Tuesday, September 8, 2009
Media / News Bites The Sun-Times Media Group Is on Its Way to New Owners
Posted by Michael Miner on 09.08.09 at 07:55 PM
For $5 million, financier James Tyree and the investor group he represents has taken a huge first step toward buying a local media empire — and $22 million of debt.
The Sun-Times Media Group announced Tuesday evening that it's entered into an asset purchase agreement with Tyree's STMG Holdings, LLC. The $5 million is technically a bid, and if anyone wants to bid against Tyree for the Sun-Times and the media group's 58 suburban titles, the federal bankruptcy court in Delaware, where the STMG is incorporated, will hold an auction.
But interim CEO Jeremy Halbreich of the STMG celebrated this mere "step" as though it were salvation — a destination nobody was sure would ever be reached.
"This agreement is an exciting and very positive step in the process of securing the future of Sun-Times Media Group's distinguished print and online brands that are such integral parts of the communities they so proudly serve..." said Halbreich, in a prepared statement. "This proposed Purchase Agreement will create and establish a wonderful future for our publications and for our employees."
He went on, in a reference to draconian cost-cutting throughout the company, before and since it filed for bankruptcy five months ago, "The Company and all of our employees have taken extraordinary steps to enhance revenues, reduce costs and strengthen our organization to become a leaner, more efficient Company that is capable of meeting the demand for news and information in this increasingly digital age. This agreement brings us one step closer to achieving our goals."
Earlier this year the leaders of STMG unions agreed to 15 percent wage cuts to keep the company going, and at a meeting last Thursday with Halbreich and Ted Rilea, they were told a sale was contingent on the unions being willing to put up with those cuts indefinitely. Despite the economies — a reporter at a suburban daily says his paper's so short-staffed that covering the news is like "spinning plates" — the media group is still losing millions of dollars a month. The Tribune reported that it had lost $3.8 million in July and was declared "administratively insolvent" — meaning the company couldn't even afford to shut down and pay severance.
A motion to approve the sale of the media group, filed Tuesday in bankruptcy court, laid out the company's unhappy recent history. In 2007, before entering bankruptcy, it hired Lazard Freres & Company to find a buyer. "This sale effort lasted several months but yielded no offers." The day it filed for bankruptcy, last March 31, it retained Rothschild Inc. to do the same. Rothschild and the the STMG between them "identified 46 parties, including private equity investors, publishing companies and high net worth individuals as potential buyers. Twenty-two entities executed confidentiality agreements and received investor presentations.... Some of the entities expressed interest in acquiring different pieces of the Debtors' businesses, and one candidate [Tyree] expressed interest in the Debtors' entire enterprise on a going concern basis...
"The fact that the sale process did not garner additinal offers is an indicator of the extremely distressed state of the newspaper industry....The Debtors are particularly vulnerable to this economic downtown that has battered the newspaper industry, because they are the victims of well-documented malfeasance by certain former directors and officers. [Those would be Conrad Black, now in prison, and David Radler, out of prison.] Those acts bled the Debtors of hundreds of millions of dollars in cash..."
The motion says the Tyree sale option likely will require the media group to remain in bankruptcy "for a period of time," but that it will "preserve the Chicago Sun-Times as a going concern... The Debtors currently employ 1,409 hourly employees (approximately 45% of which are unionized) and 495 salaried employees, all of whose jobs would be eliminated in a liquidation. The proposed sale option avoids this draconian result and preserves jobs." What is more, it will "preserve rather than destroy a vital part of Chicago's rich journalism history, which in the case of the Sun-Times traces its origins to 1948."
Comments (11)
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according to the ST, "In 2000, [James C. Tyree] was appointed chairman of the board of the City Colleges of Chicago by Mayor Daley. He was described then as a 'straight-talking, no-nonsense businessman.' "
hope straight-talking, no-nonsense businessmen come in different flavors, 'cause i recall zell being described as one when he showed up...
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Today the Sun-Times Media Group announced they were cutting all non-union employee salaries 8 percent for all salary after the first $25,000. Us non-union employees are not pleased.
Journalist, doesn't that 8 percent actually become 4 percent because of the formula? On the other hand, as your STNG colleague, I must admit that math isn't my strong suit!
