Chicago Sun-Times is sold to investor group, ending Tronc’s bid
An investor group led by the Chicago Federation of Labor and a former Chicago alderman has bought the Chicago Sun-Times, keeping the city’s No. 2 paper in business and ending a bid by Tronc Inc. — which owns the Chicago Tribune and the Los Angeles Times — to acquire the Chicago Tribune’s longtime rival.
Wednesday’s sale of the Sun-Times by its owner, Wrapports, followed two months of negotiations, public pitches for bidders and close guidance from federal antitrust regulators. Sources familiar with the deal put the price tag at $1, or the cost of a single copy of the storied tabloid.
“We’ve closed,” said Edwin Eisendrath, the former alderman. “I’m very grateful to everyone who made it possible to save this independent news voice in Chicago.”
With the Sun-Times losing about $4.5 million a year, the purchase still could prove expensive for the new owners. Eisendrath said he would have more to say about his plans for the newspaper at a Thursday news conference.
In addition to union backing, Eisendrath’s group includes corporate turnaround specialist Bill Brandt and a handful of unnamed Chicago investors who pooled the required $11.2 million needed to fund the newspaper’s projected losses over the next 30 months, according to Brad Bulkley, a financial advisor to Wrapports in the sale.
“We were trying to maximize value, but an equally important objective was to keep the paper published,” Bulkley said Wednesday.
Chicago-based Tronc, which owns the Chicago Tribune, Los Angeles Times and seven other major newspapers, announced May 15 that it had entered into a nonbinding letter of intent to acquire Wrapports — whose properties include the Sun-Times and the Chicago Reader — for an undisclosed price. The Sun-Times is obligated by a $25-million annual printing and distribution contract with the Chicago Tribune through 2019.
Although Tronc pledged that the 69-year-old Sun-Times would remain an independent news operation, the Justice Department intervened, seeking to preserve competition through separate ownership.
Wrapports published notice of the proposed sale to Tronc and solicited competitive bidders May 16, posting in the Sun-Times that it was seeking a buyer “that will agree to publish the newspaper.” According to the terms of the deal, if no other “viable buyer” emerged within 15 days, the Sun-Times would be sold to Tronc.
At the behest of the Justice Department, the deadline was extended several times to accommodate potential buyers until Eisendrath’s group submitted its bid June 19.
“Tronc has always been committed to keeping the Sun-Times an independent media voice within the city of Chicago,” Tim Knight, president of TroncX, the digital division of Tronc, said in a statement. “We’re pleased to see that happen and we look forward to the new owners honoring our contractual agreement for printing and distribution services under the terms of our multi-year agreement. Tronc will move ahead to execute our growth strategy, leverage technology and increase the digital audience of our award winning journalistic brands.”
The Justice Department said that as a result of the sale to the investor group, it will close its investigation of Tronc’s possible acquisition of the Sun-Times.
Wrapports, a local investor group formerly headed by Tronc Chairman Michael Ferro, acquired the Sun-Times and 38 suburban newspapers for about $20 million in December 2011. The suburban papers were sold to the Tribune for $23.5 million in 2014.
Ferro became Tronc’s chairman and largest shareholder in February 2016. He since has added to his holdings and now owns 9.05 million shares, which represents a 27.7% stake in Tronc.
Last year, Ferro donated his 40% stake in Wrapports to the California Community Foundation to avoid conflicts of interest.
Other Wrapports owners include Chicago private equity executive John Canning and Morningstar founder and Executive Chairman Joe Mansueto, who each hold a stake of about 10%, according to a 2014 economic disclosure statement filed with the city.
The Harvard-educated Eisendrath served as alderman for Chicago’s affluent 43rd Ward from 1987 to 1993, when he resigned to become regional administrator for the U.S. Department of Housing and Urban Development.
In 2006, Eisendrath unsuccessfully challenged then-incumbent Gov. Rod Blagojevich in the Democratic gubernatorial primary. Eisendrath made an unsuccessful Democratic primary bid for Congress against Sidney Yates in 1990.
Eisendrath currently serves as managing partner of StrateSphere, an Ohio-based business development company.
Founded in 1948 by Marshall Field III, the Sun-Times has had a colorful history and a succession of owners over the years, including media baron Rupert Murdoch, who bought it in 1984. Murdoch was forced to sell the Sun-Times in 1986 after acquiring WFLD-Ch. 32 because of Federal Communications Commission cross-ownership restrictions.
In 2009, a group led by former Mesirow CEO Jim Tyree rescued the Sun-Times from bankruptcy, paying $5 million in cash and taking on $20 million in liabilities. Wrapports stepped up to buy the newspaper after Tyree’s death in 2011.
Channick writes for the Chicago Tribune.
