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Letting the Defender Go



Letting the Defender Go

Myiti Sengstacke seems likely to lose the newspaper that's been in her family 95 years, but some sort of continuity should survive at the Chicago Defender. David Milliner is the presumptive publisher to be, and his grandmother and great-aunt once worked in the pressroom for Robert Abbott (Myiti's great-granduncle), who founded the Defender in 1905, and for John Sengstacke (Myiti's grandfather), who ran it from 1940 until his death three years ago.

As a teenager in the early 70s, Milliner worked there himself as a copyboy and photo filer. When he came home from college he set up his own marketing business in the Defender building, and in 1985 John Sengstacke hired him back as a special assistant. "I came in to turn Bud Billiken around," says Milliner. "Bud Billiken had reached the point where it had no excitement. I was brought in to create electricity."

He says that's what he did. He got up-and-coming Oprah Winfrey to make an appearance at the Defender-sponsored parade and the TV stations to all send camera crews. And then? "He fired me," says Milliner. "The way I analyzed it, I saw it as if he had a certain amount of budget to pay me and he had reached his budget and that was that."

In retrospect, Milliner shrugs off the dismissal. He'd taken a sabbatical from his company, so he had that to go back to. But the experience gave him more to chew over whenever he tried to figure Sengstacke out. "We were very close but very fiery toward each other," he says. "He was the kind of person who wouldn't back down from anything, and if you backed down from him he thought you were sucking up to him....I think he was looking for someone who could mirror his ideology, yet bring something fresh and new to the table. I think he was rather frustrated."

By what?

"I don't know. It's something you can see in a person's eyes. Sometimes I felt like I was his son. Other times I felt like I was his worst enemy. He'd have mood swings that were awesome."

However attracted Sengstacke might have been in the abstract to the fresh and the new, in his newspaper he clung to the tried and familiar. Or so some say, his son Robert among them. Milliner agrees. "Everything was relative to the past--to the things that he had done, to his success story."

Robert Sengstacke, John's son and Myiti's father, undertook various assignments his father gave him, always considered himself underused, and speaks today of himself as a photographer. "My mother always used to say, 'You're the only one of the children strong enough to get away from your father. I'm so glad you have another way to earn money,'" he says. "I wasn't the kind of person to sit around being a little rich boy, and when I came back to the Defender it was always because my father asked me to come back. He was a controlling kind of person, and after a year or two I'd say, 'Hey, I'm doing nothing, and he's doing everything.' I used to say, 'My job is to say to John Sengstacke what the rest of you know but don't say.'"

Robert counts it among his father's lapses that he didn't look beyond the day of his own death. John Sengstacke's will passed Sengstacke Enterprises to his grandchildren in trust, virtually guaranteeing that the business would have to be sold off to pay staggering estate taxes. "He was somewhat whimsical and somewhat unpredictable," Milliner offers. "John always felt like he wanted everyone to need him. And people that have those tendencies generally are very difficult to deal with on family matters."

Myiti Sengstacke, who's 28, tells the story that on her grandfather's deathbed she promised to keep the business in the family, and he gave her hand a squeeze of approval. Milliner has no way of knowing, but he finds it difficult to believe that this was genuinely his desire. "I don't think John did things that way. If he'd wanted that, then Northern Trust would have responded differently."

As Sengstacke's trustee, Northern Trust set out to liquidate the company and pay off the beneficiaries. But Myiti organized the grandchildren to exercise the one power available to them--the power to dismiss Northern Trust. She then located a sympathetic financial partner in Don Barden, a Detroit cable-TV millionaire, and persuaded the court to appoint a sympathetic interim trustee. The deal Myiti wanted circuit court judge Thomas Hett and trustee James Lowry to accept would have given Barden control of the one profitable paper in the Sengstacke chain, the weekly Michigan Chronicle. Robert Sengstacke and his cousin Tom Picou would have forgone their shares of the estate and instead accepted Barden's IOUs, plus an equity position in Sengstacke weeklies in Pittsburgh and Memphis, which they would have run. Myiti, as another minority partner, would have run the Defender--or so she said. Someone close to this deal believes Myiti heard what she wanted to hear and that Barden had no intention of turning the Defender over to anyone so young and inexperienced.

Lowry came in as trustee in early 1999, expecting to wrap up the sale to Barden in three or four months. But this highly leveraged proposal turned out to be fatally flawed: Robert Sengstacke and some of the other beneficiaries wanted money, not promises, partnerships, and obligations. The deal eventually fell apart, and this January, Barden withdrew it. When Judge Hett ordered the bidding reopened, Barden offered a flat $10 million cash and told his rivals to "take their best shot."

They did, and their best shots were millions of dollars beyond his. The two bidders still in the game at the end were Pluria Marshall Jr., whose Equal Access Media runs black papers in Texas and a radio station in Gary, and Kurt Cherry, a Chicago investment banker who'd created PublicMediaWorks just to buy newspapers.

The case dragged on so long that Hett retired before the end and Judge Bernetta Bush succeeded him. Last week she told Sengstacke Enterprises to accept PublicMediaWorks's letter of intent and negotiate a sale. Myiti Sengstacke issued a statement calling the order "a tragedy." She said she and her brothers "remain committed to the promise made to my grandfather to assure the continuity of family ownership," and she resigned from the board of the company. As the Sengstacke Enterprises board negotiated a deal with one bidder, it would have been unacceptable for an individual board member to simultaneously look for another.

No one counts Myiti Sengstacke out. Her passion to hang on to the Defender is so overpowering that she recently shocked James Lowry--who'd been her choice as trustee--by asking Judge Bush to remove him. Lowry says Myiti didn't like the way the auction process was going--the Defender appeared to be headed to a bidder who had no place for her in management. "I had a fiduciary responsibility to keep the estate liquid and pay off the debts," says Lowry. I'm told Myiti also tried to fire her own lawyers for advising her to take the deal and the money.

From her point of view, the situation still isn't hopeless. As PublicMediaWorks performs its due diligence, a window of opportunity remains open to a higher bidder. Myiti no longer talks to me, but it's difficult to imagine her calling it quits until that window closes.

An obvious place for her to seek an ally is Texas, though Pluria Marshall says he has "no clue" what Myiti is thinking. Marshall hasn't given up either; he's watching and waiting. Due diligence, he says, is "the dumbest process in the world. 'Oh, yeah, we'll talk to you. But if someone wants to come in and give us a better offer, we'll take it.'" He adds, "Until the fat lady is done and off the stage we'll still be in the audience."

But Marshall has no interest in submitting a new bid higher than Cherry's $14 million plus. "I'm not crazy," he says. "This has to make business sense above all. We have a very finite number in mind, and it's actually less than Cherry would pay. We're not going to overpay for things. We're not Rupert Murdoch or Time Warner."

Marshall observes that after three years of trying to balance fiscal obligations and family legacy, Judge Bush finally pushed every other issue aside and told the Sengstacke board to sell to the highest bidder. "They don't look at the fact I spent 20-plus years in the business," Marshall says. "Money is not always the determining factor, but they've made it the determining factor. They didn't exercise prudent business judgment in this process. They just said, whoever has the most money wins. We're still in the audience. We'll still be there in case things fall apart, which, as we know, has happened before."

Because Cherry's a Chicagoan, Robert Sengstacke wanted to see the Defender go to PublicMediaWorks, but his daughter had no use for the company. "From the first meeting, I knew I didn't want to work with them," she told me a year and a half ago. "They were very pushy, almost haughty."

And so they are. "They're part of the new world--aggressive young guys," says Lowry. And Milliner--assuring me at one point that "I don't mean to sound arrogant"--presents himself as someone ready and willing to make a desert bloom. Speaking of the management team Cherry has pulled together, he says, "We're totally impregnated."

Cherry, a WBEZ board member who played a central role a few years ago in relocating that station to Navy Pier, will be the CEO. He's brought in Alan Sorter and Gregory Huskisson, a couple of Northwestern University products with big-city newspaper experience at Knight Ridder papers; Sorter will be chief operating officer for the Sengstacke papers and Huskisson the editorial director. And Milliner will run the flagship, the Defender.

"We all have strong general-market strength and presence, yet we have a community focus," says Milliner. "And that's what coming home is all about--taking all that knowledge and experience and professionalism and bringing it home. Oftentimes people forget from whence they come. We haven't forgotten. In a sense, this is like the passing of the torch."

He tells me, "After we redesign the book and departmentalize the various sections, the Defender will be second to none in business, in sports, in entertainment. We're going to be community driven. We're going to cover Little League baseball. We're going to cover Pony League baseball. We're going to be in the Park District looking at programs that get kids off the street." Chicago is made up of 77 communities and 50 wards, says Milliner, and the Defender will be a "presence" in all of them--"and don't forget about the collar counties."

Circulation? It's dwindled to 15,000. But Milliner predicts he'll double that within a year or two, and he believes Chicago's black market could sustain a circulation as high as 200,000. "Based on our surveys we have tremendous brand identity. In olden days the Defender was called, and to some degree still is, the 'Black Dispatch'--people will go to the Defender first to find out the real deal. We want to go back to those days."

Those days are more than a short hike away. Mistakes happen, but it was emblematic of the decline of the Defender that its article last week announcing the pending sale to Kurt Cherry misspelled Cherry's name.

Cherry has offered the Sengstacke family a seat on the board of PublicMediaWorks, but no share of ownership and no managerial authority. By every indication, Myiti Sengstacke considers those terms intolerable. "It's rather unfortunate for her to feel that way," says Milliner. "Sometimes with maturity people grow to learn that there are other ways to build relationships and to move forward. She puts up a great fight. She's very tenacious. With the right skill set and the right training, she could go very far."

He can't recall the two of them ever holding a civil conversation. "It's been a very volatile situation," he says. "Just the whole energy level has been enough to make you not stay in a room with someone you opened your arms to--to help and have it not be accepted in good faith and trust. It just leaves a bad feeling."

Robert Sengstacke tells me he doesn't know what his daughter intends to do next, because she hasn't told him. "I'll say one thing about her, if there is another way to keep fighting, she's going to find it and do it." He adds, "Nobody knows how badly I feel."

News Bites

The sudden decision by Yasser Arafat and Ehud Barak last Wednesday night to go on with their peace talks caught the Tribune in the middle of a pressrun. With 35 percent of the home-edition papers already printed, the Tribune stopped the presses, changed the front page, and went on with the run.

Susan Murphy and Maureen King live in the same Ukrainian Village building, work at the Field Museum, and subscribe to the same paper. The next morning King scooped up both their Tribunes as she and Murphy were leaving for work. As Murphy drove, King happened to glance at the headlines through the blue wrapping. "Camp David summit fails," said Murphy's paper. "Mideast summit extended," said King's.

It's remarkable when so many journalists come forth to eulogize a colleague. In all the remembrances of outdoors columnist John Husar published last week in the Tribune, two traits stand out. Husar was aware of the people around him, appreciated what they did, and let them know. He was equally aware of the world he passed through and never ceased to marvel at it. In a newsroom, these are supreme virtues.

Art accompanying story in printed newspaper (not available in this archive): photo/Dan Machnik.

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