Posted by chicagomedia.org on November 07, 2008 at 10:08:32:
3rd-quarter losses signal more cuts at Sun-Times
Sun-Times Media Group lost $168.8 million in the third quarter.
That, Chief Executive Cyrus Freidheim Jr. told shareholders Thursday, means the heart-breaking $50 million in expenses slashed earlier this year from the Chicago Sun-Times and its area sister publications will be followed by another $45 million to $55 million in reductions by mid-2009.
This is going to be tough: to implement, to go through, to watch.
They've already worked their way through the low-hanging fruit, the high, hard-to-reach buds and some of the big branches. Freidheim, in a letter to investors that accompanied third-quarter results, writes of additional "outsourcing, downsizing and elimination of poorly performing products," but tremendous care will have to exercised to avoid leaving just a stump with roots.
The two cuts represent elimination of a full 30 percent of the company's operating expenses in less than two years, and while the first round was touted as an effort to return the newspaper group to profitability, this latest one is ominously projected only to stop it from bleeding cash.
"Our goal is to be cash-flow neutral while preparing for a future economic rebound," Freidheim said, noting "the industries on which we depend" probably won't be upping their ad spending until early 2010.
Freidheim said in June at the company's annual meeting that the company has "the cash to weather the worst storms over the next two or three years." Its cash position dropped by $16 million in the next quarter, to $99.8 million, excluding $10 million in Canadian asset-backed securities.
Third-quarter ad revenue in the Chicago market declined 19 percent overall, following a 15 percent slide for the first half of 2008. Sun-Times Media ad revenue, off by 18 percent, fared only marginally better.
Even the company's online revenue suffered a year-to-year decline of 2 percent for the quarter.
Freidheim noted that Sun-Times continues "to explore strategic alternatives for the company, which could include a sale, deregistration, or continuing as a public" company. But between the current financial and credit crisis and the state of the newspaper industry, he has no illusions that a solution is imminent.
Right now, the whole company has a market cap of just $7.8 million, with shares closing earlier Thursday at around 9 cents apiece. A leading shareholder, Davidson Kempner, last week called for upending and reducing the current board and sending Freidheim on his way.
So there are some proposed cuts right there.
(Phil Rosenthal, Chicago Tribune)