Tronc in deal to acquire Chicago Sun-Times – Marketing/media News

on May16

15 May 2017 | 7:00 pm

Chicago Tribune parent Tronc is seeking to purchase archrival Chicago Sun-Times, perhaps finally combining the city’s two newspapers if they can win Justice Department approval.

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Tronc CEO Justin Dearborn said in an interview that he thinks the Justice Department “will clear us to close the transaction,” assuming no other buyers come forward within the next 15 days. Dearborn declined to say in an interview how much the company offered for its competitor.

“I know there will be a lot of emotion around it being the Sun-Times” that we’re buying, Dearborn said, explaining that keeping the two newsrooms separate will be essential in winning over readers as Tronc uses this purchase to expand its footprint in an ongoing acquisition effort.

While the Justice Department’s antitrust division said it has opened an investigation into the proposal, it didn’t dispute the process as laid out by the two Chicago newspaper companies. “The antitrust division will closely monitor the sale process for the Chicago Sun-Times, including whether any other viable buyer expresses interest,” the Justice Department said in a statement.

The Sun-Times and Tribune started talking earlier this year after Wrapports approached Tronc about doing a deal, said Tim Knight, president of TroncX, the company’s digital division. The two companies have increasingly come together over the past decade as the Tribune took over printing and distribution for the smaller Sun-Times and also bought the suburban newspaper chain once owned by the Sun-Times. “This is a logical extension of the conversations that we have been having over the years,” Knight said in an interview.

Sun-Times parent Wrapports said in a statement that it agreed to enter the discussions, after exhausting local alternatives and those outside the city, as the best means to keep operating and remain as a separate newspaper voice in the Chicago. In a separate statement, Tronc said it argued to the Justice Department that the acquisition is the “best way to preserve multiple editorial voices for the greater Chicago area.”

Wrapports will publish an announcement tomorrow, at the Justice Department’s request, of its plan to sell the Sun-Times, and if no other bidder comes forward, Tronc is expected to close the transaction as early as June 1.

MICHAEL FERRO

Newspapers across the country have struggled to make money in recent years as advertising revenue marched downward with the migration of readers and advertisers to digital alternatives like Facebook. Despite traditional newspapers’ efforts to spool up digital channels, new media competitors have been winning the battle for advertiser dollars, traditionally the main source of income for newspapers.

Wrapports hasn’t been profitable recently, and Tronc also reported a net loss for the first quarter of this year.

Both parent company names were creations of a common influential owner, Michael Ferro, who joined with wealthy Chicagoans in 2011 to buy the Sun-Times assets. Last year, he backed out of his chairman and ownership roles at Wrapports to band with some of the same investors in buying a minority stake in Tronc predecessor Tribune Publishing. That move catapulted him into the chairman role at the larger newspaper chain, which also owns the Los Angeles Times and Baltimore Sun, among other dailies.

LETTER OF INTENT

Editors, reporters and columnists at the two Chicago newspapers have battled each other for years, even as some of them, including Sun-Times Publisher and Editor-in-Chief Jim Kirk, sometimes switched teams. The Chicago Tribune, which gave itself the tagline “World’s Greatest Newspaper,” was founded in 1847, just a few years after a predecessor the Sun-Times called the Chicago Daily Journal launched in 1844.

Kirk said he expects to stay on at the Sun-Times. “I love the Sun-Times—I hope to continue being with it,” he said. He said he didn’t know what the structure of a single company with two newsrooms and two editorial voices would ultimately look like in terms of management, headcount or location because Tronc and Wrapports haven’t ironed out those details. They have been mainly focused on winning over Justice Department officials.

He declined to comment on any financial related to the deal or the Sun-Times. “There’s still a lot of things we have go through in terms of negotiations,” Kirk said. Tronc said it entered into a non-binding letter of intent to acquire Wrapports as well as its other media assets, including Wrapports’ minority ownership in digital content network business Aggrego and the alternative weekly Chicago Reader.

The structure for the two newspapers will not look like a joint operation venture, a set-up that some rival newspapers used in years past to share costs without blending their newsrooms. Knight didn’t provide details on what exactly the infrastructure would look like, what costs would be shared, and whether there would be new management. “We are working through all of that right now,” Knight said. “The Chicago Sun-Times will continue to be operated as an independent newsroom and that’s where there’s benefits for the readers and citizens of Chicago.”

If the two papers win Justice Department approval, Dearborn said he expects the transaction to close within 30 days. The two media companies voluntarily informed Justice’s antitrust division about the “possibility of a transaction and have been working closely with officials to insure a potential combination protects the public interests,” Wrapports said in its statement.

Last year, the Justice Department blocked an attempt by Tribune Publishing, as Tronc was then called, to purchase the parent of the Orange County Register and the Riverside Press-Enterprise in Southern California, saying the $56 million acquisition of the bankrupt Freedom Communications would eliminate competition and injure readers and advertisers. But that antitrust lawsuit was filed under President Barack​ Obama’s administration. President Donald Trump’s administration has demonstrated, for instance with recent regulatory changes at the Federal Communications Commission, that it’s more likely to be sympathetic to arguments that 21st- century digital alternatives will maintain competition.

Tronc’s biggest trouble generally, though not necessarily with respect to this transaction, may yet come from its battle with former Vice Chairman Patrick Soon-Shiong. The second-biggest Tronc shareholder, who was ousted from the company’s board this spring, Soon-Shiong has suggested he might sue over what he alleged was preferential Tronc treatment of Ferro and his co-investors. Tronc’s biggest shareholder is Ferro.



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