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A Hard One to Spin

It was Tammy Chase's job to make layoffs at Sun-Times Media sound good. But now the company can't afford that either.



It was a small story on Orland Park Patch, one of about 500 hyperlocal websites that AOL hopes to have up and running across the country by the end of the year. "A Few More Cuts at the SouthtownStar," said the October 5 headline. The local daily was trimming its staff yet again; the latest to go were reporter Stephanie Gehring, described as a "well-liked 20-year veteran of the newspaper," and Rex Robinson, a community news editor. More cuts were said to be a possibility.

"We will continue to look for efficiencies as the situation warrants," Sun-Times Media spokesperson Tammy Chase told Patch, "but we won't speculate now on whether there will be any more reductions."

At Sun-Times Media, "efficiencies" have recently been made right and left. About 50 drivers were laid off when the job of delivering the flagship Sun-Times was turned over completely to the Tribune in September. This month the Sun-Times laid off sports columnist-turned-features writer Carol Slezak and three editorial assistants. Across the 59 daily and weekly papers held by the company, jobs have vanished in editorial, advertising, marketing, and circulation. Last week the bell tolled again at the SouthtownStar, for two receptionists and two salesmen.

Efficiencies? "That was the general message the company wanted me to put out there," says Tammy Chase. "When you're a journalist you want to tell the whole story. Even if you're not dumping your notebook, you don't want to not cover something if it's really important. In PR you need to be truthful, but you can't say whatever. You need to project the message your company executives want to project. It's a different way of thinking."

After ten years with Sun-Times Media, four of them thinking like a spokesperson, Chase is packing up her desk this week. She's been laid off. It's something she was pretty sure was about to happen when she talked to the Orland Park Patch, and she got the official word a few days later. Sun-Times Media can no longer afford a corporate spokesman—CEO Jeremy Halbreich will now do that job himself.

When things got crazy at work, Chase says, she used to joke that she ought to write a book. If she ever does, I'll read it. She started out as a reporter at a tiny paper in Iowa, went on to Bloomberg, and joined the Sun-Times as a financial writer in 2000. The paper belonged to Hollinger International back then, and Conrad Black and David Radler ran it. Chase never met Black, but now and then she'd ride the elevator with Radler. "He was very tanned and surly looking," she says. If Radler even knew she worked for him he probably also knew she belonged to the Newspaper Guild; Radler, who despised unions, would have considered her a lower life form.

But in late 2006 Chase left the newsroom and the guild. By then Hollinger shareholders had turned on Black and Radler. Black was awaiting trial for fraud over noncompete payments he and Radler had pocketed as they sold off most of Hollinger. Radler had copped a plea and agreed to testify against Black. Nothing was left of mighty Hollinger but the Sun-Times Media Group, and the new CEO was Cyrus Freidheim, the guy who'd turned around the Chiquita banana company.

Chase was Lifestyles editor when Friedheim offered her the corporate job. "You know I edit stories about shoes," she told him. But Friedheim wanted a journalist who'd been around the Sun-Times awhile speaking for the company. Black's trial was a few months away and the calls were about to pour in.

"Shareholders at large were calling," Chase says, "asking, 'How much money do Conrad and his colleagues have out there, and how do we recover it?' We settled with David Radler—we got some money from that. So shareholders wanted to know—what about the other guys?" (Besides Black, two other Hollinger officers were accused of benefiting from the noncompete payments, though on a far smaller scale.)

And if Black got off, shareholders wanted to know, what would that mean for their shares? "A lot of investors were ticked off," says Chase. "They thought he owed the company and the shareholders a lot of money." That's a lot of money as in hundreds of millions of dollars. "You can't blame them for being grouchy," says Chase. "We had the trial. We owed the IRS money. Our potential liability had gotten up to—I think at one point it was $600 million. The investors were understandably worried."

And then there were all the calls from reporters covering Black and the trial. "From Britain. Canada, of course. I was getting hundreds of calls a week—about 50-50 investors to media. It was a shitstorm."

Black was convicted. Revenues plunged. The STMG staggered on, a company desperate to be bought that nobody wanted. "Nobody wanted to take on that IRS thing," says Chase. Early last year investors took over the board and Freidheim resigned, telling the Sun-Times on his way out the door, "If we did go into bankruptcy, that would not mean the end of the company."

What Chase was about to discover is that long before bankruptcy is declared, a company must begin to prepare for it. "We worked on this at least a month in advance," she says. "I'd covered United's bankruptcy as a reporter, and I'd say the restructuring adviser is so and so and the lawyer is so and so, and this happened in court today. But now I saw what the restructuring adviser actually does. It sets up shop and goes through the books. Three people were devoted full-time to this—'OK, here's the people whose bills we'll pay right away and these bills we'll address later.' You have to have people help you on this and these guys are experts."

