Cox execs censured 

CL charges Cox officials with unethical conduct

It was not a happy camp at a meeting last week of Creative Loafing Inc.'s board of directors. The majority of the board voted to censure two members who are executives with Cox Newspapers.

In response, one of the Cox delegates -- newspaper division President Jay Smith -- hurled insults at CL Inc. President Ben Eason and other board members, according to those attending the session in Tampa. Smith did not respond to phone messages and an e-mail seeking comment for this story.

The censure resolution charges the Cox executives with "violating business and journalism ethical standards."

The two Cox delegates -- Smith and his chief financial officer, Charles "Buddy" Solomon -- voted against their own reprimand. The other six board members -- investment bankers, media executives, entrepreneurs and a former university president -- approved the resolution.

The censure followed an investigation by a special board committee into the April 24 launch of Access Atlanta by the Cox-owned Atlanta Journal-Constitution. Access Atlanta imitates the format and entertainment content of alternative newspapers such as Atlanta's Creative Loafing. The AJC section also utilizes free distribution similar to that of CL.

In 2000, Eason and a group of investors acquired Creative Loafing and several sister papers founded by Eason's parents, Debby and Elton "Chick" Eason. Ben Eason, prior to the acquisition, owned the Weekly Planet in Tampa, Fla. In the 2000 deal, Cox acquired a 25 percent equity stake in Creative Loafing Inc.

"The Cox people got a very good education in the alternative newspaper business while sitting on our board," said board member Sterling "Jim" Soderlind, a retired Wall Street Journal executive who drafted the censure resolution. "And we feel they used that education to compete against us. ... What they did was unethical."

The special committee's investigation focused on possible anti-trust and predatory actions by Cox in Atlanta, where the company owns the daily newspaper, the largest television station (WSB-TV), five radio stations (including the area's dominant AM signal, WSB-750), a major website plus smaller media and marketing enterprises. The committee's findings on predatory practices were inconclusive.

Cox has often found itself accused of unethical -- possibly illegal -- conduct. It was stripped of its TV license in Miami after the Federal Communications Commission found that Cox had engaged in improper conduct with an FCC official. It was one of several newspaper companies that in 1972 agreed to endorse Richard Nixon's re-election bid in exchange for the administration dropping its opposition to monopolistic practices by the media.

In 1991, Cox was fined almost $2 million by the federal government for the illegal acquisition of stock in Knight-Ridder Inc. Cox bought $101 million in KRI stock to force the company to renegotiate a deal under which KRI's Miami Herald published Cox's Miami News. The renegotiated deal allowed Cox to shut down the News, although Cox, in obtaining an anti-trust exemption for the "joint operating arrangement," had vowed to preserve a second editorial voice in the city. Cox ended up making a windfall -- as much as $300 million -- by closing the newspaper, due to the renegotiated terms.

Senior Editor John Sugg is a shareholder in Creative Loafing Inc.

In a Nov. 20 article on a dispute between Cox Newspapers and Creative Loafing Inc., a response by Cox Newspaper President Jay Smith arrived too late for inclusion in the printed article. The following is his response:

I have little faith that anything you may write will be any fairer to us than the utterly absurd report and the so-called censure. Nonetheless, I want to give you the courtesy of a reply. When I asked what it meant to be 'censured' no one could tell me.

I asked the five board members, besides Ben, if they had read and understood the report for which they voted. Although no one would look me in the eye, they said they did. In fairness, one couldn't look me in the eye because he was on a teleconference. I told each person he should be ashamed of himself. If that's seen as a view of their business skills, so be it.

Ben then told me he was ashamed of me. I recalled all of the cruel things Ben had told me and others about his mother and I said simply, "You are everything you've ever said about your mother."

When Ben's father, Chick, jumped to his son's defense and said to me, "If there's a hell, I hope you burn in it," I believe I referred to him as a "little man."

Seeing no further need to hang around a meeting that was clearly over, I departed.

Hope you will see fit to use this fairly.

Jay Smith, President
Cox Newspapers, Inc.


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