Sun-Times Media Group To Cut Operating Costs By $50 Million

By: E&P Staff Three days after its second-biggest shareholder demanded a plan to cut costs more, Sun-Times Media Group (STMG) said Friday its board of directors had approved management's plan to shrink operating costs by $50 million in the first half of 2008.

And bowing partly to demands by the stockholder, K Capital Partners LLC, that its top executives and board directors take their 2008 compensation entirely in cash rather than stock, STMG said the top executives, including Chairman and CEO Cyrus F. Freidheim Jr., "have agreed to take a portion of their 2008 compensation in shares of Sun-Times Media Group Class A common stock."

STMG also said the board "elected to receive 100% of their 2008 annual retainer fees in stock."

"Management needs to set an example and demonstrate the confidence it has in the future of Sun-Times Media Group," Freidheim said in a statement.

The $50 million operating cost reduction includes $10 million in savings to be realized by two actions the publisher of the Chicago Sun-Times and dozens of other Chicago-area papers has already undertaken: Contracting its circulation operations to the rival Chicago Tribune, and combining the suburban Daily Southtown and twice-weekly Star newspapers.

STMG said it would provide additional details of where the savings is coming as the measures are implemented.

"The future of the Company rests on management's ability to size anticipated costs with anticipated revenues to achieve profitable operations," Freidheim said.

Freidheim said he expects the group's businesses to "survive and prosper" through "appropriate investments to drive our key strategic initiatives, including the expansion of our digital services platforms."