Posted on 11/08/2006 5:14:00 PM PST by abb
CHICAGO The Sun-Times Media Group, publisher of the Chicago Sun-Times, is reporting a 34-point-9 (m) million dollar third-quarter loss because of declining advertising and circulation revenue. Sun-Times officials also say they have found that the grant dates on some stock option awards to executives and key employees from 1999-to-2002 were misdated.
It says the amounts resulting from options misdating do not appear to have had a material impact on financial results. But the company will determine whether the misdating will require the restatement of affected prior-year results.
The net third-quarter operating revenues declined 13 percent to 99-point-one (m) million dollars from 113-point-six (m) million dollars.
Shares in the company fell 10 cent to close at five-dollars, 74 cents on the New York Stock Exchange.
"There was a land of Publishers and Editors called the Newspaper Business... Here in this pretty world Journalism took its last bow... Here was the last ever to be seen of Reporters and their Enablers, of Anonymous Sources and of Stringers... Look for it only in books, for it is no more than a dream remembered. A Civilization Gone With the Wind..."
With apologies to Margaret Mitchell...
Sun-Times Media Group 3Q Loss as Big as It Had Warned
By E&P Staff
Published: November 08, 2006 6:20 PM ET
CHICAGO Back in October, the Sun-Times Media Group warned that its third-quarter financial results would be bad. After markets closed Wednesday evening, the publishing company of the Chicago Sun-Times reported results that were all they were advertised to be.
The company reported a third-quarter loss of $34 million, or $0.43 per share, compared with a year-ago loss of $9.1 million, or $0.10 a share.
The loss from continuing operations for the first nine months of the year was $41.3 million, or a loss of $0.48 per share, compared with a loss of $51.7 million, or a loss of $0.57 per share, the company said.
Total operating revenues for the third quarter were $99.1 million, down from $113.6 million in the year-ago period.
Losses were driven by depressed ad revenues, the company reported.
The Sun-Times News Group (STNG) operating segment, which produces all the company's operating revenues, was hurt by an "advertising performance (that) lagged the Chicago market in the third quarter largely due to weakness at the Chicago Sun-Times, as well as at publications in the southwest suburbs, including the Daily Southtown.
The company said its suburban Chicago papers "modestly improved their market share of print advertising revenue in the third quarter versus the year-ago period."
Advertising revenues in the third quarter were $76.4 million, down $12.5 million, or 14%, compared with the prior year period, the company said.
Circulation revenues in the third quarter were down 8% compared with the same period a year ago, reflecting lower single-copy sales and continued competitive discounting of home subscription rates, the group said.
Newsprint expense in the third quarter declined 12% to $15.1 million. Total newsprint consumption was down 22% due to lower circulation and page volumes, as well as planned reductions of page sizes of many of STNG's titles, the company said.
CEO Gordon A. Paris said the company had taken "significant steps" to improve its cost structure, including closing two printing plants.
"We are exploring ways to better leverage these brands to improve our profitability," Paris said in a statement. "In particular, with respect to the Chicago Sun-Times, we are analyzing alternatives to reposition and reenergize that property to more effectively meet the needs of our targeted print and online readers and advertisers."
The company, formerly known as Hollinger International and led for many years by Conrad Black, has come under recent pressure from shareholders who would like to see the chain sold.
Paris said the company is "actively assessing a broad array of options across the company and its assets."
E&P Staff (letters@editorandpublisher.com)
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Ping
They better put their election advertising revenue into a piggy bank then try to make it last until 2008.
How can this possibly happen to the official newspaper of the Gay Games?
http://www.chicagotribune.com/business/chi-0611090049nov09,0,7467396.story?coll=chi-business-hed
Sun-Times red ink, questions mounting
Advertisement
By James P. Miller
Tribune staff reporter
November 9, 2006
Sun-Times Media Group Inc. on Wednesday reported a painful third-quarter loss and disclosed that directors have found preliminary evidence the company misdated stock-option awards from 1999 through 2002.
For the quarter ended Sept. 30, the Chicago-based newspaper holding company had a net loss of $34.9 million, or 43 cents a share, a deficit more than three times deeper than the year-earlier period's loss of $9.1 million, or 10 cents a share.
Three weeks ago, the parent of the Chicago Sun-Times and other Chicago-area newspapers had warned investors the latest results would be crimped by an accelerating decline in advertising revenue.
They were. Paced by a 14.1 percent drop in ad revenue, to $76.4 million, Sun-Times Media's total revenue declined 12.8 percent, to $99.1 million.
The company blamed its softening advertising revenue primarily on "weakness at the Chicago Sun-Times, as well as at publications in the southwest suburbs, including the Daily Southtown."
