http://cbs2chicago.com/business/sun.times.bankruptcy.2.972099.html Sun-Times Files For Bankruptcy Rival Tribune Company Has Been In Chapter 11 Since December 2008 CHICAGO (CBS) -- This was a dark day at the Chicago Sun-Times. The Sun-Times Media Group, owner of the Chicago Sun-Times and numerous suburban newspapers, filed for Chapter 11 bankruptcy Friday morning, just a few months after rival newspaper titan Tribune Company did the same thing. It's been only two days since the price of the Sun-Times went from 50 to 75 cents, but it's clear the newspaper needs every quarter it can get. Even though its circulation puts it in the top 20 nationwide, ad sales are down dramatically and as CBS 2's Mike Parker reports, there are fears the tabloid is about to fold. As CBS 2's Joanie Lum reports, the filing didn't come as a surprise for many employees at the paper. The only surprise was that the Sun-Times filed for bankruptcy after the Tribune. On Tuesday morning, the staff of the Sun-Times met in a meeting with the bosses in the Holiday Inn located above their headquarters at 354 N. Orleans St., to learn how bankruptcy protection will affect the newspaper and its readers. In a letter to readers, Chief Executive Officer Jeremy Halbreich emphasized that the paper is not going out of business. The news, features and sports will continue to be delivered, he wrote. But the bankruptcy is bad news for employees. In a separate letter to Sun-Times employees that was published on the Tribune's Web site, Halbreich wrote that employees would no longer receive severance or COBRA benefits when to staff whose jobs are terminated. "Former employees who wish to receive COBRA medical benefits must pay the full insurance premium costs and administrative costs required by COBRA," the letter said. The Sun-Times is also requiring all non-union employees, including top managers, to take one week of unpaid leave in April or May, the letter said. The company "will seek similar sacrifices" from unionized staff, the letter said. Those points were all reiterated in the staff meeting. The Sun-Times retained Rothschild Inc. to help with a possible sale of assets. Halbreich said in a statement that filing for Chapter 11 protection offers the best opportunity to protect the company's media properties for the long-term. He said in the Sun-Times that filing was a difficult decision but essential for the company "to re-establish itself as a self-sustaining, profitable operation. That is worth fighting for." His overriding goals are to sustain the company's print and online news operations while "preserving as many jobs as possible," he said. On its website, the newspaper is pledging to reorganize, seek new investors, and continue publishing Sun-Times, the Southtown Star and a handful of suburban papers. Bill Zwecker writes his daily column for the Sun-Times, sometimes from his desk at CBS 2, where he is also an entertainment reporter. He says the words "bankruptcy protection" sting. "It's not a surprise," Zwecker said. "The Sun-Times has been hemorrhaging money like so many news organizations have been in this economic climate for a long time, plus we have so many added problems with Conrad Black and theft." Controlling owner Conrad Black pillaged the company, which is now burdened with a $608 million debt in taxes and penalties. Black is now serving a 6 1/2-year sentence in federal prison, after being convicted in July 2007 of siphoning off millions of dollars belonging to the Sun-Times parent company, then known as Hollinger International, when he was chief executive officer of the company. Hollinger also owned the Daily Telegraph of London, the Jerusalem Post and hundreds of community papers across this country and Canada. But even though Black went to prison, newspaper employees are paying the price. "These things usually lead to renegotiations of salaries and benefits," Zwecker said. "It's very, very sad, and very hard to have to deal with this. But hopefully, we'll get through it, and we've got a lot of great people that work for the paper, and hopefully, we'll survive." At the last major staff meeting about a month ago, then-Editor-in-Chief Michael Cooke predicted the bankruptcy, then left for a job out of town. Asked if there will be anything left for shareholders after bankruptcy, Halbreich said, "You never want to say never and you never know because we haven't solicited offers yet, but realistically, probably not." The company reported that it has one significant creditor -- the Internal Revenue Service. The IRS has said Sun-Times Media Group owes up to $608 million in back taxes and penalties from past business practices by its former controlling owner, Conrad Black, now imprisoned for theft from corporate coffers. Sun-Times Media Group shares are traded on the Pink Sheets and closed Monday worth just a nickel each. That means that based on the stock, the entire company is worth about $4 million. Halbreich predicted that the bankruptcy will be resolved by the end of the year, speedy by the standards of such cases. The paper was formed in 1948 by the merger of the Chicago Sun and the Chicago Daily Times, although it traces its history back to the founding of the Times' predecessor, the Chicago Evening Journal, in 1844. It Sun-Times was owned by the Marshall Field family until 1983, when it was purchased by Rupert Murdoch's News Corp, a buyout that made legendary columnist Mike Royko so angry that he jumped to the rival Tribune. Murdoch sold the paper a few years later because of cross-ownership restrictions when he bought TV station WFLD to help start the Fox TV network. Hollinger later bought the Sun-Times. A group of private investors owned the paper until Hollinger bought it in 1994. The Tribune Company, filed for Chapter 11 bankruptcy in December 2008. Other media companies with Chicago interests have also had trouble. Creative Loafing, parent company of the Chicago Reader weekly alternative paper, filed for Chapter 11 bankruptcy in September 2008. The Minneapolis Star-Tribune has also filed for bankruptcy, as has the parent company of the Philadelphia Inquirer and Daily News, and the Journal Register Company, which owns the New Haven Register and several other papers in Connecticut, Pennsylvania, New Jersey, upstate New York, Ohio and Michigan. Some newspapers have gone out of business completely or switched to Web-only formats in recent months. The Rocky Mountain News in Denver posted its last edition on Feb. 27, while the Seattle Post-Intelligencer went all online earlier this month. Michael Smith, who teaches Media Management at Northwestern University, said, "What this means is that they are placing a bet on the future. They're ready to restructure for the future. If they didn't think that they had a future, they'd probably just cash in their chips." "What you'll hear is that a diminished work force means diminished journalism. And I don't have any evidence to the contrary," added Smith. Fear not, the Sun-Times will be at your doorstep or on the newsstand again tomorrow, but who can predict the size of the reporting staff? If the ad revenues continue to fall, will the paper keep shrinking? CBS 2's Joanie Lum, the Associated Press and the STNG Wire contributed to this report. (© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
Newspapers everywhere are going to die. Why would I buy print when I can read all the same content (and more) online for free? I can't say I'm sad to see them go either. Print journalists are some of the most egocentric and smug pricks on the face of this earth.
Yup. I'm a journalism student at the top journalism school in the nation. It's pretty grim. It's nonstop talk about how the newspaper is going to die because they tried to push profit margins too high and that online isn't profitable yet. Not a very good business to be going into right now. Needless to say, I'm going to be transferring schools next year to study film and Russian.
Well, I was in sports journalism for seven years. Five with ESPN Insider and three with Basketball News Services. I also did some radio. Journalism is a terrible business, and I usually try to steer people away from it. It takes tough skin and a drive that can match. I saw the writing on the wall years ago, but it makes me laugh now that I see a lot of print guys posting blogs and twittering. These were the same guys who looked down their noses at me because I was an internet journalist in 2003. Now who's laughing bitches? Oh, and I don't believe it's because profit margins were too high. It's simply an outdated form of media. With the internet, print has become obsolete. There's really nothing they could do to fix the problem. As our parents and our parents parents die out, they will be left in the dust by a generation that gets its news by the minute, not by the day. I will say this, it was a mistake to start putting their articles online for free. Why would I buy something that I can get online for free? You are right about one thing though, internet advertising isn't worth shit. It was profitable for a minute, back in the early 2000's. After that, the bottom fell out and now it isn't much of a revenue generator. I'm honestly not sure how journalism is going to make its money in the future. We don't need advertising with things like google, websites, and television. Even radio has a leg up on print. I think eventually everything will be paid subscription online. ESPN Insider makes the lion's share of profit for ESPN.com. In fact, unless things have drastically changed, Insider supports the entire ESPN internet family. I'm not sure why though. The content is shit, and most of it you can find online for free if you are willing to take the time to visit all the websites of newspapers. Journalism is due for a major change, and I'm not sure how it's going to shake out.
