Published on Wednesday, 21 December 2011 10:10
For the second time in just over two years, the Sun-Times Media and its properties, including the Chicago Sun-Times, has been sold. An investment group led by Merrick Ventures LLC CEO Michael Ferro Jr. and Madison Dearborn Partners LLC Chairman John Canning Jr. have agreed to acquire the media company's assets for a little over $20 million up front, but no assumption of debt.
The name of the new investment group who is taking over ownership and responsibility of Sun-Times Media is Wrapports LLC.
The purchase, which was first unveiled by Crain's Chicago Business at the end of last month
, but quickly denied
by Sun-Times Media management, could become official as early as the end of this week or Monday of next week. The transaction will give the new investor group ownership of the 40 daily & weekly publications of Sun-Times Media, as well as its stable of web-based properties.
Ferro and Canning are also recent investors in the Chicago News Cooperative (CNC) -- the local, non-profit news organization which publishes news on its own website and for the New York Times. Canning is now the Chairman of the CNC Board of Directors, while Ferro sits on the Board. Both men are said to be investing in Sun-Times Media as individuals, not as representatives for Merrick Ventures, Madison Dearborn Partners, CNC, or any other business they are affiliated with.
The new owners plan on immediately replacing current Sun-Times Media Chairman/CEO Jeremy Halbreich. Timothy P. (Tim) Knight, a former Tribune Company executive, will take over as CEO. Knight, 46, is also the former Publisher of New York's Newsday, which he left in 2009 after five years with the paper. The former attorney and currently the CEO of online teaching website CraftEdu.com, now lives in suburban Lake Forest. Additionally, Tim Knight is an investor in the new company.
Michael Ferro, Jr. will take over as Charirman, replacing Halbreich, who also held that title. Halbreich will completely exit Sun-Times Media by the end of this week and focus on his personal media consulting company, Amercomm LLP.
In 2009, Jim Tyree, then the Chairman/CEO of Mesirow Financial, led a large group of investors to purchase the Chicago Sun-Times and all of its suburban newspapers, taking them out of the bankruptcy it had entered earlier that year and saving them from probable extinction. Tyree & his investment group bid $5 million dollars to gain the media company and assumed the bankrupt company's $20 million in liabilities. It has been a tumultuous two years for Sun-Times Media since this sale took place, though.
Circulation for the Chicago Sun-Times and its suburban sister newspapers has fallen between 5% and 8%, as has its revenue. The newspaper has had to make severe cuts in the last two years, jettisoning some of its most popular columnists, writers and contributors. Even some comic strips and the Sun-Times' TV section were cut out
. Hundreds of staffers (exact number unknown) have been let go from the company, as wave after wave of layoffs hit the company over the last two years. Many suburban newspapers stopped being published and the suburban real estate properties were placed up for sale. The company centralized all of its editorial and billing locations into one location. Sun-Times Media began outsourcing its delivery and printing to its rival, the Chicago Tribune. Earlier this month
, the Sun-Times websites erected a paywall, forcing frequent visitors to pay a monthly or annual fee to see its content. Most frustrating to readers was that the newspapers, the company's main product, became a fraction of their former size and a shadow of their former greatness.
Not connected to a downturn economy, Sun-Times Media was dealt possibly its biggest blow this past March, when Sun-Times Chairman and co-owner James Tyree unexpectedly passed away
Some of the investors in the James Tyree-led investor group will remain shareholders in the new Ferro/Canning-led investment group. Those who will remain connected to the new Sun-Times Media include Mesirow Financial CEO Richard Price and Chicago Blackhawks owner Rocky Wirtz.
Other notable investors in the new ownership group include:
- Michael Sacks, CEO of Grosvenor Capital Management LP,
- Bradley Phillip Bell, son of Chicago television legend Lee Phillip Bell and President of Bell-Phillip Television Productions,
- Bruce Sagan, Publisher of the Hyde Park Herald, real estate investor. and former owner of the Southtown Economist (now known as the SouthtownStar, a Sun-Times Media-owned newspaper),
- Joseph Mansueto, founder and CEO of Morningstar Inc., owner of the magazines Inc. and Fast Company, and co-owner of Time Out Chicago,
- William "Beau" Wrigley, of Chicago's famous Wrigley family, who used to operate the Wrigley gum and candy company, and at one time owned the Chicago Cubs and Wrigley Field.
The Chicago Sun-Times and its suburban papers are the second largest newspaper group in Chicago, just behind the Chicago Tribune and its properties. The combined ranking of the Sun-Times Media newspaper properties has the group at #12 out of all of the newspaper groups in America. (Rival Chicago Tribune ranks at #9.) As of September 30th, the Chicago Sun-Times' circulation was down to 400,506 for Sundays and 389,353 for weekdays.