For logistical purposes, CL has been consolidating its multiple blog platforms into one, and now it is The Political Whore’s turn to hang out the “We’re Moving” sign. It makes sense: we can’t use a common search engine among more than one blog right now. And we have to cross-post Green Community posts to both sites, to use just one example of content that fits into both blogs.

This will be the last post in this old blog site (Friday, August 21, 2009). Future PoHo posts will appear in our Daily Loaf blog, which also includes Green Community, arts, entertainment, sports, sex & love, film, TV and other pop culture posts.

You can read PoHo news pretty much the same way you read PoHo now, if you just want news & politics and not the rest of the Daily Loaf fare. Just change your bookmark from http://blogs.creativeloafing.com/politicalwhore/

to

http://blogs.creativeloafing.com/dailyloaf/category/politics/

And the RSS feed changes from http://blogs.creativeloafing.com/politicalwhore/feed

to

http://blogs.creativeloafing.com/dailyloaf/category/politics/feed

See you over at the Daily Loaf.

While today’s hearing about the rules and procedures for the bidding was given a pretty high-drama buildup in a 1B St. Petersburg Times story and in the Chicago Reader last week, it didn’t live up to its billing and was actually a complex, confusing, and undramatic court session.

Delano approved the negotiated set of bidding rules that was contested for two hours today, but she left some core issues unresolved and said, “I’ll make my ruling as to what the highest and best offer is” on Aug. 25.

If there was real news out of today’s hearing, it was that Creative Loafing CEO Ben Eason is considering stepping down temporarily to focus on formulating a new equity bid for the post-bankruptcy company.

“There is this big fight about [my] fiduciary obligations,” Eason said after the hearing. “It’s just a very tricky sort of thing.”

How tricky? So tricky that Eason, as the CEO of the debtor Creative Loafing, had one set of lawyers in court today who had negotiated and filed the bidding rules and sought Judge Delano’s approval. He also had another lawyer in court representing him and family members who would be part of the new equity bid, and that lawyer — for Eason (the bidder) — took issue with the bidding rules that Eason (the debtor) had OK’ed.

Eason said he has not made up his mind about stepping aside as CEO and did not have a timetable in mind for it.

But back to the equity auction for a minute.

To recap for those not living through the fun of this Chapter 11 for nearly the past year, it has come down to this: Two competing interests want very badly to own Creative Loafing post-bankruptcy. The first is Atalaya Capital Management, an Atlanta-based hedge fund that loaned $30 million to Creative Loafing in 2007 to finance the purchase of the Chicago Reader and the Washington City Paper and that, for fairly understandable reasons, isn’t real happy that it didn’t get repaid. On the other side is a coalition put together by Eason, his family and another CL investor, BIA Digital Partners, which lost $10 million in that same 2007 financing deal.

Here is a preview of the arguments both sides will make to Judge Delano at the Aug. 25 equity auction:

Atalaya will insist that the “highest return” for the company in the equity auction would be an all-cash bid, as it has already made in the amount of $2 million. It likely will question any in-kind considerations in the expected BIA-Eason Family bid, which could include free office rents valued at nearly $1 million. Atalaya will ask the judge to rule that cash is king in the bidding. “It’s what the creditors get … cash on the barrelhead,” he said. And the only creditors not envisioned being repaid in the current bids are Atalaya and BIA, so if bids rise and there is more money to repay those debts, that would be beneficial, Atalaya’s lawyer Tyler Brown argued.

Eason’s personal lawyer and a lawyer for BIA, however, said Delano must not allow Atalaya simply to bid up as much as it wants, under the theory that every dollar it puts in for equity it can take right back out to satisfy the unpaid portion of its owed $30 million. They argued it was “taking money out of one pocket and putting it another,” which would not be in the best interests of the newspaper chain going forward. They labeled it “credit bidding.”

“This is a hedge fund,” Eason said outside the courtroom. “The question is are they really going to operate the business? This is just a financial deal for them. We’re prepared to run it for the long term.”

Atalaya, during hearings earlier this year, also said it plans to operate the business as a news media company and has a management consultant lined up. It also said it would make an additional $1 million line of credit available to the new CL if it is the successful bidder, for operational needs. “We’ve committed some real money here,” Brown said in court.

