Chicago-based investment group purchases Sun-Times Media
By David Roeder Business Reporter December 21, 2011 8:13PM
Timothy P. Knight, new CEO of Sun-Times Media Holdings LLC, in his Chicago office, Wednesday, December 21, 2011. | John H. White~Chicago Sun-Times.
Updated: January 23, 2012 10:44AM
A local investment group is acquiring the media company that includes the Chicago Sun-Times, taking over from owners who purchased it out of bankruptcy under the direction of the late James Tyree.
The buyers include Michael Ferro Jr., chairman of Merrick Ventures LLC, a private equity firm that deals with technology companies. Ferro, who will serve as chairman, is bringing in media executive Timothy Knight to run the company as chief executive and as an investor.
Knight is a former publisher of Newsday, the newspaper that serves Long Island. Jeremy Halbreich, who was part of the Sun-Times investment group and was the company’s chairman and chief executive, is stepping down.
Financial terms were not disclosed, but a source said the company sold for more than $20 million. Principals in the deal confirmed other points of the transaction Wednesday and announced the new lineup of investors.
They include prominent investment bankers John Canning Jr., chairman of Madison Dearborn Partners LLC, and Michael Sacks, chief executive of Grosvenor Capital Management LP. Another member is William “Beau” Wrigley Jr., whose family formerly ran the Wrigley gum and candy company.
Knight, 46, said the new team blends experience with traditional media and a commitment to technology. The goal, he said, is to apply newspaper content to new platforms, and to craft ways to deliver an audience to advertisers.
“This isn’t a newspaper acquisition. This is the creation of a technologically-enabled content company,” Knight said. “The platform, the brands that the Sun-Times has across Chicagoland are outstanding and unmatched.”
Documents for the sale were signed Wednesday, and it is expected to close in a couple of days.
Knight said that while the printed paper will remain important “for the foreseeable future,” he will concentrate on using technology to connect readers to the local content, especially in the company’s network of suburban publications.
Ferro is a well-known apostle of the power of technology. He is best known for founding a business software company, Click Commerce Inc., and selling it in 2006 for $292 million.
He has assembled a partnership notable for its deep pockets and its connections to every corner of Chicago business. Among the investors, although not members of the board that will oversee Sun-Times properties, are: Joe Mansueto, chairman of Morningstar Inc.; Miles White, chairman of Abbott Laboratories; mutual fund manager David Herro; and Bruce Rauner, principal of the private equity firm GTCR LLC.
Sun-Times Media Holdings LLC, the company being purchased, includes the Sun-Times and nearly 40 titles that cover suburban Chicago, among them the SouthtownStar, Lake County News-Sun, the Herald-News of Joliet, the Beacon-News of Aurora, the Post-Tribune of Northwest Indiana, the Courier-News of Elgin, the Naperville Sun and the Pioneer Press chain of weeklies.
A Tyree-led partnership acquired the company out of bankruptcy for $5 million in 2009, assuring its survival when it was running out of cash. The partnership also put additional cash into the company for operations.
Since that sale, managers have cut costs drastically, much of it by closing the Sun-Times printing plant and hiring Tribune Co., owner of the Chicago Tribune, to print the paper. Deep cost cuts hit the newsrooms of all the papers as well, but are believed to have brought the company to slight profitability.
Earlier this month, Sun-Times Media rolled out a system to begin charging heavy users of its websites.
Those decisions were tough but important to the company’s evolution, Knight said. “I think the current management team has done a terrific job positioning it for long-term growth,” he said, adding that while he expects no drastic changes in company leadership or staffing levels, the partnership will invest in the operation where it sees fit.
Knight is an attorney and accountant who formerly worked for Tribune Co., where he co-founded its Classified Ventures unit, which runs Cars.com and Apartments.com.
Tyree, former chairman of Mesirow Financial Holdings, died suddenly last March after serving as ambassador and cheerleader for the publications. He argued that their business prospects could be turned around, even with the Internet eroding traditional advertising and readership, and that preserving journalism was an important civic goal.
Among the investors Tyree brought in, two have retained their stakes. They are W. Rockwell “Rocky” Wirtz, owner of the Chicago Blackhawks, and Richard Price, Tyree’s successor as Mesirow chairman.
Canning and Ferro have shown an interest in the news business. Both serve on the board of the nonprofit Chicago News Cooperative, which is staffed largely by former Chicago Tribune writers. The co-op uses grant money to fund public service reporting and provides stories to the New York Times.
Knight said the co-op will have no role in running the Sun-Times properties.
Another member of the Ferro partnership is Bruce Sagan, a real estate investor and publisher of the Hyde Park Herald. For many years, Sagan owned the Southtown Economist, the southwest suburban-based daily that survives as the SouthtownStar.
Also among the investors is Bradley Phillip Bell, president of Bell-Phillip Television Productions, which produces the soap opera “The Bold and the Beautiful.” He is the son of Chicago TV pioneer Lee Phillip Bell.
To accomplish the deal, the investors created a new company with the pun-laden name Wrapports LLC. Knight said the name refers to a mix of old media — the “wrapping” of a newspaper — with the rapport promised by new technology. He said the company will buy other ventures or launch its own tech startups.
Halbreich discussed his decision to step down in a memo issued to company workers late Wednesday. He said a main concern of his since coming to the company in 2009 has been to find someone qualified to take Sun-Times publications into the future. “I know this to be the case in Wrapports LLC and its group of investors with their strong and deep commitments to the Chicago community and to the value of local journalism,” Halbreich said.
He said he will continue working in the media business through his consulting company, Amercomm LLP.
Knight sent a greeting to employees. “We believe that if we combine the existing talent of Sun-Times Media with innovative technology, we can deliver even richer content to readers and we can deliver it in more creative and satisfying ways,” Knight wrote.