The Chicago Sun-Times has been sold to a group that includes Chicago unions and former local politician Edwin Eisendrath, it was confirmed Wednesday.
A source involved in the deal indicated that it would close by day's end after the paper's owners succumbed to pressure from the Justice Department's antitrust division. The department had made clear it would not approve an initial agreement to sell to Tronc, owner of the Chicago Tribune.
The Tribune is Chicago's leading newspaper, though it's circulation and revenues have plummeted amid the industry downturn of the past decade. The scrappy tabloid Sun-Times trails it markedly in a two-paper town.
Despite media fragmentation and the devouring of local ad revenues nationwide by Google and Facebook, the government felt that a sale to Tronc would be anti-competitive. It held that view despite the fact that the Sun-Times and Tribune are already in business, essentially, under a $25 million a year deal in which the Tribune prints and distributes the Sun-Times.
The owners of the Sun-Times concluded that despite their frustration with the government position, and preference to sell to Tronc, it was best to sell to the Eisendrath group for what amounts to $1 and the assumption of costs in any future shutdown.
Those costs of shutting down the paper are somewhere in the area of $8 million.
To prove its viability, the Eisendrath group, which includes unions and a restructuring consultant, Bill Brandt, had to raise $11.2 million. That's an amount that comprises the potential losses of the paper in the next two and a half years, according to one source familiar with the deal.
When it finally raised that amount, the die was essentially cast for any desired sale to Tronc. So the new group will pay $1 for the paper as the current owners take a financial bath but at least avoid the costs of possibly shutting down the paper.
But raising the $11.2 million is quite separate from the question of what the group will be able to invest in the paper. It will still need substantial sums if it desires to improve technology, editorial and business-side quality.
Further, there is the question of long-term strategy and how a group with no past media experience can do what recent owners have been unable to pull off: getting sizable numbers of Chicagoans to spend money on the digital version of the paper.
There has been talk of a more "worker-friendly" product but it remains unclear what that would mean day to day in the paper's pages.
Further, union ownership could bring its own complications, especially if the paper's slide continues. Then, unions thrust into the role of management will need to make some tough decisions involve personnel, including union members.
The paper dates to 1948 and the merger of the Chicago Sun and the Chicago Daily Times. It was owned by the Field family until sold to Rupert Murdoch in 1984.
He then sold it in 1986 to a group including a former subordinate, Robert Page. Subsequent owners have included Conrad Black, the Canadian newspaper magnate (later turned British citizen) who would later served time in prison for diverting funds of his Hollinger International for the personal use of himself and allies.
The current group of local investors bought the paper not long after the sudden 2011 death of owner James Tyree, a Chicago businessman who had led the paper out of bankruptcy.
Tyree, 53, died during surgery at the University of Chicago medical center, prompting a wrongful death suit and a reported $10 million settlement.