In the meantime, you can download the proposed rules and procedures in .pdf.

Michael Miner, the media writer at our sister Chicago Reader, has a good piece with Creative Loafing CEO Ben Eason in which the once-and-possible-future owner of the online media and alternative weekly newspaper chain talks about how he plans to win a bankruptcy court equity auction to maintain control of the company.

The difficulty is that the company bidding against him, Atalaya Capital Management, could have deeper pockets. Atalaya loaned Creative Loafing $30 million in 2007 to finance the purchase of the Reader and Washington City Paper and is now owed in the area of $31 million.

Miner’s story picks it up from there:

Atalaya is in the catbird seat. The first $2 or $3 million raised in the auction will pay back small creditors and provide the company with working capital. But after that the money all goes to Atalaya until it gets back the money it’s owed, now about $31 millon. In effect, it can bid that high simply by taking money out of one pocket that it will put back in another. Under the circumstances, how can Eason compete?

I asked him. “You hit on a dilemma we think we can work through,” he said. The key date, according to Eason, is not August 25, when the auction will be held, but July 27, when Judge Caryl Delano sets the rules of the auction.

“What the issue really is,” Eason said, “is who’s going to keep their money in. Who’ll be involved in this thing for the long haul. It appears the way Atalaya is coming at this they’ll put their money in and immediately take it out. That’s part of their financial engineering, it’s a typical Wall Street hedge fund being slick with the money. But we’re looking to make sure that whoever bids at the equity auction truly wants to hold the company.”

Eason thinks control of the company will, in part, be decided through the judge’s interpretation of two words he wants to make sure are in the bidding procedures: “and best.”

Eason believes the judge should award the papers to the “highest and best” bid, which he’s ready to argue would be Creative Loafing’s. For Atalaya, he told me, “it’s just a deal. For me it’s my passion, my life, and everything. And on the business side, I have to say I think the company has really responded to making the digital transition. I think we’re a third of the way there, a half the way there, and I like the model we’ve created of sort of old media morphing over to new media and using in our sales models the strengths of both mediums. The real key here is not a financial play — it’s how everybody uses their publishing smarts and knowledge of online to fuse those models together. The game is not who’s got the most money but who’s got the most smarts to make the transition.”

And if Federal Bankruptcy Judge Caryl E. Delano doesn’t allow “and best” to be part of the bidding requirements or doesn’t see things Eason’s way about what is best for the future of Creative Loafing, what happens then, Ben?

Read the rest of Miner’s article to find that out.

And it will be on Aug. 25, during a hearing in downtown Tampa that will start at 10 a.m. Federal Bankruptcy Judge Caryl E. Delano today approved a disclosure statement for Creative Loafing’s reorganization plan after a week of intensive talks between the chain’s owners, in the form of company CEO Ben Eason, and its largest creditor, Atalaya Capital Management LP.

Atalaya is the investment fund that was owed $31 million from financing CL’s 2007 pay-down of debt and purchase of the Chicago Reader and Washington City Paper. As part of the negotiations, Atalaya has agreed to write-down its promissory note to $12 million, which would be repaid at 8 percent interest-only for five years and balloon due at that point.

According to the terms of the reorganization plan and promises made in court today, all CL creditors would be paid in full with two exceptions: Atalaya and BIA Digital Partners, which provided additional lending in the 2007 deals. BIA is now part of an Eason-led equity group that will bid for ownership against Atalaya.

Monday’s hearing found the normally adversarial Atalaya and CL relationship thawed to some degree.

“We are on board and supportive of moving forward under this process,” Atalaya’s lawyer, Tyler Brown, told the judge via telephone during the noon hearing.

That means that Atalaya is supporting the reorganization plan and auction process. It remains, however, interested in owning the nation’s second-largest alternative newspaper chain and has put in what is called a “stalking horse offer” of $2 million that will be the first bid up during the Aug. 25 equity auction, at which anybody can essentially bid to own the post-bankruptcy Creative Loafing.

