STMG Holdings LLC’s Statement Regarding Purchase of Sun-Times Media Group Assets

CHICAGO, Sept. 16 /PRNewswire/ — We are disappointed to learn that the Chicago Sun-Times unit of the Chicago Newspaper Guild has voted to reject amendments to their collective bargaining agreement that were proposed by Sun-Times Media Group (“STMG”). We believe that the seniority and work rule changes and cost saving measures proposed by the company’s current management are vital to save the Sun-Times News Group Newspapers and Web sites, including the Chicago Sun-Times.

Although we understand and respect the Chicago Newspaper Guild’s difficult decision, the investors of STMG Holdings have determined, after five months of intensive review, that any successful business plan would require drastic changes to the current business model, including the cost-savings and flexibility sought through the amendments current management is seeking from the Guild and all its other unions. Without these changes, our investors, led by Jim Tyree, would not be able to move forward with their plan to absorb significant projected initial losses and invest more than $25 million in capital to create the self-sustaining enterprise that they envision.

STMG Holdings continues to believe that the Sun-Times News Group is a high-quality organization that has great potential–but it cannot survive without implementing an aggressive restructuring plan. To save the Sun-Times and reposition it as a leader in a challenged industry, there needs to be a drastic change in the company’s strategic and operating business model. We have worked hard with management to develop a model that we believe can be successful, if it has the support of all constituencies.

We recognize that in order for this to work, all constituencies need to participate and consider the following realities:

• The current business model is broken and is no longer effective. STMG is losing significant amounts of money each week and has been for an extended period of time.
• With its bankruptcy filing in March, the employees effectively lost the right to full payment of their severance and their defined benefit plans.
• STMG Holdings’ goal is to save jobs and a great Chicago institution. Our bid includes financial and operational requirements intended to preserve jobs and avoid liquidation.
• The status quo is not an option. STMG Holdings intends to stabilize the Sun-Times News Group’s revenue after years of significant decline. It plans to invest the necessary capital to transform the company into a flexible, dynamic institution that can adapt to the changing media landscape. Through this process, it hopes that employees will be a part of a secure, leading media group for years to come.
• The new company needs greater flexibility to innovate and a substantial reduction in cost structure in order to succeed. That, unfortunately, means that all employees — union and non-union — need to make concessions, including the elimination of inflexible work rules to ensure that the company can survive in the long term. We are certain that this industry will continue to undergo dramatic change in the years to come and we need to be prepared to transform the organization accordingly.
• Flexibility will allow us to build an organization that’s effective for all its constituents. Together, we can create:
  • A more cohesive and effective vehicle for advertisers
  • The best, highest quality, local content that’s informative and valued by readers
  • Secure and stable jobs for hundreds of employees
  • A successful Chicago institution that has been an important part of our community and a model for our industry
  • Opportunities for investors to participate in the preservation of a once-great business
    

We understand that everyone must make a very difficult decision. The legacy organization that Sun-Times Media Group once was, is no longer viable. What worked in the past, will not work any longer. The proposal made by management could give the business a fighting chance to become successful once more. Without passage of that proposal, our plan simply won’t work.

We urge the Chicago Sun-Times unit of the Chicago Newspaper Guild to reconsider their vote, approve management’s proposal, and give our plan a chance.

SOURCE STMG Holdings LLC