Sun-Times Media posts $59.1 million 4Q loss as decline continues

CHICAGO -- Sun-Times Media Group Inc., parent of the Chicago Sun-Times and dozens of smaller newspapers in the metropolitan area, reported a widened fourth-quarter loss of $59.1 million today as tumbling advertising and circulation sent its revenues down 15 percent.

The company swung to a profit of $271.6 million for 2007 from a loss in 2006, but that reflected a $586.7 million benefit from a Canadian tax settlement. Its full-year operating loss was $140.2 million, more than triple the loss of a year earlier.

Earnings for the last three months of 2007 amounted to 73 cents per share and compared with a loss a year ago of $34.6 million or 43 cents per share.

Total fourth-quarter operating revenues were $93.3 million, down from $110.3 million in the fourth quarter of 2006. Advertising revenues dipped by $13.4 million or 15.7 percent to $72.3 million, while circulation revenues sank to $19 million from $22.3 million in the fourth quarter of 2006.

Sun-Times Media is in the midst of sweeping cuts aimed at reducing annual operating costs by $50 million by the end of June, including eliminating roughly one of every six union-covered newsroom jobs at its flagship paper. The quarterly results included $6 million in severance expenses.

CEO Cyrus Freidheim said the company has "taken the bold steps we believe we need to take to remain a viable competitor."

The cutbacks come under pressure from the company's biggest shareholders, who are unhappy with the steep decline in its stock. Sun-Times Media Group shares rose 14 cents to 82 cents a share in Tuesday trading before the earnings report was released but have lost 96 percent of their value since peaking at just above $20 in 2004.

"We feel as acutely sensitive about the stock price as any one of our investors," Freidheim said on a conference call. "And we want to reiterate, time and again: We are doing everything we can within our power to improve the shareholder value of this company."

The company launched a process to examine its strategic alternatives a month ago that most expect will lead to its sale, although its board of directors also is looking at other alternatives such as joint ventures or strategic partnerships.

"We will report as things occur with the strategic process that we have under way," Freidheim said without going into specifics.

Besides the newspaper industry's historic slump, Sun-Times Media executives blame much of the company's recent troubles on the legacy of past management when it was known as Hollinger International Inc. It has had to dig out from the aftermath of almost $200 million in legal fees and other liabilities related to former CEO Conrad Black and his longtime partner in the newspaper business, F. David Radler.

Black and Radler are both in prison for their roles in swindling Hollinger International shareholders out of millions of dollars.