks.
"Cash is not always king," said David Jennis, one of Creative Loafing's bankruptcy attorneys.
But Judge Caryl Delano was having none of that. She noted that the $5 million would, once distributed, satisfy the company's debts. Atalaya's attorneys have suggested they'll pour more money into the papers to strengthen the business, though eventual divestment is a strong possibility. Creative Loafing has about 230 employees and 400,000 readers in six cities.
Creative Loafing's own report on the sale noted that Atalaya's managing partner, Michael Bogdan, has chosen experienced news executives to join the board.
They include former Los Angeles Times editor Jim O'Shea; Richard Gilbert, a former executive with the Des Moines (Iowa) Register and the St. Paul (Minn.) Pioneer Press; and Michelle Laven, formerly of the New Times alternative weekly chain and now with Clear Channel LA.
"We are here for the long haul, and we want to make this work," Bogdan told Creative Loafing.
The new owners have promised to vacate the newspaper's Tampa offices at 810 N. Howard Ave. by Oct. 31. The building belongs to the Easons. Bogdan plans to lease another space in town.
The Eason family started the first newspaper in Atlanta in the early 1970s, and seemed reluctant Tuesday to abandon their life's work. Ben Eason said his new media company would adopt the "Planet" label, reminiscent of the former name of the Tampa weekly, the Weekly Planet.
As for Creative Loafing, he hopes the employees who stay on will strive to maintain the chain's "alternative" ethos.
Said Eason: "They're going to fight for the soul of the company."