Chicago Sun-Times buyout offer could be derailed – Marketing/media News

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22 June 2017 | 7:17 pm

Owners of the Chicago Sun-Times aren’t interested in a $1 bid for the newspaper from a group led by former Ald. Edwin Eisendrath and the Chicago Federation of Labor, according to sources close to sale talks.

The Sun-Times’ owners at parent Wrapports would reject that low-ball bid as it’s currently written because it includes provisions that would keep current owners on the hook for potential expenses in the future, the sources said.

Wrapports last month entered a nonbinding letter of intent to sell the Sun-Times, plus other assets including the Chicago Reader, to archrival Chicago Tribune parent Tronc. At the time, Wrapports said it couldn’t find any other potential bidders, but the Eisendrath group emerged when the Justice Department’s antitrust division required a public call for other offers.

Tronc has pledged as part of its offer to keep the papers’ newsrooms separate to preserve a second editorial voice in the third-largest U.S. city, but the antitrust division generally favors separate ownership of big papers in the same market. Last year, the division shot down Tronc’s effort to buy the Orange County Register. Tronc also owns the Los Angeles Times, as well as a number of other papers nationwide.

EISENDRATH’S TAKE

In an interview yesterday, Eisendrath declined to detail his group’s offer, but he said it met criteria set out by the Justice Department that he figured also met Wrapports’ requirements. He said he expected the deal was moving toward the finish line. Still, he acknowledged negotiations are ongoing. “We now have some work to do to close a deal,” he said.

He declined to explain how his group’s reported $15 million raised breaks down in terms of a payment to Wrapports’ owners, as opposed to funds for operating the company, but he didn’t dispute that figure as approximately the amount he and other investors had rounded up for an acquisition.

In what seemed to be a move to smooth the way, he also gave Wrapports owners credit for keeping the money-losing Sun-Times alive in recent years.

Sun-Times Editor and Publisher Jim Kirk declined to comment on the sales process.

There doesn’t seem to be a deadline for reaching a pact, though a transaction was expected to be completed by early July. Tronc’s initial statement about its pact with Wrapports last month predicted a transaction might be done by June 1.

The Chicago Federation of Labor’s interest in the acquisition has been spurred on by the Chicago Newspaper Guild, which is a part of the federation and represents some workers at the Sun-Times and Chicago Reader.

WRAPPORTS’ CALL

While Justice may prefer a buyer other than Tronc and could threaten to block that deal, Wrapports’ owners ultimately have the prerogative of picking a winning bidder. The Sun-Times’ owners previously picked Tronc partly because it already has a $25 million contract to print and distribute the Sun-Times through 2019.

If Justice were to block a sale to Tronc, that wouldn’t necessarily mean the sale to the Eisendrath group would happen because other bidders might come forward if Wrapports’ owners were now willing to entertain lower bids with terms they consider superior to that of the Eisendrath offer.

Wrapports’ owners could always circle back to other potential bidders, such as Shaw Media, Paddock Publications or real estate developer mogul Neil Bluhm. At a lower price, they may be able to rekindle more interest.

The current Eisendrath proposal, including possible liabilities, would be more burdensome to Wrapports’ owners than shutting down the paper, said the sources familiar with the talks.

A spokeswoman for Wrapports didn’t immediately respond to a request for comment.



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