Posted by chicagomedia.org on September 10, 2009 at 13:57:00:
Employees to also pay for Sun-Times sale
By: Ann Saphir
Sept. 09, 2009
(Crain's) -- A day after Sun-Times Media Group Inc. announced that a group led by Chicago financier James Tyree would buy its assets, the media company's employees found out they'll pay a price, too.
Starting at the end of the month, non-union employees will take pay cuts based on how much they earn, according to a memo that CEO Jeremy Halbreich sent to employees on Wednesday. The first $25,000 of pay is exempt from cuts. Additional salary, up to $100,000, is subject to an 8% cut and anything above $100,000 will be reduced 11%. That means someone earning $125,000 will take an overall 7% reduction, the memo said.
Only advertising staff below the vice-president level, who already have seen their salaries drop due to declines in ad sales, are exempt, he said. The reductions will remain for an "indefinite" period, he said.
"We continue to need to drive revenue and pare expenses to put our business on a solid footing so that we can ensure that our new owners will be able to complete the transaction to buy the Sun-Times News Group business and secure the substantial financial commitment they are making to our enterprise," Mr. Halbreich said in the memo. The savings will be "an important element in eliminating the cash burn rate" and returning the company to profitability.
Sun-Times Media Group has been losing money for years, burning through $3.8 million in July alone. Still, that's down from the $2 million per week it had been losing before its bankruptcy filing.
A Sun-Times spokeswoman said that it was "crucial for our company, and a top priority of the buyer, to get this company to completely eliminate the cash burn." She declined to say how much savings the pay cuts would deliver.
Union leaders, who agreed to temporary compensation cuts of 15% after the company's March 31 bankruptcy filing, also have been asked to agree to permanent reductions and work-rule changes, Mr. Halbreich said in the letter. Those concessions must be in place by Sept. 29 for the sale to go forward, he said.
Mr. Tyree, who is chairman of Mesirow Financial Inc., agreed Tuesday to buy the Chicago Sun-Times and the 58 suburban papers run by its parent for $5 million in cash, plus $22 million in assumed liabilities. The agreement allows other bidders to come forward during an auction period, but the media company hopes to wrap up a sale -- which requires Bankruptcy Court approval -- by Oct. 8, according to a court document. The company expects to remain in bankruptcy for an unspecified period afterward.
Mr. Tyree was not available for comment.
Sun Times has 1,409 hourly workers, 775 of whom are non-unionized, and 495 salaried employees, according to a court document.
Without a sale, all those jobs would be eliminated, the filing said. "The proposed sale option avoids this draconian result and preserves jobs," it said.
The terms of the deal require Mr. Tyree to have $15 million on hand by the sale date to cover the sale price and to keep the business operational for 180 days, according to the purchase agreement.
The pay cuts announced Wednesday will help Sun-Times Media deal with a drastic decline in advertising revenue that's affected newspapers across the country, Mr. Halbreich said. Many other media companies have cut pay, and some, including Chicago Tribune publisher Tribune Co., are also in bankruptcy proceedings.