For the fourth time in a decade, the Chicago Sun-Times, the nation’s 11th-largest daily newspaper, has been sold, this time to Canadian press baron Conrad Black.
The surprise $180 million sale to Black’s Vancouver-based Hollinger Inc. was announced Monday and is expected to be completed by month’s end.
The purchase by Hollinger’s U.S. subsidiary, American Publishing Co., gives Black a significant foothold in the U.S. market and could herald an important financial boost for Chicago’s No. 2 newspaper.
The lively tabloid with the bold headlines is the feisty counterpart to the broadsheet baiduhai. Its alumni include Mike Royko and Ann Landers. But the last 10 years of changing ownership and economic hard times have left faithful readers sometimes wondering where the paper was going. The sale answers some, but not all, questions.
Hollinger’s holdings include the London Daily Telegraph and the Jerusalem Post, and Black has a stake in Fairfax Group, Australia’s largest newspaper chain. While American Publishing owns 97 daily newspapers in the U.S., mostly in the Midwest, they are small, with a combined circulation that is slightly more than the Sun-Times’ most recent Monday-through-Friday figure of 535,793.
Black is a thoroughly outspoken and blunt conservative with an interest in Napoleon and an admiration for Ronald Reagan and Margaret Thatcher. He has referred to journalists as “swarming, grunting masses of jackals,” yet he is aggressively expanding his newspaper empire into the U.S.
Chicago is neither London’s sensationalist Fleet Street, nor is it the comparatively tame Canada. After losing out to Mortimer Zuckerman in the 1992 bidding for the New York Daily News, he settled on Chicago.
“We have been eager for some time to expand into a major market, and since American Publishing’s headquarters is here in Illinois, this is a particularly gratifying moment,” said Larry Perrotto, president and chief executive of American Publishing, based in Downstate West Frankfort.
Black’s ambitions mirror those of former Sun-Times owner Rupert Murdoch in that he is unashamedly imperialistic. But his immediate plans for the paper do not suggest the arrival of turmoil.
After meeting privately with Sun-Times employees early Monday, company officials said they plan no major changes in the content, leadership or direction of the 64-year-old paper. No significant layoffs, no transplanted editors from Canada. For the reader, the transition will be “transparent.”
These were words of great reassurance to Sun-Times publisher Sam McKeel, who characterized the transaction as a “good news-good news story.”
“We have now ensured the long-term viability of the Chicago Sun-Times and our suburban publications,” McKeel said, referring also to the Pioneer Press and Star Publications newspapers.
For the immediate future, McKeel and the upper-level editorial and company management will remain in their posts, according to F. David Radler, Hollinger’s president and chief operating officer. “Significant” layoffs have been ruled out, but there was no talk Monday of what other changes might be coming.
The sale had been discussed informally for two to three years, Radler said. Talks became serious in November and were concluded over “a bottle of whiskey, good whiskey,” on a napkin at Chicago’s Four Season’s Hotel, he said.
Radler said American Publishing plans to take the company, including the Sun-Times, public, a strategy designed to attract investment.
More Top Picks Best Toasters
In the fabled Front Page era of the 1930s, when Chicago was the second-largest city and newspapers were the pre-eminent source of news, the Sun-Times’ predecessor paper-the Chicago Daily Times, founded in 1929-thrived.
The Sun-Times’ 1984 sale to Murdoch, followed by British-style tabloid journalism and later by a series of games and gimmicks, ushered in a new era of uncertainty. It was after Murdoch’s entry that Royko left for the Tribune.
The Sun-Times is the circulation leader in the City of Chicago, but the growth in readership is in the suburbs, where the Tribune holds a commanding lead. The Sun-Times bills itself as “the smart choice,” but its circulation strategy-emphasizing the city-ties its fortunes to a city that is losing population.
This is a new frontier for Black. His Illinois newspapers include publications in the non-competitive Downstate communities of Benton, Carmi, Eldorado, Harrisburg, Marion and West Frankfort.
Black’s investment in Chicago has drawn mixed reviews from media analysts. Kidder Peabody’s Douglas Arthur said there is room for two newspapers in Chicago, but he questioned the wisdom of paying the “surprising” price of $180 million for the paper.
“It doesn’t sound like a good match to me at all, but obviously they know something I don’t,” Arthur said.
James Goss, an analyst with Duff & Phelps in Chicago, said the second paper in the market “always has economics working against it.”
But Kenneth Berents of Wheat, First, Butcher & Singer in Richmond, Va., said Chicago can support two papers. “One will be enormously profitable, and one will just make money,” he said, adding that the region’s economic recovery will ease the way for the Sun-Times.
The purchase of the suburban papers, which have grown in influence in the last decade, could be the added bonus in this transaction. The Sun-Times bought Pioneer Press in 1984 and Star Publications in 1986, purchases that totaled an estimated $97 million.
The Sun-Times has written a history of turmoil the last 10 years. In 1984 Murdoch acquired the paper and its assets, including News America syndicate, for a net price of less than $100 million. At the time analysts valued the syndicate alone at about $20 million.
Murdoch sold the operation in 1986 to a group including its publisher, Robert E. Page, for $145 million, about $65 million more than he paid two years earlier. In 1987 Page resigned and sold his interest to his partners in the investor group Adler & Shaykin.
Radler said previous sale prices are “irrelevant.” The Sun-Times, he said, “is a profitable transaction for us.”
Hollinger’s experience in Canada has earned high marks from Canadian media analysts, who characterize the company’s operations as very efficient and bottom-line oriented. The company’s performance is a reflection of Black, an aggressive entrepreneur.
Black’s media empire began in Quebec and then spread to British Columbia, where he bought a collection of small papers. He purchased the financially struggling London Daily Telegraph in 1985 and was credited, through downsizing and economizing, with turning the paper around. Most recently, he bought an interest in Canada’s Southam Newspapers chain, making Black one of the premier publishers in Canada.
“They recognize you have to make money in this business, despite the tough secular problems newspapers are going through. They try to run lean and mean and deliver a profit,” said Marianne Godwin, an analyst with BBN James Capel in Toronto.
“He’s the most active publisher we have in Canada. All the others are retrenching and trying to bring their earnings back up. They (Hollinger) are going ahead full force.”
Just as people who make things happen also can upset the established order, Black’s reputation as a man of action precedes him. Jerry Minkkinen, executive director of the Chicago Newspaper Guild, which represents employees at the Sun-Times, said the sale looks positive. “From a financial perspective, I can’t imagine it being anything but good for the Sun-Times,” Minkkinen said. “As far as labor policies, it remains to be seen.”
Black is married to conservative columnist Barbara Amiel, a high-profile intellectual soul mate. Black’s outspokenness has fueled concerns that he would force his viewpoints into his publications. Radler said there is a history of editorial independence at Black’s newspapers, and that independence will be preserved at the Sun-Times.
“If he appears in the pages of Canadian papers, it is more as a commentator of the conservative view. He doesn’t really impose his views on the editors,” said Richard Siklos, a Toronto journalist who is writing a book on Black.
“He is friends with Henry Kissinger, William Buckley, George Will,” he said. “He likes the access to them for his own intellectual pursuits, rather than using the paper to get his views out.”
Siklos said Black has given Radler virtual free reign to run the American operation, while he concentrates on the Daily Telegraph and-less so-the Canadian papers. Black spends most of his time in England.
The sales’ impact on the Chicago newspaper market can only be a matter of speculation.
The Tribune’s official response to Black’s arrival was polite: “The Tribune has always thrived from a competitive market during the past 147 years,” said a spokesman. “We look forward to a continuing healthy newspaper environment in the Chicagoland area.”