Posted by chicagomedia.org on August 08, 2008 at 11:03:20:
Sun-Times weighs own private turn
Chicago Sun-Times parent Sun-Times Media Group thinks it might be able to shave $10 million in 2009 expenses just by going private or deregistering its stock under federal securities laws.
The lawyering, accounting and paperwork needed for Sarbanes-Oxley compliance and reporting to the Securities and Exchange Commission, not to mention requisite insurance for directors and officers, apparently isn't cheap.
But that revelation Thursday, from President and Chief Executive Cyrus Freidheim Jr. in a letter to shareholders as Sun-Times Media announced a second-quarter loss of $37.8 million, is an indication of both the determination and desperation to pinch every penny possible in a bid to save a struggling enterprise in a struggling sector.
"The entire newspaper industry is in a deep recession, possibly the deepest in 70 years. And it may well worsen," Freidheim wrote. "We will weather this difficult period, however long it lasts, by aggressive actions to reduce costs, conserve cash and gain share in the declining advertising market."
And, all together now, "We recognize we cannot solely cut our way to financial health."
Sun-Times Media's slumping ad revenue—down 13 percent in the first quarter, 14 percent in the second, compared with the same stretches a year ago—and surging expenses for newsprint and energy combined to swallow up the company's $50 million in cost cuts and efforts to grow business earlier this year, setting the stage for still more reductions at the Sun-Times and its suburban sisters.
Freidheim acknowledged that exploration of strategic alternatives, which could include a sale of all or some of the company or perhaps taking Sun-Times Media private, have hit a snag thanks to the tightened credit market and diminished market value for newspaper companies under current conditions.
Sun-Times Media's situation has been particularly aggravated though several factors, including corruption under convicted and incarcerated Conrad Black, but it is hardly alone in its dilemma.
Chicago Tribune parent Tribune Co. is eliminating hundreds of jobs nationwide and reducing the size of its papers, including here at the company flagship, where an anxious staff awaits follow-through any day now on cuts announced earlier. The New York Times Co., the Washington Post Co., McClatchy Co. and just about every other outfit has been pushed to make similar moves.
"We recognize the need to downsize the cost structure to keep up with the revenue losses we are experiencing," Freidheim said, noting cuts in virtually every area of the company will continue until the free fall stops. "We recognize that these reductions will require changes in our business model. We will disclose these changes as they are being implemented."
Managers at the Sun-Times and the company's other units now said to be weighing another round of slashing already are working with lean resources, depleted by past job eliminations and other budget-wringing measures, such as outsourcing most distribution responsibilities to the Chicago Tribune.
The earlier $50 million in cuts supposedly were to the bone. So look out marrow. There's talk of outsourcing classified ad sales and some financial and administrative activities, making more changes to the size and format of its papers and exploring real estate sales.
"We cannot simply survive over the next 18 months," Freidheim wrote.
But surviving is a start, and every $10 million counts.
(Rosenthal)