New CEO: Sale of 'Sun-Times' Group Unlikely

By: Mark Fitzgerald A sale of the Chicago Sun-Times and its parent Sun-Times Media Group (STMG) is not in the cards, the company's new CEO said Wednesday.

Cyrus Freidheim Jr. told E&P that he had a simple response for demands for a sale of the chain from minority shareholders such as Tweedy Browne, whose complaints about former Chairman Conrad Black's management led to his ouster and a scandal that revealed hundreds of millions had been bled out of the company.

"The response is, we can't," Freidheim said. "If you know somebody who's willing to take on the Canadian tax liability and all the uncertainty that it entails -- send 'em on over."

Later in the interview Freidheim added that the company is prepared to entertain offers but doesn't expect them.

"Every company is always for sale, (but) the difficulty for us is we've got some serious limitations," he said. "We've got, in effect, a huge poison pill, so I don't expect a sale near term."

STMG faces a potential tax bill, mostly in Canada but in the U.S. as well, of as much as $900 million. Much of that liability relates to the sales in 2000 of Canadian newspapers, and to the allegedly fraudulent non-compete payments made while Black was running the company then known as Hollinger International. Black and others face federal criminal trial in Chicago next March on racketeering, fraud, income tax and other charges.

Freidheim, 71, was named CEO Wednesday, succeeding Gordon A. Paris. He has been a STMG director since October 2005. He arrives at STMG with a reputation for turning around companies honed through nearly four decades as a management consultant at BoozAllenHamilton Inc., and as CEO of Chiquita Brands International from 2002 to 2004. Freidheim took the banana company out of bankruptcy.

When he took the reins of Chiquita, Freidheim said, he and the company's principal investors expected a quick sale. "We did get bids, but they came in too low," he said.

After the corporate scandals and the years of notorious penny-pinching at the Sun-Times and its approximately 100 sibling daily and community papers in the Chicago area, opportunities to cut further costs would appear to be limited.

"Partly that's true," he said. "Certainly the infrastructure has been starved, IT (information technology) has been staved, but there's still a lot to be done that is structural in nature. So it's not a matter of just cutting heads, but changing operations. I've been a consultant, as you know, for most of my life, and I never met an operation that could not be run more efficiently."

In recent months, the company has reduced head count by 260 in its news group, and closed two printing plants.

Freidheim said the company's newspapers and Web operations were strong. "Even the Sun-Times, which has been the most embattled part of this enterprise, has a tremendous brand," he said.

STMG has come in for recent criticism of the way it reports its financial results. At a recent conference call with analysts, for instance, Gene Fox of shareholders Cardinal Capital Management complained it was hard to get a picture of the company's performance.

Freidheim said the company would be transparent, but that he was more concerned about turning STMG around operationally. "There's nothing like operating performance to improve (shareholders') feelings about the company," he said.

He also warned analysts not to expect forecasts from him: "I happen to be anti-guidance, so that's just he way it is."