Atlaya’s lawyer wrote to CL on July 10:

Atalaya submits that the Atalaya Stalking Horse Offer provides a significantly higher and better recovery for the Debtors’ unsecured creditors than the “Stalking Horse Offer” identified in the Debtors’ prior Second Plan and, together with the Court approved Bidding Procedures and the Equity Auction, a greater prospect for the employees, vendors, and customers of the Company to move forward with a properly capitalized organization having access to sufficient post-consummation working capital. Further, the Atalaya Stalking Horse Offer has the added benefit of allowing the Debtors to emerge from bankruptcy sooner and without incurring the unnecessary costs and expenses of a highly contested auction and confirmation process. Finally, the Atalaya Stalking Horse Offer will provide the Reorganized Debtors the wherewithal to fully implement their business strategy. In sum, the Atalaya Stalking Horse Offer will enable the Debtors to fulfill their duty of maximizing value for their creditors while also providing sufficient capital for the reorganized Debtors.

Atalaya’s offer is more than an initial Eason-BIA group Stalking Horse bid (about $1.5 million in cash and free office space). But Eason plans to bid at auction, as well, so the two sides will likely be locked in a competition for ownership of the chain again, as they were earlier this year during protracted hearings into the future of the media company.

Great article in our Washington City Paper sister pub last week by Andrew Beaujon about how the changes to adult-use ads at Craigslist could affect the alt-newspaper industry.

From the article:

Last year Craigslist, which lists 18 employees on its “about us” page, made somewhere between $20 and $80 million dollars. So why is its CEO, Jim Buckmaster, so p.o.’d about sex ads in alt-weeklies?

Because these bottom-feeding free publications are making an erotic comeback in the classifieds biz, with an assist from law enforcement.

Buckmaster has even taken to the blogosphere to air his frustrations with alt-weekly encroachment. In a recent post, he lists several titles of adult ads he found on backpage.com, a collection of classifieds sites owned by Village Voice Media (VVM). “Cum lay your hotdog on my bun for memorial day” (Dallas); “Let me put you to bed backdoor available $80? (Columbia, S.C.); “An Irish blowjob and a cum showering rainbow” (New York). He links to a screenshot of the last ad, which has photos of a woman performing fellatio.

“It’s worth noting that these ads’ TITLES ALONE contain more explicit content than you will find in all craigslist adult service ads combined,” he writes in the post.

It goes on to say that adult advertising in the Washington alt-weekly has increased since the craigslist change. Read the full ‘Will Craigslist’s New Stance on Adult Ads Save Alt-Weeklies?’

It is an interesting subject given the historical use and reliance on adult-use advertising by publications such as Creative Loafing. It always pits free speech (free love?) advocates against those who have concerns about the objectification of women and the violence that can result.

In our new CLTampa.com, the hottest-growing section seems to be the often explicit Sex & Love articles, to the point where some readers (and CL staffers, in internal discussions and e-mails) have raised questions about the balance between news and erotica/porn/sex coverage. Our publisher and classified ad manager tell me, unlike in Washington, that our adult-use advertising hasn’t seen a bump upward since the change in Craigslist policy.

I never really talk about it much or pimp it to you, but indulge me for a sec: Our News & Politics section page is a great companion to this blog and has lots more headlines, video, Twitter feeds and podcasts than you will find here on any given day.

Here’s how it works:

NEWS HEADLINES: All the important news in Tampa Bay and Florida politics and public affairs that we don’t have time to expand upon with a separate story in PoHo ends up being aggregated into our News & Politics section, with links to the original articles. In other words, I find the news so you don’t have to. Just read the headline and blurb, or click on the link and read the whole thing. Plus, headlines from PoHo posts automatically feed into the News & Politics section, so if you miss checking on PoHo you won’t miss a blog post.

TWITTER FEED: If the word “Tampa” or the hashtag “#cltampa” is in a tweet, it will show up on our Twitter Feed panel. Sort of a cross between micronews and voyeurism.

PODCASTS: Our streaming podcast player for the Political Whore podcast is always on the News & Politics section front, so if you missed an episode and can’t find it in the blog archives you can get it easily.

USER COMMENTS: The most recent three comments on PoHo blog roll up here, no matter which post they were posted on.

CL TV: I scour the best political videos and news bites on YouTube and elsewhere and post them here, so that you can get lost in the joy of streaming video and screw off for another 2-3 hours at work. Wanna see Tom Tancredo call La Raza the Latino equivalent of the KKK? This is the place to do it.

