Sun-Times Media Group Performance 'Unacceptable,' CEO Says

By: Mark Fitzgerald Sun-Times Media Group's performance is "unacceptable," but top management is "dedicated to reversing the slide in circulation and advertising," President and CEO Cyrus F. Freidheim Jr. told the Chicago newspaper company's annual meeting Tuesday.

The brisk 35-minute meeting, in which stockholders asked no questions at all, contrasted with turbulent annual confrontations with shareholders in the final years of the Conrad Black era, when the company was known as Hollinger International Inc.

Freidheim portrayed a company that endured "a very difficult" 2006, with an operating loss that widened to $40 million from $10 million in 2005, that had a $1 billion reserve for tax problems with Canada and the U.S., and that was spending millions on lawyers for Black and three other former Hollinger executives, who are now on trial in Chicago on federal fraud charges relating to alleged looting of the company.

"We fully understand that our performance has been unacceptable," he said.

But Freidheim also noted that a recent tax settlement with Canada will allow STMG to draw down its reserve by $570 million in the second quarter of this year. Legal bills should also ease, aiding the balance sheet, he said. And the company has made its last payments to reimburse advertisers cheated by a massive circulation fraud at the flagship Chicago Sun-Times in the early 2000s, he noted.

Freidheim said a redesign at the flagship Chicago Sun-Times, reorganization of STMG's business units, the closing of two production plants, and a 10% reduction in staffing had put the company on a path towards financial health.

While touting improvements in its chain-wide Web sites, Freidheim said STMG's future depends on the performance of its newspapers. "Ninety-five percent of our revenues are still in the print media -- and therefore we live and die with print," he said.

Shareholders reelected eight directors: John F. Bard; Herbert A. Denton; Freidheim; John M. O'Brien; Gordon A. Paris; Graham W. Savage; Raymond G.H. Seitz; and Raymond S. Troubh.


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