Nate, I'm going to have to disagree. Some of the very largest WWW sites, traffic-wise, are big newspapers. The NYTimes WWW site is downright massive. While the printed page is dying, the newspapers that figured out the Internet are doing fine. NYTimes is one example to look at. They still hire a lot of reporters, report the news with original content/writing, and develop really big business relationships that are out there to be had for high traffic WWW sites. Reminds me of the movie business, which has evolved a few times. At one point, the studios owned the means of production (studios, actors, films) and the means of distribution (the theaters). They were broken up as a monopoly and survived. Then TV came along, they survived and ended up making content for TV (it was a competing medium!). Video tapes and now DVDs have come along and they're still making movies. The Internet is the next (current, as well) means of delivery and they're still going to survive. The thing is, cities need local reporting like the Trib and Sun-Times provide. The writers will move on to blogs or other kinds of publishing sites if the newspapers don't get their acts together. The Tribune is particularly interesting because they owned more than newspapers. They own the Cubs, Wrigley Field, and WGN TV. They just don't get it.
The problem is they haven't actually figured out how to make money on this. Which is sort of a problem, because if you don't figure out how to pay the journalists, you won't be reading the content online for free for very long. News (the actual content) is a classic public goods problem in economics. It's non-rival, and its excludability depends on technology. When technology improved (the net), the fair use doctrines set up for the print age probably preclude a lot of the exclusion capability that newspapers derived their profits from. That is, newspapers could be profitable in print and network TV, because even though the limited delivery vehicles for news were subject to fair use law (other agencies could pick up and re-report news that the initial reporter might have gathered at great expense), the cost of delivery was still limited enough to keep the general news syndicate system profitable (note also that things like the AP were/are essentially means of news agencies dividing up markets and preventing too much competition). With the internet though, delivery costs are much lower and the fair use doctrines as the exist (and I'm not suggesting we necessarily change them, that'd open up lots of cans of worms), make it much easier to re-report gathered news without any recompense. I think that's the fundamental problem, and simply moving everything to the internet doesn't solve it. Because I can get the essentials from a NY Times story, for example, by reading the essentials of it, plus commentary, at 100 different sites every day. None of which pay a penny to the NY Times for collecting the news in the first place. So I think it's a real problem.
All of NYTimes' original content, as a whole, is worth visiting their WWW site. Whether you can get an article here or there on some blog isn't hurting that. http://finance.yahoo.com/q/ks?s=NYT Operating margin 8% Revenue $2.95B Gross Profit $1.63B Operating Cash Flow $250M That's with newspaper sales down and newspapers folding all over the place. Like I said, they figured it out
Sorry Denny, but the NY Times is the worst example you could give. The Times is a nationally syndicated newspaper, with readers all around the country. The Oregonian, for example, is only read in Oregon, and has very little hope of generating income from the internet. But even the Oregonian is a bad example, because it's the largest paper in Oregon, has very little competition for readers.
The oregonian doesn't have to pay the salary level or the numbers of staff that the NYTimes does. This paper seems to be in great shape: http://www.mauinews.com/ And a nice WWW site business.
Those NYTimes numbers are misleading. They aren't doing any better than any other paper, they just have deeper pockets at this point. They've cut salaries and staff and I think they even sold their building or leased it as well. They've tried at least twice to do and Insider type of paid content only to open it back up to the public. So they aren't bucking any trends and haven't discovered any magic bullets.
I agree with the prior poster. Every evidence is that the NY Times is going down the same craphole as the others, they just are starting at the top of the slide instead of the bottom. They've got $50 million in cash and $1 billion in debt. Denny is going to really scream when the taxpayers bail out the NY Times. barfo
Seriously. Obama is already spending so much money. Just use the tax payer money to buy the Bulls, and bring in all the great NBA talent. Then give Lebron James an endorsement with the NASA or something to make up for his new MLE contract.
The Q4 numbers for the NY Times also come on a presidential election cycle, which tends to the best of times for a paper. Moreover, they really obvious part is they're getting there by dramatically cutting production of actual news. My guess would be that, as far as actual local news production, we will see several things. After thinking it out, I'm not sure there's really much of a problem: * For local news, most cities of even moderate size seem to be able to sustain weekly or semi-weekly papers (the Carmel Current here in my home town, the DC Examiner in the DC Area, just to name a couple examples. These outlets tend to report more on local interest stuff anyway, and you probably don't need a daily paper telling you what stupid shit the Mayor of Carmel is up to. * You've also got local television news serving similar functions, and that doesn't seem to be about to go away anytime soon (though my understanding is it's largely unprofitable and an FCC requirement). * And you've got the possibility for independent reporting (via blogs, etc) to become more profitable. So I see things going on to prevent "the collapse of civilization", but I don't see the subscriber model working.