CONTRIBUTORS: Click on each PoHo contributor’s picture to learn more about them and see their latest posts.

If you haven’t checked it out, give it a shot and let me know if you like, dislike or want me to add new features or types of news to it.

Here are their bios, after the jump. I will have some more to announce by the end of this week:

Peter Schweitzer – Contributor

Peter Schweitzer owns PMC, Inc., (www.pmcwriters.com) a marketing and public relations firm located in Seminole, FL.  He is an active blogger and has freelanced for the St. Petersburg Times and the Associated Press. He has covered issues ranging from education, municipal and county government, religion, immigration, and crime.  Schweitzer writes website content and blogs for attorneys, real estate professionals, manufacturers, and sales teams. He has also served in the capacity of communications director and press secretary for political campaigns.

Manny Leto – Contributor

Manny Leto is the Managing Editor of Cigar City Magazine, a local history publication focusing on the Tampa Bay Area. Before joining Cigar City, he developed public and educational programming for the Ybor City Muesum Society, serving as curator for a variety of exhibits including Otras Voces: The Radical and Alternative Press in Ybor City and Tampa y Cuba: The 500 Year Connection. A Tampa native, Manny is a resident of Ybor City and a member of the Ybor City Chamber of Commerce Board of Directors.

email: editor@cigarcitymagazine.com

George Niemann – Contributor

George Niemann is a community advocate living in the Valrico area in east Hillsborough. He is on the board of directors of United Citizens’ Action Network. UCAN-Hillsborough is a countywide group of activists that demand government accountability and citizen-focused growth management from county, as well as, state government.

In addition to being active in local issues, he proactively gives input into the county’s management of land-use, comprehensive plan changes, and growth decision making, promoting the rights of average citizens. He participates in TBARTA’s long range transportation planning as a citizen member of the Land Use Working Group. He also created and maintains a website for the UCAN-Hillsborough group at www.u-canHillsborough.net

email: george_n@verizon.net

Dan Sullivan – Contributor

Dan Sullivan is a Republican, but don’t hold that against him. He’s actually quite a charming fellow, if you get to know him. A regular volunteer for local political campaigns and a member of several Republican groups, he considers himself an independent-thinking conservative. He believes Republicans make a lot of bad decisions and Democrats make nothing but bad decisions. In a past life, he was a newspaper reporter, covering crime and public safety. These days, when he’s not doing something related to politics, he spends most of his time writing, reading literature and pretending to know something about pop culture.

Former Creative Loafing reporter and mensch Max Linsky (picture, above, in the good old days in Tampa, moonlighting as a freelance restroom attendant) has an exciting new gig: Managing editor at The Stimulist, an Internet news start-up being headed by MSNBC’s Carlos Watson.

From Business Week:

Another personality who first made a name in traditional media is putting the final touches on an ambitious online destination. Carlos Watson, an MSNBC anchor who also hosts a weekend show on talk radio network Air America, and a small band of staffers are readying The Stimulist, a news and opinion site slated to go live on May 12.

Watson bills The Stimulist as being aimed at what he terms “the change generation;” that is, an audience of young professionals between the ages of 25 and 49. Watson is still on the shy side of 40 and counts himself as a card-carrying member of this cohort, and freely uses the words “we” and “us” to describe his intended audience. “People in their 20s, 30s, and 40s—educated but edgy,” he says. “I don’t think of us as the same as the yuppies of 20 years ago. We are more down to earth, more digitally savvy, and more diverse.” And more global: The Stimulist aims to draw 30% of its traffic from outside of the U.S., which would be significantly more than even a site like nytimes.com gets.

Obviously, the Web is a very crowded place, and many who have succeeded in more traditional precincts of media have encountered less success online. The ultimate success of The Stimulist may hinge less on its precise editorial positioning than on whether Watson can supercharge his career and to what degree his personal brand takes root in the market. There is chatter regarding his roles being expanded at both Air America and MSNBC.

… Watson, who worked for McKinsey & Co. and started and sold an educational company before beginning a media career, is the sole bankroller behind The Stimulist, though he expects to lure outside investors eventually. The site’s managing editor is Max Linsky, a former editor in the Creative Loafing chain of alternative-weekly newspapers. Its chief operating officer and chief revenue officer is Taiye Tuakli-Wosornu, who has worked closely with Watson on his TV shows.

