Tronc makes expected move to buy Chicago Sun-Times as Department of Justice launches antitrust probe
Seeking to make virtue out of totally predictable and painful necessity, the parent of The Chicago Tribune is seeking to buy its longtime tabloid rival, The Chicago Sun-Times.
The two papers already have a joint printing and distribution agreement and will now enter into a merger discussion that would theoretically maintain them as separate entities.
Any such deal would need Justice Department approval. But the weakened state of the industry, and the coming of the more free market Trump administration, would likely make likely approval of a merger of two business whose revenues and paid circulation are declining.
The Department of Justice announced on Monday that it's launching an investigation into the possible acquisition of the Chicago Sun-Times by Tronc, a move that may raise antitrust concerns among the paper's newfound suitor.
In the middle of the deal is Michael Ferro, who was previously the primary owner of the Sun-Times via his Wrapports Holdings Inc. Then, he pulled off a head-turning investor coup at Tronc., or what he later renamed Tribune Publishing, after entering the company as a friendly investor but then booting the CEO who had courted him in the first place.
As a result, he had to exit Wrapports Holdings. But it was the very notion of a future combination of the paper that had led to his entry into the newspaper business and his involvement first with the Sun-Times, the The Tribune.
The Sun-Times will formally announce its intent to sell to a buyer that will keep it a separate newspaper. If nobody comes forward to offer a deal, which is most certainly the case, it would do a deal with Tronc.
“The acquisition is the latest in almost a decade of transactions between the owners of the Chicago Tribune and Chicago Sun-Times,” said Tim Knight, president of TroncX who also heads mergers and acquisitions for the company.
Knight was also hired as Sun-Times publisher by Ferro during his days at the tabloid. He left to work for the Newhouse chain in Ohio, then has returned to the Ferro fold at Tronc.
Ferro's arrival at the Sun-Times was a result of his involvement as a board member at the now defunct nonprofit Chicago News Cooperative, of which I was a part.
When the paper's owner died, Chicago News Cooperative chief James O'Shea, the former editor of the Los Angeles Times and managing editor of the Chicago Tribune, broached the notion of our board buying the Sun-Times.
Led by John Canning, a respected Chicago businessman who chaired the nonprofit's board, a group did buy it. As a result, Ferro, whose background was in tech, wound up running the paper and getting the newspaper bug.
"I think it's been obvious for a long time that these two were keeping each other alive," O'Shea said Monday. The printing contract gives the Tribune much-needed income---indeed the original deal was seen by some as very advantageous to the Tribune and was later renegotiated downward---and also helped keep the Sun-Times alive.
"It's an inevitable transaction," O'Shea said. "The only question is Justice Department approval."
From the day the investor group began planning to buy the Sun-Times, there was a notion that it could eventually position them to buy the Tribune, he said.
Now, the reverse would happen, though a key player in the original strategizing, Ferro, will still wind up a king of the hill, though now as head of Tronc.
"The idea in mind was always putting them into one, since it's hard to see how Chicago can support two daily newspapers," O'Shea said.
Alan Mutter, a San Francisco-based industry analyst and Sun-Times alumnus, says, "Sadly, it comes as no surprise that the Sun-Times is no longer viable as a standalone newspaper, given the relentless decade-plus decline that the newspaper, like other metro publications, has suffered in readership and revenues."
"In all likelihood, Tronc is the only buyer who can sustain the Sun-Times, owing to the ad sales, printing, circulation and digital publishing functions it already has in place."
"The big question is how much Tronc will invest in preserving a strong and independent editorial voice for the Sun-Times. Will there be a separate and truly competitive newsroom in city once famed for a rich tradition of journalistic jousting? Or, will Tribune content simply be channeled into the Sun-Times print and digital brands? "
"Even if tronc at this writing intends to field a fully competitive Sun-Times, will the deteriorating economics of metro newspaper publishing support the effort?"