If I were you, Journalist, I would just be a happy I still had a job. Many knowledgable people have, in recent months, predicted that the entire company (or at least a very substantial preportion) would be shut down. If the media reports are correct, James Tyree was the only bidder willing to keep the entire company together and is apparently not planning to substantially reduce the size of its staff or operations. Many of your collegues have been laid off in recent years. I don't think I would be too disapointed with a pay cut of 8% or less if I were a Sun-Times employee. I think I would be celebrating right now.
@ a 75k annual salary, under the reported pay reduction plan, that's a $4,000 cut.
@ a 100k, that's an $8,000 cut.
i'm w/ The original IAC ... if you're still an employed chicago journalist, you may want to count your remaining blessings.
Yes, on the most basic level, any journalist is happy to still be employed when so many other people in the profession are not. But after two years of constant cuts on everything, from the size of the staff and papers to the salaries, it really starts to get to you. It's great that we can still pay the mortgage, but you want more out of work than that. It used to be a great job. Now everyone in the newsroom is bitter and angry. It's a matter of perception. A few years ago when there was a prospect of moving up in the profession and we were producing a great product, you could rationalize your low salary and lousy hours by telling yourself it was for a good cause and things would get better. Now, you look at it and think, "I have no prospects of advancement, there are no other newspapers hiring, our company will probably close anyway in a few years, and I have a bachelor's degree and seven years' experience and am making $35,000 when most college grads in other professions make more straight out of school." The old "at least I have a job" argument only works for so long and then it's not enough to keep you going anymore.
@ journalist - have the utmost sympathy for any staff reporter who is going through what you are, and will in the future, anywhere in the country.
that said, after freelancing in this town full-time for 15 years (with a masters) & initially getting paid by the trib 25 bucks to cover village board meetings, often running from 7 to midnight, while listening to backyard politicians hotly debate the color of a sign someone wants to install, all the while covering my own office & transportation costs (not to mention dental work), still think you guys should be counting your blessings, 35k or not (make that 34,200).
DeBartolo, the point I want to make is not feel sorry for me, it's more feel sorry for the industry. What kind of a future do newspapers have when already low salaries are going down, the number of jobs are shrinking, and everyone who works in the business wants to get out? Most of us at STMG were hoping that somehow in defiance of logic this sale would finally make things better after literally two full years of a cloud hanging over us, and then the very next day we get news of a pay cut. I just don't think people can take any more. You have an entire business where every employee has basically given up and is more interested in sending out their resume than in trying to save the company because pretty much everyone has concluded the ship is sinking and they want to be on one of the lifeboats. Believe it or not, I'm generally one of the more optimistic people at my office. You should hear what the pessimists are saying.
i do get it journalist ... i do lament the prospects of a truly free press in the future ...
i've long thought it was difficult enough getting inconvenient truths published when the industry was robust, so what we're in for now doesn't sadden me - i'm terrified.
as for the sun-times' situation, just read a requested part of the deal is to relax union work rules allowing more freelancers to contribute...a silver lining as far as i'm concerned.
but i dare say, if Tyree were to wipe out the lot of you guys, it wouldn't take terribly long in this market to get up & running w/ a new, highly optimistic crew -- when i was doing this on a daily basis, if i asked an editor if he had any assignments for me, i'd occasionally hear - not today, but call so & so, and tell him you're 'hungry.'
lots of hungry people in town right now...again, count your blessings.
& if depression ever becomes a real problem, i've read st john's wort is pretty effective.
best...
Maybe the union is keeping freelancers out of the Sun-Times, but in the suburbs they want us to use more of them, especially for sports and meeting coverage. We have people who write stories practically every day. Maybe you should look in the burbs if you want freelancing work.
As far as wiping out the current crew, I've often thought it wouldn't be a bad idea if we knew there was going to be something to replace it. You could start over without all the baggage and the poor management, and if they'd put some people in charge who actually worked in the newsroom at night I think things would be very different. But I feel bad for the veterans. The young people in this business like myself will just go and do something else and probably end up doing better financially. But the old veterans who are five years from retirement, they're the ones I really feel for. And especially in the union papers, they're the ones who are left because the new hires get fired first.
well, thanks for the freelancing tip journalist; next time i get hungry i'll be sure to drive out to posen & cover a park district board meeting for your guys.
until then, best i can do to help is offer you & all your senior colleagues my sincere best wishes in these most difficult times.
would rather see the mayor install toll booths on all the downtown bridges than the sun-times ever stop its presses.
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