‘DEATH TAX’ CLAIMS STORIED TABLOID

By: Mark Fitzgerald

Chicago Defender Going On The Auction Block


The Chicago Defender, the storied tabloid that is one of only two surviving daily black newspapers in the nation, will be sold in a closed auction by the end of January.

Facing a mid-February deadline to pay estate taxes of $3 million following the 1997 death of Chairman and Publisher John Sengstacke, the board of directors of Sengstacke Enterprises Inc. decided to sell the Defender and its three weeklies, the Michigan Chronicle in Detroit, the New Pittsburgh Courier and the Tri State Defender in Memphis, Tenn.

Myiti Sengstacke said the auction decision followed the collapse of a recapitalization plan she had favored as a way to retain a family role in the paper, founded 94 years ago by her great-granduncle, Robert Sengstacke Abbott. The $10-million debt-financed recapitalization plan would have left the family with 49% of the company and given majority control to Don Barden, a Detroit businessman who got his start as the owner of the weekly Lorain County (Ohio) Times and now counts the Majestic Star casino in Gary, Ind., among his enterprises.

Barden’s company is one of three black-owned firms that have been invited to bid in the auction, which will be conducted by Duff & Phelps LLC. The other companies are PublicMediaWorks Inc., a group of Chicago-based investors, and Equal Access Media Inc., which is based in Houston.

A year ago, PublicMediaWorks offered $12.5 million in cash for the company, but its president, investment banker Kurt R. Cherry, now says it isn’t clear what bid his group may make.

‘It’s done nothing but deteriorate since that time,’ Cherry said in a telephone interview. ‘I couldn’t make a guesstimate on what we would pay for it.’

Begun as a weekly on Abbott’s kitchen table in 1905, the Defender’s reporting and editorializing on the differing social climates of the segregationist South and the industrialized North are credited with triggering the so-called Great Migration of African Americans out of Dixie in the years following World War I. In its special centennial issue Oct. 30, E&P named Abbott in its list of the 25 most influential newspaper people of the century.

At its peak, the Defender had a national circulation of 230,000. Now, in a city with nearly 1.1 million black people, it has a weekday circulation of 13,786 and a weekend circulation of 16,268, according to the most recent FAS-FAX report from the Audit Bureau of Circulations.

The family-owned company does not report financial results, but the Defender is believed to be losing money while the Michigan Chronicle is profitable. Only the Defender, which became a daily in 1956, and the Brooklyn-based New York Daily Challenge remain as black-oriented daily papers. Taking the Defender weekly is a frequently discussed option among industry observers. PublicMediaWork’s Cherry calls the decision ‘a close call’ and one his group would not make for at least six months, in the event it bids and is successful at the auction.

‘The Defender has a history and a place in Chicagoland that is unique,’ Cherry said. ‘But it kind of died on the vine. There’s no doubt it’s a turnaround situation.’ Phone calls to Barden’s Detroit headquarters rang unanswered Dec. 27. Principals of Equal Access Media could not be reached.

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Mark Fitzgerald ([email protected]) is editor at large for Editor & Publisher magazine.



(c) Copyright 1999, Editor & Publisher

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