Chicago Sun-Times publisher files for bankruptcy
Will Chicago be the next one newspaper town?
Sun-Times Media Group Inc. (SUTM), publisher of the Chicago Sun-Times and other papers in the Chicago area, has filed for Chapter 11 bankruptcy, following similar moves by its longtime rival Tribune Co. and owners of papers in Philadelphia and Minneapolis. The company, though, has been a disaster even longer than the rest of the newspaper industry.
As the trade publication Editor & Publisher notes, the company "has never recovered from the damage inflicted by the disastrous reign of former chairman and controlling shareholder Conrad M. Black, who along with a handful of other top executives were ultimately accused of 'looting' the publisher through sales of assets with phony 'non-compete fees,' excessive expense accounts and management fees, and sweetheart contracts."
Black is currently serving time in a federal prison in Florida. Other former Black associates were also convicted of fraud. The company recently settled claims related to a newspaper sale done under the Black management team.
But the company's problems have continued.
In February, shareholder Davidson Kempner pushed out Chief Executive Officer Cyrus Freidheim, a corporate turnaround expert brought in to revive the company. New editorial management was named at the Sun-Times as well.
"Unfortunately, this deteriorating economic climate, coupled with a significant, pending IRS tax liability dating back to previous management, has led us to today's difficult action," said Jeremy L. Halbreich, Chairman and Interim Chief Executive Officer of Sun-Times Media Group, in an statement.
Tom Thibeault, executive director of the Chicago Newspaper Guild, told the Daily Finance that the filing was a "half-surprise." He said the union expects to learn more about the company's plans in meetings later today. Sun-Times had already laid off employees.
"This does not tear up any union contracts," he said. "[But] I am sure that the company is going to want some concessions."