As New Board Takes Over, CEO Freidheim Leaving Sun-Times Media Group

By: Mark Fitzgerald Sun-Times Media Group President and CEO Cyrus Freidheim -- the turnaround expert who battled not only the headwinds of a faltering newspaper industry but the damage wrought by internal corruption -- said Thursday he is leaving at the end of the month.

Freidheim's resignation comes as a new board of directors is seated, following a shareholders revolt engineered by a hedge fund that earlier this month ousted all directors but one.

No replacement has been named. One of the new directors seated in the vote, former Dallas Morning News Jeremy Halbreich, was reported by the Frontburner blog in Dallas as saying he was not interested in heading the Chicago Sun-Times parent.

Freidheim was at the helm of Sun-Times Media Group during its most tumultuous period. The company was reeling from the revelations that former Chairman Conrad Black and other top executives had looted the company through phony fees and contracts as they furiously sold off newspapers. When one of those executives, former Sun-Times Publisher David Radler, was removed, the paper discovered massive circulation fraud that required refunds to advertisers in the millions of dollars. Black is in federal prison serving a sentence for fraud and obstruction of justice. Radler, who testified in Black's prosecution, was recently released from prison.

At Sun-Times Media Group, Freidheim chopped away at expenses by outsourcing, laying off employees and folding newspapers. The paper wrung out $50 million in expenses in the first half of 2008, and committed to reducing costs another $50 million in the first half of this year.

In an interview in Thursday's Sun-Times, Freidheim said the company needs to shake out $75 million in more cuts for it to break even.

In the past year, Sun-Times Media Group stock fell precipitously, to the point it was delisted from the New York Stock Exchange for failing to sustain a price of at least $1 a share. It is now traded on the Over-The-Counter Pink Sheets electronic platform, where Wednesday it closed at 7 1/2 cents a share.

Sun-Times Media Group management was criticized for not moving fast enough to right the chain. A shareholders revolt engineered by the hedge fund Davidson Kempner Capital Partners amassed sufficient votes to replace all the directors but one with its nominees.

In a statement Thursday, Freidheim said of the new board, "It is time for me to move on."

In a statement, the one board member who was not replaced, Robert Poile, the single largest individual shareholder said: "We regret Cyrus is leaving at this time, but wish him well. He dedicated two very difficult years to maintaining the viability of Sun-Times Media Group and its products and continuing its market leadership throughout the Chicago area. We have a great team and look forward to guiding the Company through truly tough challenges to a brighter future. The ride will be rough, but it's worth the effort."

Freidheim, 73, is a former Booz Allen Hamilton management consultant, who had his greatest corporate success turning around Chiquita Brands, the then-ailing banana marketer.