Sun-Times Media reports $35.8 million 1Q loss, pursues sale
CHICAGO—Sun-Times Media Group Inc. said Thursday it had a dramatically wider first-quarter net loss of $35.8 million on continued steep declines in advertising revenue and circulation.
A sale could come soon for the troubled company. Chief Executive Cyrus Freidheim said the company has sent its financial books to "a large number of parties" who expressed interest in acquiring one or more of its businesses. He said the company will decide its next step after receiving formal responses from potential buyers late this month.
Sun-Times first announced plans in February to explore a potential sale or other strategic options.
Despite heavy cost cuts, Freidheim said the parent of the Chicago Sun-Times and smaller area newspapers was hurt again in the quarter by the weakened economy and the historic industrywide slump which has resulted from the mass defection of readers and advertisers to the Internet.
"We expect the secular move from print to the Internet to continue probably forever," Freidheim said on a conference call.
He said the company is on track to reach its goal of reducing operating costs by $50 million this year and will not stop there.
Chicago-based Sun-Times Media said it lost 44 cents per share, compared with a loss $4.8 million, or 6 cents per share, in the year-earlier period.
First-quarter advertising revenue dropped 12.6 percent from a year earlier and circulation revenue fell 8.4 percent. The company also had another $5.5 million in legal and related costs in the quarter, much of it for the ongoing appeals process involving former CEO Conrad Black and other Sun-Times executives.
Black is serving a 6 1/2-year prison sentence for swindling shareholders of the former Hollinger International media empire.
The company's fast-dwindling stock value dropped another 25 percent in Thursday trading, declining by 17 cents to 52 cents a share.
Freidheim said the stock is expected to be suspended next Wednesday from trading on the New York Stock Exchange and ultimately delisted for not meeting its requirements on share price and market capitalization, which now totals just $41.8 million. He said it will trade over the counter.
"We have done everything we think we can and should to improve the operation, to change the business model, change management, resize the cost structure, handle the legacy issues -- all of which we think have resulted in a significantly stronger company. The problem we face is a single one and a huge one," Freidheim said of the industrywide slump.
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On the Net:
http://www.thesuntimesgroup.com
(This version CORRECTS SUBS 1st graf to correct to 'Thursday' sted 'Wednesday.' )
