Sun-Times hops on bankruptcy bandwagon

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: Sun-Times hops on bankruptcy bandwagon : Phil Rosenthal | Media : April 1, 2009 : The ultracompetitive "Front Page" tradition of Chicago has come to this: : The parent of the Chicago Sun-Times on Tuesday filed for Chapter 11, beaten into U.S. Bankruptcy Court in Delaware 113 days earlier by rival Chicago Tribune's parent, Tribune Co. : Although each company took separate routes to Wilmington, Del., their stories are part of a continuing series that has seen five major newspaper companies file for bankruptcy in recent months, reflecting industrywide erosion of ad revenue and a long-successful business model that may have passed its expiration date. : Unlike Tribune Co., which has remained profitable despite the economic downturn but entered bankruptcy because it was unable to manage the massive debt load incurred going private in late 2007, Sun-Times Media Group says it has no bank debt. : Sun-Times Media's problem is that its portfolio, which includes the Sun-Times, dozens of suburban publications, including the Pioneer Press weeklies, and related Web sites, has been burning cash in recent years. : The company went through more than $40 million in the first three quarters of 2008, leaving it with around $100 million at the end of September, and business conditions have only degenerated. : Add to that the looming U.S. tax bill Sun-Times Media has said it hopes to negotiate down from around $600 million. That obligation is a hangover from when the once-global media concern was run by now-imprisoned former press lord Conrad Black and paroled former Publisher F. David Radler. : "It's a sound business move," Pulitzer Prize-winning Sun-Times film critic Roger Ebert said by e-mail of the filing. "Hopefully, it will free the paper from the tax debt imposed on it by the convicted thieves, Black and Radler. ? I believe [the paper] has a future." : The company's bankruptcy filing listed $479 million in assets and $801 million in debt. Most of its biggest creditors are vendors, such as newsprint suppliers, and the Chicago Tribune, which is owed more than $600,000 from its deal to distribute papers for its rival. : Sun-Times Media spokeswoman Tammy Chase said the goal is to make the company, or at least some of its properties, more attractive. But the weak market for newspapers is what earlier this year drove E.W. Scripps to close Denver's Rocky Mountain News and Hearst to make the Seattle Post-Intelligencer a stripped-down, all-digital product. : "You pull the assets away from the liabilities, so the assets are free and clear and more attractive to investors, either as a new investment or to buyers," Chase said, noting the company hopes to emerge from bankruptcy protection by the end of the year. : Jeremy Halbreich, who took over as Sun-Times Media's chairman and interim chief executive in February after a shareholder revolt upended the previous board, told Sun-Times Media non-union staff they must take an unpaid week and there no longer will be severance pay. : Union members are being asked to accept the same reductions. According to Thomas Thibeault, executive director of the Chicago Newspaper Guild, which represents newsroom staff at the Sun-Times as well as employees at several sister titles, that includes a call for a 15 percent reduction in overall compensation, with job eliminations likely to follow. : "Nothing surprises me anymore. The industry has taken such a hard turn," Thibeault said. "We certainly want to help save the company, but I'm not sure we can save it by giving everything up." : Sun-Times Media's problems hardly developed overnight, which raises the question of why the company didn't file for Chapter 11 protection sooner. But there was always some optimism things would get better. : "Reflections of a Newsosaur" blogger Alan D. Mutter, managing partner of Silicon Valley's Tapit Partners, suggests that, in many respects, they probably won't, and companies must evolve. : "Forget about the Sun-Times and the Tribune, this is all across the board in the U.S. newspaper industry," said Mutter, who once worked at the Sun-Times and, before that, the defunct Chicago Daily News. : "Newspaper companies have been trying to cut their way to optimize the traditional model that did wonderful things for them throughout the entire post- World War II era, but the fact is that the fundamentals of the market have completely changed." : (Chicago Tribune)

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