NEW YORK | Sun-Times Media Group Inc., parent company of the Post-Tribune, posted a loss in the second quarter as advertising and circulation revenue slid, the company said late Thursday.
The publisher of the Chicago Sun-Times said it is still seeking a buyer or considering going private, but blamed the struggling newspaper and credit sectors for hampering progress. Meanwhile, the company will seek to cut costs further, and may consolidate editorial and sales offices, with an eye toward selling some of the real estate it owns.
"The U.S. economic downturn was tough on the newspaper industry in the second quarter," Chief Executive Cyrus Freidheim said in a statement. He did not project when the economy would turn, and implied that some lost advertising revenue may not return when it does.
The company -- formed after the dissolution of Conrad Black's Hollinger International media empire -- reported a loss of $37.8 million, or 46 cents per share in the quarter ended June 30. A year ago, it earned $528 million, or 56 cents per share, helped by a $612.4 million tax benefit.
Its operating loss narrowed to $24 million from $80.6 million last year.
Revenue fell to $83 million from $94.7 million a year ago, as ad revenue fell 14 percent to $62.7 million.
Within advertising, classified -- which includes jobs and real estate -- lost 19 percent, and retail fell 14 percent. The company's online ad revenue rose by 5 percent, but did not grow fast enough to overcome the decline in print. Internet ad revenue accounts for 5 percent of total ad revenue.
Freidheim said the Chicago metro area had an $890 million online ad market in 2007, but that newspaper publishers -- Tribune Co. is the largest in the region -- had about only 10 percent of that market.
"We need to close that gap," he said in a letter to shareholders.
The company plans to join Yahoo Inc.'s consortium of newspaper companies that allows advertisers to buy local ads on Yahoo and national ads on member Web sites. The group has more than 300 dailies as members, including A.H. Belo's Dallas Morning News.
Sun-Times also has a new print real-estate insert section to boost real estate ad revenue. The timing is curious since the housing market continues to slump and most economists predict it will worsen yet and not improve before late 2009.
Circulation revenue dropped to $18.8 million from $19.7 million, with the Chicago Sun-Times enduring a 4 percent slide.
Sun-Times said it met its goal, announced in December, of reducing costs by $50 million in 2008, but that the sharp declines in ad revenue have "wiped away the benefits of those cost reductions."
The company is looking at other sources of cash or ways to cut costs, including selling real estate, Freidheim said in a separate letter to shareholders.
"There are significant opportunities to consolidate editorial, sales and administrative offices throughout the company. This consolidation will enable us to sell certain properties," Freidheim said.
He said the company is still exploring options, including a sale or privatization. Sun-Times, whose shares trade on the unregulated capital market Pink Sheets, has no outstanding debt. He estimated going private would save about $10 million in costs related to complying with regulatory requirements.
