The Chicago Sun-Times became the latest newspaper — and the second large Chicago daily — to write a Chapter-11 bankruptcy story for its parent. Sun-Times Media Group Inc. has joined five other major newspaper companies in filing for bankruptcy in recent months.
Sun-Times Media, which operates 59 papers, owes the Internal Revenue Service up to $608 million in back taxes and penalties from past business practices by its former controlling owner, Conrad Black, the Chicago Sun-Times reported. In fact, unlike many companies that file for bankruptcy, Sun-Times Media has no bank debt, the paper noted.
“Over the past several months, the company has taken several steps to reduce costs and strengthen our organization,” said Jeremy L. Halbreich, chairman and interim CEO of Sun-Times Media. “However, the significant downturn in the print advertising environment that has affected newspapers across the country has continued to severely impact us. Unfortunately, this deteriorating economic climate, coupled with a significant, pending IRS tax liability dating back to previous management, has led us to today’s difficult action.”
The company said that it expects the Chapter 11 process will be completed in 2009.
Back in December, cross-town rival Tribune Co. filed for Chapter 11, putting the parent of the Chicago Tribune, Los Angeles Times, Baltimore Sun, Hartford Courant, and Orlando Sentinel among other papers into bankruptcy . At the time, Tribune listed a whopping $13 billion of debt, one year after Sam Zell’s $8.2-billion purchase of the media giant. He did, however, keep two Tribune properties — the Chicago Cubs franchise and Wrigley Field — out of the petition.
In February, Philadelphia Newspapers L.L.C., which owns the Inquirer, the Philadelphia Daily News, and Philly.com, filed for Chapter 11. It is trying to restructure its $390 million of debt. Also in February, the Rocky Mountain News, Colorado’s oldest newspaper, and Journal Register Co., which publishes the New Haven Register and other newspapers, filed for Chapter 11. In January, the Minneapolis Star Tribune filed for bankruptcy. While most papers with parents in bankruptcy protection — including the Sun-Times — are still operating through a reorganization process, the Rock Mountain News recently ceased publication.