Judge Caryl E. Delano said despite contradictory (and flawed, in her estimation) reports about the chain’s value since going into Chapter 11 bankruptcy protection in September 2008, there was no evidence given that Eason’s management of the media company is harming its value, as lender Atalaya Capital Management had maintained in its effort to dislodge Eason and the current management.

To the contrary, Delano read from the bench, three days of hearings showed that Eason’s management had done a lot to preserve value, by making budget cuts and introducing an emphasis on web publishing models, including one in Tampa that has produced a sharp increase in web traffic while making the print edition a break-even proposition instead of a money-losing one.

“I find that Atalaya has not met its initial burden of proof and is not entitled to relief [from court stays against it foreclosing on the company's debt] at this time,” Delano said.

For Eason, who has been slagged by some former employees and in anonymous blog comments, the ruling was more than satisfying, even if the company still has a long way to go in winning confirmation and release from bankruptcy court.

“I’m psyched,” Eason said as he exited an elevator on the ground floor of the Sam Gibbons Federal Courthouse. “Just to have it over with. She came to a pretty solid decision at this point.”

Delano, in fact, said from the bench that she heard no evidence that Creative Loafing’s woes are anything beyond those being experienced by all newspaper and news media companies in this recession. And as for the disputed employee morale in CL newspapers, Delano said, “Employee morale at all newspapers is is probably at an all-time low” with layoffs and contraction in the industry. If it does exist at CL, she said, it is likely for those reasons, and no evidence was given that Eason is the cause.

Likewise, Delano said that Atalaya’s financial experts had plenty of information about the start of declining revenues at Creative Loafing, which began in July 2008 and not after the bankruptcy filing. Delano said both sides’ expert valuation witnesses had impressive credentials but produced flawed values for different reasons. For Creative Loafing’s side, she said the idea that the value of the company had actually doubled since bankruptcy was filed “just defies belief.”

Atalaya loaned Creative Loafing $30 million in 2007, in a deal to pay down company debt and purchase the Washington City Paper and Chicago Reader. Another investment fund, BIA Digital, provided a secondary loan of $10 million.

But in 2008, as the impacts of the recession were felt by advertisers, Creative Loafing’s revenues began to fall sharply, down by 20 percent across the six newspapers. Much of the dispute at the heart of the three days of hearings on Atalaya’s motion went to how much the lender knew about the decline and how forthcoming the company was about it. Delano ruled that company financial reports provided at the time to Atalaya painted a clear picture of the problem, and if there was any verbal misunderstanding between the two parties about the impact of such a decline, it was only the normal “tension” between a borrower and a lender.

Although it was a strong win for the current CL management, Delano also struck a cautious tone, saying that she believed the company has “an uphill battle” ahead to have any reorganization plan confirmed by the creditors since Atalaya is far and wide the biggest creditor and could choose to vote against any plan. Delano suggested mediation for the two sides, but after a 30-minute recess in which the two sides’ lawyers talked by telephone, the idea of having a mediator appointed was tabled for now, at least until April 20 when Creative Loafing reveals more details of its reorganization plan, including possible new investors.

One of those could be BIA Digital, another lender owed $10 million in bankruptcy court. BIA’s lawyer listened in on the hearing by telephone, a rare appearance by the fund. Eason said of BIA: “They’ve been great. They’ve been very supportive through all of this.”  The lender could be among the investors announced in the April 20 court filings, Eason said during the recess.

Eason cautioned that a lot more work remains ahead of the company in bankruptcy court but that with backers like BIA and others, he believes the company will emerge stronger from Chapter 11 and transformed as a web-first news publishing firm.

Print will come back a little after the recession abates, Eason said after the ruling, but never to the levels that it once held and with the profit margins it once enjoyed. The transformation to digital daily news publication online provides a better future for the company, he added. “We’ve fallen in love with the distribution platform [of the Internet], if not yet the content” being put on it.

[UPDATE] See video of Wayne Garcia talking with Ben Eason just hours after the decision came down:

Part 1:

Part 2: