Sun-Times sale called a ‘marriage with a dowry’

The Sun-Times combination with WBEZ includes pledges of cash from foundations and a key backer of the deal.

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Jim Friedlich

Lenfest Institute for Journalism

The sale of the Chicago Sun-Times to the owner of public radio station WBEZ is not your typical transfer of a corporate asset.

In the view of a consultant in the deal, it’s more like “a marriage with a dowry.”

That’s the opinion of Jim Friedlich, executive director and CEO of the Lenfest Institute for Journalism. In the Sun-Times sale, he was an adviser to the WBEZ parent, Chicago Public Media, and its CEO, Matt Moog.

Friedlich has apt credentials for the role. His institute is a nonprofit that owns the Philadelphia Inquirer, a for-profit subsidiary. In the Sun-Times sale, the paper will convert to nonprofit operations, ending its ability to endorse political candidates. Executives of the Sun-Times and WBEZ said that despite that restriction, the sale will improve both organizations’ abilities to deliver insightful news coverage.

The sale to Chicago Public Media involves no cash paid to Sun-Times investors. On the contrary, principal Sun-Times owner Michael Sacks has pledged an unspecified sum for ongoing support. Also, the John D. and Catherine T. MacArthur Foundation and the Pritzker Traubert Foundation are early funders in the deal.

“The Sun-Times is being donated to Chicago Public Media to form a larger, local news powerhouse. This is a marriage with a dowry, including Michael Sacks contributing both the Sun-Times and additional funds to help it succeed,” Friedlich said Wednesday in an email. “The conversion of the Sun-Times to nonprofit ownership has also provided the combined business access to significant new financial backing from major Chicago foundations in support of this transaction and more robust local news in the region. This approach has worked well in Philadelphia and is off to a promising start in Chicago.”

The terms indicate the Sun-Times continues to lose money, although executives said the deficits have narrowed and that, with no debt, the company’s financial condition is better than it’s been in years. Sacks has declined to discuss his financial pledge.

Concerning the Sun-Times’ operations under the new arrangement, Friedlich said, “Chicago Public Media has chosen, I think wisely, to convert the Sun-Times fully to a nonprofit. This makes it easier to raise money from both foundations and the public, and it is very much in keeping with their public media heritage. It’s true that nonprofits cannot endorse political candidates, but they can provide a critical public forum or soap box for candidates, issues and advocacy.”

Rick Edmonds, media analyst at the Poynter Institute for Media Studies, said the Sun-Times deal will be followed closely in other cities that have seen their own legacy newspapers decline or disappear. Many foundation-backed digital news sites have sprung up in their wake, often with a hyperlocal or single-topic emphasis.

But there have been no permanent answers for a new financial model in for-profit journalism that replaces a steady revenue loss from circulation and advertising, dollars that have migrated to internet giants such as Google, Facebook and Amazon.

Edmonds said the prohibition on political endorsements by nonprofit media outlets is clear. To keep their tax-free status, nonprofits have to avoid overt partisan stances or activity.

He said the Salt Lake Tribune, apparently the largest U.S. newspaper currently a nonprofit, observes that rule. But the for-profit Philadelphia Inquirer and Tampa Bay Times, owned by nonprofits, can continue endorsements. The Poynter Institute owns the Tampa Bay paper.

Some traditional newspapers are dropping endorsements as a relic of the past, Edmonds said, while others believe the practice still offers a community service. The Sun-Times stopped endorsing several years ago but brought them back.

Aside from that issue, executives in the Sun-Times-WBEZ deal foresaw no jarring changes to operations when announcing it Tuesday. Moog and Nykia Wright, CEO of the Sun-Times, said they expect no layoffs. Wright will report to Moog once the deal closes, expected by the end of the month.

Moog said there will be funds to expand the combined staffs, currently at about 300 people. He offered specifics in an interview with WBEZ, saying, “We expect to have 50 open positions between the two organizations at the moment that we combine so we are in the position of looking to hire additional people across the organization.”

There are no plans to bring Sun-Times employees into the WBEZ offices and studios at Navy Pier, Moog said. “We just don’t have the room,” he said. The Sun-Times has offices at 30 N. Racine Ave., but they have been largely unoccupied during the pandemic. With many employees adapting to remote work, the paper could seek smaller accommodations elsewhere.

Those are small details in the larger matter of a combination that some believe will strengthen two news organizations with traditions of investigative and analytical coverage.

“We are unabashedly bullish on the combination of these two news enterprises for the benefit of local news and information in Chicago,” Friedlich said. “The city’s newsrooms have been gutted over the years by hedge funds, out-of-town owners, the secular decline of print and a failure to invest in the digital transformation of local news products.”

He called the sale “a model for other public media and local newspapers to emulate.”

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