The company has "taken significant steps to improve our cost structure and address the challenging market and competitive environment," said Chairman and Chief Executive Gordon Paris. "There is more work to do."
Three years ago, a wide-ranging scandal broke over the company, then known as Hollinger International Inc. That's when directors forced out CEO Conrad Black after an internal investigation found evidence that he and certain other top Hollinger officials had improperly pocketed millions of dollars that should have gone to the company.
In the wake of that discovery, which has spawned a number of civil lawsuits as well as criminal charges against Black and other former executives, the board tapped investment banker Paris to become the troubled company's new CEO.
On Wednesday, the company unveiled yet another unsettling financial discrepancy: Sun-Times Media appears to have become entangled in the scandal over misdating stock options. That issue has drawn scrutiny from regulators and the Justice Department, has resulted in the departure of executives at several firms and has involved more than 100 companies, with that list expected to grow.
Sun-Times Media said outside directors are reviewing stock-option awards to executives and key employees through 2003, when it stopped granting options. Preliminary results indicate that some awards were misdated between 1999 and 2002, the company said Wednesday.
To date, it said, directors think the amounts resulting from option misdating "do not have a material impact on the financial statements for the relevant periods."
Still, if any of the misdatings turn out to have been intentional, Sun-Times Media pointed out, it might have to restate the results from that period even if the change isn't material.
Paris disclosed several weeks ago that he intends to "transition out" of the top job at Sun-Times Media by year's end. His successor hasn't been named, but the company said Wednesday that it expects to announce that appointment "shortly."
Sun-Times Media reported its results after the stock market closed. During the regular New York Stock Exchange session, the company's shares shed 10 cents, to $5.74.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003380232
Sun-Times Media Group Eyes Changes to Stem Losses
Published: November 09, 2006 3:10 PM ET
CHICAGO Sun-Times Media Group Inc. is considering a complete overhaul of the Chicago Sun-Times amid a continuing steep decline in advertising and circulation revenue at the city's second-largest newspaper, its chief executive said Thursday.
Gordon Paris' comments on a conference call came a day after the company, which also publishes community newspapers around Chicago, reported a $34.9 million third-quarter loss.
Paris attributed the company's 14 percent decline in overall advertising revenues largely to weakness at the Sun-Times, the largest remaining asset in the former Hollinger International Inc. media empire. He said newspaper print advertising was down about 15 percent, worse than the struggling newspaper industry as a whole.
The CEO, who is stepping down from the post Dec. 29, told analysts the company needs to go beyond the "new media" initiatives and advertising sales reorganization plan that it has already put in place to try to stem the Sun-Times' decline.
"We have begun evaluating alternatives to reposition and re-energize the Sun-Times to address the challenging market and competitive environment," he said.
Paris declined to discuss specific options being reviewed but said general areas include content, demographic targeting, marketing and branding, circulation sales and distribution.
The company said last month it had begun looking at strategic alternatives as a faster-than-anticipated decline in the newspaper market adds to its losses.
Asked about a possible sale of the entire company, which includes the Post-Tribune of Merrillville, Ind., Chief Financial Officer Gregory Stoklosa said, "We view all options on the table."
The Sun-Times, like other newspapers, has been losing readers and advertisers to Internet competitors. As it undergoes additional audits required by the Audit Bureau of Circulations, the newspaper did not report circulation figures for the latest six months when the rest of the industry did last month.
Paris said its circulation problems have been compounded by strong competitive moves by the Chicago Tribune, including micro-zoning of advertisements and increased distribution of the Tribune's free tabloid RedEye, from 90,000 to 150,000 copies per day.
"The Tribune's actions have involved significant investments over a number of years, a time when the Sun-Times has had to confront historical disinvestment in the business and the damaging competitive impact of circulation issues as well as unfavorable advertising trends," he said.
He declined to provide details on Sun-Times Media's announcement Wednesday that directors have found preliminary evidence the company misdated stock-option awards from 1999 through 2002. If any misdating is found to have been intentional, the company said it could require the restatement of earlier results.
Paris became CEO in November 2003 following the forced ouster of ex-newspaper tycoon Conrad Black, who is set to go to trial in March on fraud and racketeering charges for allegedly plundering millions of dollars from Hollinger.
It has been a profitable three-year stint for Paris. The company disclosed in a regulatory filing Thursday that he will get $2.7 million in severance pay.
Paris told analysts that the company has spent $136 million on legal fees and expenses since mid-2003.
Shares in the company, trading at their lowest point in the past 52 weeks, fell 13 cents or 2.3 percent to $5.61 in mid-afternoon trading on the New York Stock Exchange.
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