Not as naked as all that | Bleader

Not as naked as all that

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If you're a fan of the corrections columns in which newspapers daily confess their sins, the more trivial the better, you might conclude they gladly stand naked to their enemies. But not so much.

Editor-at-large Mark Fitzgerald of Editor & Publisher observes that troubled companies such as the Journal Register Company and MediaNews Group have decided to stop filing those arcane but revealing financial reports such as the SC 13D and the 10-K with the Securities and Exchange Commission. It's a trend Fitzgerald doesn't like much, but he expects it to continue.

Fitzgerald, who's based in Chicago, discusses the matter on "Fitz & Jen Give You the Business," a podcast he produces about once a week with Jennifer Saba, an E&P associate editor in New York. Saba assumed what I did: that public corporations are legally bound to file with the SEC. But Fitzgerald explains that companies willing to surrender the opportunity to raise capital via markets such as the New York Stock Exchange don't have to. And woebegone media companies that recognize they don't have a prayer of raising public capital are concluding that the elaborate financial statements the SEC asks for are too expensive, too much of a hassle, and too embarrassing to submit. They'll file whatever the banks they owe money to tell them to file, and Fitzgerald thinks these banks want them to keep under their hats the concessions the banks have been willing to make to keep the companies from going under. 

He observes that the Tribune Company, now that it's gone private, doesn't have to tell the SEC anything the banks that financed Sam Zell's takeover don't order it to tell. And as for the Sun-Times Media Group, whose stock is now worth about 70 cents a share -- it's a prime candidate to tell the SEC to shove it. Fitzgerald savors the irony. He tells Saba it was the brokerage firm of Tweedy, Browne that began studying the documents Hollinger International turned over to the SEC when Conrad Black ran the company and wondering, "Who are all these guys getting all these financial fees? And why are you selling everything to yourselves and getting fees back on top of that?" Fitzgerald continues, "That kind of exposed the accounting house of cards going on -- according to the federal authorities the larceny going on.”

UPDATE: The Sun-Times Media Group announced Wednesday that it has no steps in mind to bring its greatly depreciated common stock into keeping with NYSE standards, and therefore expects the exchange to stop listing the stock. In the future STMG stock will be traded on the OTC Bulletin Board. 

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