A big fight for control is going on at the Sun Times Media Group, whose principal asset is the Chicago Sun-Times newspaper. I recently wrote (link) about how the Sun-Times has decided to alienate 50% of its potential readership by becoming increasingly ultra-liberal not only in its opinion but also in its slanting of “straight” news stories, a move that could only speed up its demise.But hope springs eternal. A few weeks ago, Davidson Kempner Capital Management, one of the company’s largest shareholders, began an effort to replace almost the entire board of directors in an attempt to revitalize the company and avoid collapse. It must get holders of more than 50% of shares to support this move.
Yesterday the company’s third largest shareholder K Capital announced its support of this effort, stating that it “is shocked that the board would fight this proposal given the disastrous operating results and shareholder losses over the last few years due to the board’s inaction.” Ann Saphir at Crain’s Chicago Business online reports (link):
Sun-Times Media is losing money despite cutting $50 million in expenses this year, and its shares trade for less than a dime apiece. K Capital’s vote to install a new board at Sun-Times brings publicly declared support for the initiative to 27% of outstanding shares…. The company … said the attempt to oust the board would do no more than delay plans that are underway to bring the company back to profitability.
Sun-Times Media Group said its ongoing cost-cutting efforts will reduce it to a "fraction” of its current size. The company, which runs 70 community papers in addition to its flagship Chicago daily, plans to eliminate “several” unprofitable titles next year…. The reduction is part of a previously announced plan to trim $50 million in expenses. Sun-Times Media cut 534 employees, or almost 20% of its workforce, in the past 12 months. It also eliminated 16 titles. The current plan for an additional $50 million in cuts will go further, the company said [today].As to the fight for control of the board, Saphir reports that yesterday shareholder Davidson Kempner stated that “[t]he directors who have presided over the deterioration of [the] Sun-Times do not possess the skills or experience to rescue this business.”
Meanwhile at the Chicago Tribune, part of its own revival plan is to make the newspaper more appealing to people who don’t read newspapers. Joseph Epstein posted a review (link) of the recently redesigned Tribune in the Wall Street Journal on December 13, titled “Another Newspaper Bet Goes Bad.” He doesn’t like what he sees:
Struggling to make changes that will attract the young and other readers with short attention spans has everywhere failed to bring salubrious results. In the case of the Chicago Tribune all that has been accomplished is to make the paper -- with more color photography, shorter stories, more features, less hard news -- seem more like USA Today, of which the world does not need more than one. This has brought greater discontent among loyal Tribune readers and done little to bring in new readers. I am not a regular reader of the Tribune, but when I do pick up a copy these days it feels like nothing so much as holding the local evening television news in my hand, and that's not a happy feeling.As for the current value of the shares of these two companies – well, for the Tribune Co., now in bankruptcy, the value is zero, as it has no shares, and for the Sun-Times Media Group (SUTM), shares last traded at a whopping 5 cents, a 16% drop from the 6 cents at which shares were trading when I last posted on this topic 19 days ago.
John M Greco
