CHICAGO | Sun-Times Media Group Inc. is considering going private, Chief Executive Cyrus Freidheim told shareholders Tuesday, after shopping its newspaper properties for months without yet making a deal.
The parent company of the Chicago Sun-Times, the Post-Tribune and newspapers has been exploring a sale and other strategic options since February as it tries to navigate through an unprecedented industry tailspin. It sent its financial books out to possible buyers this spring and received back several responses, Freidheim said.
But there was no word at the annual meeting about a decision on any of the apparent bids, and Friedheim raised the possibility of privatization.
"We continue to consider the sale of assets and the privatization of the Sun-Times Media Group," he said. "We will report back if and when there is an agreement."
Freidheim reiterated that he remains intent on steering the company's businesses to a "safe landing" for the next generation of owners and said it has sufficient cash to "weather the worst storms over the next two to three years."
"We're ready for the worst," he said, declaring that newspapers are not dying despite a revenue-sapping slump that shows no evidence of subsiding.
His remarks appeared to signify management's commitment to keep both the company and the struggling Sun-Times afloat despite speculation that Chicago's No. 2 paper could be forced to shut down, amid what the CEO called a "miserable" market for print advertising.
Sun-Times Media Group lost $35.8 million in the first quarter and likely is headed for another loss in the second quarter. Freidheim said the decline in the print ad market has wiped out most of the financial benefits of the cutbacks and other changes that have reduced annual operating costs by $50 million.
John Morton, an independent newspaper industry analyst, said the company may be forced into going private to avoid shareholder obligations since it doesn't want to liquidate.
"Selling would be a very difficult thing to accomplish, probably for a lack of potential buyers," he said. "The history of being in the second position in big-city markets is not good. They would have to find somebody who was remarkably unsophisticated about the newspaper business and has a lot of money."
If the company sold off its more desirable suburban properties, Morton said, "the Sun-Times would be dead."
Six Sun-Times directors appointed last year by Hollinger Inc. resigned in keeping with a recent court-approved settlement ending Hollinger's control of the company: Hollinger's CEO Wesley Voorheis and Chief Financial Officer William Aziz as well as Edward Hannah, Peter Dey, Brent Baird, and Albrecht Bellstedt.
Aziz was then elected along with the other incumbent directors, and investors Robert Poile and Abner Kurtin were added to the board, which was thus shrunk to eight members from 11. Poile is portfolio strategist at Polar Securities Inc., which owns 8.8 million shares or 10.7 percent of the company's stock, while Kurtin is founder and portfolio manager of Boston-based K Capital Partners, which owns 8.6 million shares or 10.5 percent.
Sun-Times had its stock delisted by the New York Stock Exchange last month after falling to well under a dollar a share. It now trades on the over-the-counter Pink Sheets, falling 4 cents to 40 cents a share in Tuesday trading -- down 93 percent from a year ago.
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