Sun-Times files for bankruptcy
The rump of Conrad Black’s former newspaper empire, Sun-Times Media, filed for bankruptcy protection last week, citing the burden of paying the disgraced press baron’s legal fees as one of its financial woes.
Previously known as Hollinger International, the Chicago-based Sun-Times group once controlled a global network of papers—including Britain’s Daily and Sunday Telegraph—built up by Black, who controlled the business until he was caught plundering money from shareholders in 2003.
The company, which owns the Chicago Sun-Times and 58 UK papers, said it was struggling to cope with a slump in advertising on top of tax and legal liabilities dating back to previous management.
“The significant downturn in print advertising that has affected newspapers across the country has continued to severely impact us,” said chair Jeremy Halbreich.
“Unfortunately, this deteriorating economic climate, coupled with a significant pending tax liability dating back to previous management, has led to today’s difficult action.”
Sun-Times has been struggling to settle a $600-million dispute with tax authorities dating back to a period between 1996 and 2003 when Black served as chief executive. An indemnity clause guaranteeing that the company would protect its directors against legal action has also proved costly as Black and a clutch of senior executives were convicted of fraud and jailed in 2007.
A spokeswoman for Sun-Times said that as of September, the cost of defence fees for former executives had reached $117.9-million.
“We’re now a small newspaper company,” she said.
“That’s a lot of money for a small company.”
Sun-Times has unsuccessfully gone to court to escape the indemnities. Costs continue to mount as Black recently petitioned the supreme court in the hope of overturning his six-and-a-half-year prison sentence. Black’s appeal lawyer, Miguel Estrada, declined to comment.
Several major US newspapers have shut as commercial revenue collapses, including the Seattle Post-Intelligencer and Denver’s Rocky Mountain News.
The Chicago Tribune is also operating under bankruptcy protection as the owner, Sam Zell, struggles to renegotiate $13-billion of debts.
“They’re up against the elephant in the market in the Tribune,” said John Morton, an independent newspaper analyst.
“Second newspapers, in those places where they still exist, are having a tougher time in this downturn.”
According to its bankruptcy filing, Sun-Times has assets of $479-million and debt of $801-million. The company has been looking for buyers for its papers for more than a year. Its shares were delisted from the New York Stock Exchange last year after it failed to meet listing requirements.—