‘Sun-Times’ Reaches $20 Million Settlement in Circ Fraud Lawsuits

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By: E&P Staff

Hollinger International Inc. said Friday afternoon that it will settle the class action lawsuits related to the Chicago Sun-Times circulation scandal by paying the complaining advertisers $7.7 million in cash plus up to $7.3 million in free or discounted advertising. Hollinger said it would also pay the legal costs of the plaintiffs up to a total of $5.575 million.

The settlement would resolve nearly all the lawsuits that followed the newspaper’s revelation in 2003 that it had been overstating its circulation for eight years, and by as much as 50,000 copies a day. Circulation overstatements were also found at two other Hollinger papers.

Attorneys for the Sun-Times and the advertisers have filed a joint motion to approve the tentative settlement, Hollinger said. The Chicago judge overseeing the lawsuit has “preliminarily approved” the settlement, which will be the subject of a fairness hearing in December 2005.

If approved as expected, the payout to advertisers would begin in early 2006.

Hollinger said the settlement was the result of a six-month mediation effort overseen by Abner J. Mikva, a retired judge and prominent Chicagoan appointed by the court.

As reported earlier, the Sun-Times reached settlements with about 400 of its largest advertisers after separate negotiations approved by the court. Hollinger said it settled with those advertisers — who accounted for approximately 58% of advertiser claims — for $10 million of cash and $6.8 million of advertising benefits “to advertisers continuing to advertise with the paper at specified levels.”

Hollinger said this latest settlement does not cover the claims of advertisers in four other, separate lawsuits or the claims of four advertisers with whom the Sun-Times is still negotiating. The combined spending of those advertisers during the time of the circulation fraud represented approximately 3.5% of Sun-Times advertising, Hollinger said.

“Since our voluntary reporting of the problem, the Chicago Sun-Times has been committed to make fair and equitable restitution to our advertisers,” Sun-Times Publisher John Cruickshank said in a statement. “The class action settlement is consistent with the settlement principles announced in connection with our major advertiser settlement program and is intended to treat all advertisers fairly.”

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