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The Sun-Times Media Group Bankruptcy: How Bad Is It?

By Marcus Gilmer in News on Apr 1, 2009 8:20PM

2009_04_01_STMG.jpg After yesterday's filing for Chapter 11 bankruptcy protection, the Sun-Times Media Group tried to put a positive spin on the proceedings. Jeremy L. Halbreich, the STMG Chairman of the Board and Interim CEO, said he hopes the proceedings are all done by the end of the year and the situation will not interrupt the publication of the group's many newspapers and their corresponding websites.

The bankruptcy has also drawn many comparisons to the similar filing made by the Tribune Company a few months ago. However, the STMG seems to be the worse off between the two. Crain's Ann Saphir takes a look at the differences between the Tribune Company's situation and that of the STMG. The main disparity? The Tribune Company is managing to make money (its net cash influx for January was around $200 million) while the STMG is hemorrhaging money: they lost an average of $14 million for the first three quarters of 2008 and recently paid $21 million to settle a dispute with a Canadian company. Saphir also talked to Chicago-based Fitch Ratings credit analyst Mike Simonton, who seems pessimistic about the STMG's chances of finding buyers for its assets. Said Simonton, “Sentiment in the capital markets regarding newspapers has turned very negative. We’re pessimistic about the prospects for selling newspapers in this environment.”