Companies do their best to sound chipper when they announce bankruptcy. Just a step backward so we can take two steps forward. Striking that note was Chase's job. "I was focused on the press releases and what we tell employees and advertisers. We were in it for the long haul and we would do everything we could to serve them and we were looking for a buy and we were hopeful. You don't want to scare advertisers into running away. And the Tribune had filed for bankruptcy before us," as had Reader parent company Creative Loafing, "and the Tribune was still around and so it didn't mean if you filed for bankruptcy you were automatically dead."

Even so, on Monday afternoon, March 30, when the various vice presidents and other top executives assembled in the boardroom and new CEO Jeremy Halbreich said, "OK, it's a go for tomorrow," Chase had to look away. "I could feel these tears welling up in my eyes. I was pregnant too, it could have been hormonal. But I was very sad and I went back to my office and cried a little bit and went back to work."

Bankruptcy got the company out from under its IRS debt, and finally someone showed an interest in buying it. James Tyree of Mesirow Financial made the calculation—perhaps cold and shrewd but inevitably perceived as romantic—that money could be made from the Sun-Times newspapers if he had a free hand to reorganize the company the way he wanted to, with no union contracts standing in his way. For the unions, the Newspaper Guild in particular, the choice was death or emasculation—never an easy one to make.

"I was nervous," says Chase. "I was in the guild for six years. I know how those guys saw it. I knew what they were being asked to give up. I didn't blame them for being pissed. On the other hand, I believed Tyree. He didn't have to buy the company. He could have walked away. The deal could have unraveled and I think that's why I was scared. I wasn't sure I'd have a job after he bought it, but I wanted the Sun-Times to live."

While Tyree hovered silently in the background, Halbreich fired off letters to the unions telling them what they had to do. "I worked very hard on them," says Chase. Were you the primary author? "Yeah, with the direction of Jeremy," she says. "It wasn't one of my most comfortable jobs, I will admit. But I believed Tyree. We basically told our employees, 'if we don't do x, y, and z, we're toast.'"

On September 15 the Guild voted 83-22 to reject Tyree's terms. Tyree made some minor concessions, Halbreich issued more memos—warning employees that no other bidder was coming forward and the company was rapidly running out of money. On October 7 the guild accepted Tyree's terms. On October 26 Tyree paid $5 million, assumed $20 million in debts, and took over the company.

"The anniversary's this week!" says Chase, just realizing. No celebration was being planned.

Even saved, the STMG is a troubled company in a sinking industry in a sunken economy. Halbreich asked me to understand three things about the layoffs. The first is that a new centralized content management system he announced a year ago is finally up and running. "It's technology that allows us to do things automatically that heretofore were done manually. People in those areas—news editorial and advertising—have known for a very long time that this was coming."

Secondly, "interactive," or online, revenues have grown 20 percent in the past year (from what to what Halbreich wouldn't say), so "we have an ongoing shift of resources—as every other major media company does—from the traditional print area to interactive. We are hiring in interactive."

And thirdly, "since we are no longer publicly traded, we are smaller than the old public company and we just don't need the same staffing and support level on the corporate side of the house. Tammy is just a consummate professional—we love her. But we just can't justify that level of professional support in the way we're constituted today. Going forward, I'll be talking to the press more often myself."

"Oh God, I bawled," says Chase. "I love the Sun-Times. I love being here. I want to see the paper survive and the suburban papers do well. But yeah, it sucks right now."

Chase is pregnant again. She's 42; her husband, Brett Chase, used to be an editor at Crain's Chicago Business, but now he's freelancing. "They were good salaries," she reminisces. "My husband and I were able to buy a house, a little fixer-upper bungalow near Foster and California." If journalism could still support a family she'd try to get back into it. But she's not sure it can.

This week Chase did her last big job for Sun-Times Media. An essential skill in her line of work is finding something positive to say about anything. On Monday the Audit Bureau of Circulation announced that daily circulation of the Sun-Times had dropped 9 percent from last year, Sunday circulation 5.5 percent. Circulation of the company's other seven dailies had collectively dropped 8.7 percent.

The news release Chase prepared pointed out that the papers had performed "in line with the Company's expectations" and showed "positive trends" for home delivery. Halbreich's statement began, "We are very pleased to have performed and in some instances exceeded our expectations."

Once a reporter's mastered that "different way of thinking," can she ever go back? Chase knows purists say no way; "I used to think that way myself," she admits. But she's changed her mind. "I think really good journalists can go back. If someone will have them back."   

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