THE SUN-TIMES Media Group, publisher of the Chicago Sun-Timesand 58 smaller newspapers in the Chicago suburbs, yesterday became the fifth US newspaper publisher in the last four months to file for Chapter 11 bankruptcy.
The move leaves both Chicago's flagship newspapers under court protection from creditors. Tribune, publisher of the Chicago Tribuneand the Los Angeles Times, was the first of the five groups to file for bankruptcy protection in December.
The Sun-Timeswas at one time known for its searing investigative reporting and for spellbinding writing by columnists such as Mike Royko. But its woes run deeper than the sharp decline in advertising revenue that has wounded many totemic US newspaper titles in recent months.
The parent company, which was owned by Rupert Murdoch’s News Corp in the 1980s, is still suffering from years of mismanagement by Conrad Black, under whom the group was known as Hollinger International.
Lord Black and David Radler, who worked as the newspaper’s publisher, looted millions of dollars from the company.
Both men were convicted and imprisoned on criminal fraud charges. Radler was also censured by the Audit Bureau of Circulations for overstating the newspaper’s circulation figures.
The Sun-Timeshas struggled to cope with consequences of the fraud. The company owes the Internal Revenue Service more than $600 million in unpaid taxes and penalties relating to the Black era.
Sun-Times Media recently paid $21 million to settle a case with Canwest Global Communications, a Canadian company that claimed Lord Black misled it over the purchase of a group of Hollinger-owned Canadian newspapers.
The financial woes led to a boardroom battle, in which Davidson Kempner Capital Management, a New York-based hedge fund, led a shareholder revolt that in February forced Cyrus Freid-heim to quit as chief executive.
Like its rivals, the Sun-Times has gone through several rounds of job and pay cuts. This year it announced the closure of 12 suburban newspapers.
Jeremy Halbreich, chairman and interim chief executive, said in spite of the Chapter 11 filing, it would be “business as usual”.
Sun-Times Media last year hired Lazard Frères as its strategic adviser to look at a possible sale of assets. However, that arrangement came to an end in February without any sale.
This time, the company said it had retained Rothschild to contact potential buyers. – ( Financial Timesservice)