Bankruptcy court oks Chicago Sun-Times media sale

by David Roeder, Chicago Sun-Times

There's a new kingpin of media in Chicago -- James Tyree, 51, chairman of Mesirow Financial and scheduled to be the next owner of the Chicago Sun-Times and most of the leading newspapers in the suburbs. Media kingpins aren't what they used to be, but Tyree said he's not content with modest expectations.

Tyree insists his venture into publishing will turn out better than Sam Zell's disastrous dalliance at Tribune Co. "For one thing, there's no debt on this company, and we're not going to put any debt on it," he said.

While friends have questioned his wisdom for investing in an industry under siege, Tyree said he's convinced there's still a business model to build around "high-quality, high-integrity and focused local content." As he takes control of the Sun-Times and 58 suburban newspaper titles plus corresponding Web sites, Tyree said he will stay out of decisions about coverage or editorial endorsements while concentrating on strategic and capital planning.

He represents the kind of reader old-line media need to cultivate. Tyree reads six papers a day online, mostly for free, and barely touches a printed copy until the weekend, when he has more time.

Tyree heads an investor group, STMG Holdings LLC, that emerged Thursday as the approved buyer of the Sun-Times holdings in U.S. Bankruptcy Court. His offer of $25 million, including the assumption of $20 million in liabilities, was approved by U.S. Bankruptcy Judge Christopher Sontchi.

Sontchi approved the sale of Sun-Times Media Group Inc. after Tyree's bid was the only one submitted in a bankruptcy auction. The bid was conditioned on agreements for pay cuts and other concessions from 16 unions. Fourteen have approved concession packages, and company officials said they expect approval from the other two in short order.

The sale is due to close in late October. Newsroom workers at the company's Post-Tribune newspaper in northwest Indiana are to vote today, and the other vote is due from a trade union representing six typographers.

The approval came with little time to spare. Sources said Sun-Times Media's cash reserves at the start of this week were $17.7 million, close to a $12 million threshold believed necessary for an orderly liquidation. Such a thin cushion -- the cash balance was $21.2 million at the end of August -- could have prompted the bankruptcy judge to order a liquidation and preserve money for creditors.

Tyree said the labor concessions, including a continuation of 15 percent pay reductions negotiated earlier this year with the Sun-Times' newsroom employees, were essential to bring the company to a break-even position. Concessions over seniority rights and work assignments in a union shop, he said, were needed for the company to easily supply content in print and digital forms, and in formats unimagined.

"Everybody thinks there will be some golden light that will be the answer" for the media business, he said. "I don't think that will be the case. There will be a lot of answers, and they will work differently for different operations. It's a portrait that's still being painted."

Tyree said he will disclose next week the names of his partners in the bid, but not the relative stakes that each owns. All are "fine, upstanding business leaders," he said, and the group has raised "plenty enough capital" to support a business turnaround.

He would not confirm or deny a report that W. Rockwell "Rocky" Wirtz, chairman of the Chicago Blackhawks and owner of property and liquor distribution interests, is part of the group.

The bid got an important boost Wednesday night when the Sun-Times' newsroom workers, represented by the Chicago Newspaper Guild, joined three other newsroom unions in endorsing the Tyree concessions by a vote of 89-29. The newsroom unions had rejected a prior company proposal Sept. 15, throwing the sale into jeopardy and suggesting the company's papers might not survive.

Sun-Times executives Thursday voiced relief and gratitude over the union agreements and deal approval. Jeremy Halbreich, Sun-Times Media Group chairman and interim CEO, said, "These new owners will work hard to establish a wonderful, long future for our publications and for our employees, and finally, all of the legacy issues and distractions that have followed and negatively affected our products will be put to rest."

The company resorted to bankruptcy because of a more than $600 million liability to the Internal Revenue Service left over from the business practices of former Sun-Times owner Conrad Black, now imprisoned. The IRS, the only significant creditor, approved the sale to Tyree.

article originally published at Chicago Sun-Times.

The media's job is to interest the public in the public interest. -John Dewey