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CL seeks to be free of Cox

Alt-weekly chain could cut ties by mid-July


Like a Liza Minelli marriage, the union four years ago between Creative Loafing Inc. and Cox Enterprises began with a smile, puzzled onlookers and is now careering inexorably toward divorce.

Last week, Ben Eason, CEO of Creative Loafing Inc., confirmed that his company's board has agreed to buy out Cox's minority stake in the alternative newsweekly chain, which publishes newspapers in Atlanta, Tampa, Sarasota, and the one you're holding right now. Eason wouldn't disclose the price, nor would Jay Smith, president of Cox Newspapers.

CLI is now in discussions with a lender to help finance the deal. If everything goes well, the deal could be complete by mid-July, Eason said. According to Cox's Smith, the buyback is "conditioned upon their ability to buy our share. But I'm assuming they'll do that, and we'll end the investment that we've had."

In 2000, Cox bought a 25 percent stake in Creative Loafing Inc., when it invested $5 million to help finance Eason's merger of his Tampa alt-weekly with the Atlanta and Charlotte papers, which had been led by his mother.

Smith told the Atlanta Journal-Constitution on the eve of the sale that alt-weeklies were "a terrific growth market." But critics wondered if Creative Loafing was making a deal with the devil. After all, in Atlanta, CL's main competitor is the AJC, which is owned by Cox. And many of the city's other leading media outlets, including the largest TV station, the busiest website and several radio stations, are concentrated in Cox's hands. In Charlotte, Cox owns WSOC-TV, Channel 9.

Eason stressed from the start that CL would continue to be an outspoken watchdog of the daily and that Cox's stake wasn't enough to influence editorial policy. Last year, however, the relationship soured when the AJC launched Access Atlanta, a free entertainment weekly that reflects a growing trend by daily newspapers to compete with alt-weeklies.

Not long after the first issue of Access Atlanta hit the streets, CLI's board of directors began investigating the two Cox executives on the board -- Smith and Charles "Buddy" Solomon. The probe was intended to determine whether information Smith and Solomon had been privy to as board members was used to help launch the new publication.

Although Smith has denied any wrongdoing, the board last November voted to censure him and Solomon, charging them with "violating business and journalism ethical standards." In an e-mail to CL, Smith responded that the report issued by the board was "utterly absurd."

Late last year, Eason hadn't ruled out suing Cox. But last week he struck a more subdued tone, saying the impending separation is intended to "settle out all the issues."

Smith expressed some regret at the split.

"I guess there's a tinge of sadness in that I feel some people saw a ghost where none existed," the Cox executive said. "That was a feeling that they couldn't get beyond. The truth is, the things that were publicly said about our company, about me, were dead wrong and they remain dead wrong."

Eason said the costs incurred to reclaim the 25 percent stake might make expanding the chain of newspapers more difficult in the next couple of years. Other than that, he said, he expected the buyback wouldn't affect normal operations at Creative Loafing.

Some Creative Loafing staffers say that CL's reputation would be enhanced by cutting ties with Cox.

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