Posted by Bud on August 26, 2009 at 10:24:51:
In Reply to: Miner: Chicago Reader enters Atalaya Era posted by chicagomedia.org on August 26, 2009 at 10:24:01:
Hedging its bets, investment fund wrests control of the Chicago Reader
Posted in Media by Frank Sennett
on August 25th, 2009 at 6:30 pm
How alternative can an alternative weekly be when it's run by a New York hedge fund? We're about to find out, as creditor Atalaya Capital Management has won control of the Chicago Reader and the rest of the Creative Loafing chain in a court-ordered bankruptcy auction.
Before wresting control of the chain from erstwhile honcho Ben Eason, Atalaya went a-courtin' the judge, showing her it was serious about running the business by bringing in the former ME of the Trib as a board member and "editorial resource" (and how's that for alt cred!). The gambit worked, too, with the judge declaring, "There is not a hint that Atalaya is going to dismantle this because that is antithetical to Atalaya's best interest."
But today, there's been a post-auction development so shocking that, well, we were predicting it around the water cooler here at TOC this morning: Atalaya is already backpedaling on that whole long-term operational thing, with an Atalaya bigwig telling the Reader's crackerjack media scribe, "We're not going to say we'll own you guys forever. That is not what investment funds do. But we'll be living with you guys for a while." Kinda sounds like that ex from college who jetted a few months after renting an apartment with you, no? Of course, that same Reader media scribe was yesterday uncritically quoting O'Shea as saying that Atalaya is "serious about reinvesting in journalism." Same story now, just with an asterisk. What a difference a day makes, eh?
And for some, it makes no difference at all, apparently. Eason clings to the notion that the overly inflated $40 million purchase of the Reader and Washington City Paper in 2007, which drove away more rational potential buyers such as Village Voice Media, was a "fine deal," if only that pesky old Craigslist (founded in 1995) hadn't come along to steal his thunder. Further, Eason states, the judge's decision "says anybody who does an equity auction where the creditor is bidding, on your face you'll lose." Um, you mean, creditors have some kind of right to recoup their investment? Like, crazy, Scoob. That's similar to someone defaulting on their mortgage saying, "This decision says the lender can take a house away if someone stops making their house payment!" Unless Eason's arguing that he's victim of something akin to a subprime lending scheme, the outcome seems almost... reasonable. Meanwhile, Eason is promising to dust himself off and start a new media outlet.
Ben Eason took the reins of CL from his mother, Deborah Eason, in 2000 in what the chain's flagship paper described at the time as a "contentious process." Said Deborah Eason then, "If I didn't sell the shares I'd be out anyway." Ouch. As a friend of mine in the business remarked recently, that type of deal can generate some bad karma.
So what's the over-under on when Voice Media finally enters the Chicago market?