There's a chance that by the end of February the Defender and the other three newspapers controlled by Sengstacke Enterprises will finally be auctioned off. But though bids of $15 million once were on the table, that much money is not there now. And the package just became less attractive.
Detroit's weekly Michigan Chronicle was the company's one serious moneymaker. Samuel Logan Jr. had been its publisher for the past 30 years, and last week he suddenly quit. "I heard today that Sam is planning to start a rival publication," says Kurt Cherry, a Chicago investment banker who's bidding on Sengstacke Enterprises. "I can't take it any way but seriously. With Sam leaving, the management and execution risk of this deal goes up."
John Sengstacke left behind, in trust, 70 percent of the shares of Sengstacke Enterprises, $13,000 cash, and "Yellow Lake," which is 160 acres of farmland in southwest Michigan. Some of the trust's many beneficiaries just want their money out; others, namely Robert Sengstacke's four grown children, have been willing to forgo that windfall to keep the Defender in the family. John Sengstacke bequeathed Yellow Lake to Chicago Defender Charities. But while the charity has waited for it, the cash-poor trust has fallen so far behind on mortgage payments that the land, valued at $2 million, now could easily be lost to the bank.
Logan's sudden resignation--he announced it last Wednesday and was gone two days later--seems to have been prompted by a strong sense of drift and insult. Shortly before John Sengstacke died, the shareholders had met and voted Logan in as president of the company--"because of his phenomenal sales ability," says Robert Sengstacke. But for various reasons, one of them being that he had no desire to move to Chicago, Logan didn't formally take over before John Sengstacke died, and Robert Sengstacke says Northern Trust, his father's trustee, refused to recognize Logan's accession.
As the battle for the prosperous Chronicle, the storied but moribund Defender, and weeklies in Pittsburgh and Memphis raged in Chicago courtrooms, Logan stayed on the job in Detroit, feeling increasingly ignored and unrewarded. Another bidder--Houston's Pluria Marshall Jr., who owns black newspapers in Texas and a radio station in Gary, Indiana--ran into Logan a few days ago at a convention. "He told me his concerns, which are totally warranted," says Marshall. "For a guy who's basically carried the chain of papers for years, for the powers that be not to recognize that and give the guy stock is a travesty. You just don't let an employee at the executive level be made to feel as though he's worthless, and that's probably what Sam is feeling. We do not by any stretch of the imagination have a deal for the paper. But if they do decide to accept our offer, my first phone call's to Sam Logan."
"I'm an old man. Talk is the cheapest thing in the world," Logan muses. "One thing I say--this is a commitment I make with my God--as long as I live I will never work for anybody in the world at will."
"'At will' means no contract, nothing in writing," says Logan. To make his position absolutely clear, he tells me that Lou Rawls--his buddy from the 82nd Airborne Division in Korea--used to sing about "sleeping in the hollow log and drinking muddy water." Logan says, "I have no ax to grind. I have no animosity to anyone in the world." But he wants one thing understood: "I'd rather sleep in the hollow log and drink muddy water than work at will."
"I don't think Sam is too interested in working for new people," says Robert Sengstacke.
Even if they give him equity?
"There's always the offer we can't refuse. But I suspect Sam is going into another publishing venture."
One promise Logan says he made to John Sengstacke was to teach Myiti Sengstacke and her three brothers everything he knew about journalism. "I do not believe in taking everything I've learned to my grave."
Does this mean Sengstacke truly intended his grandchildren to take over one day? I ask Logan.
"I think maybe he did and maybe he didn't. The bottom line is that if he really, really, really wanted that, he'd have gotten with his advisers and signed his name. It didn't really have to be this way. But that's spilled milk--a lot of us think we're going to live forever."
Myiti Sengstacke's life since her grandfather's death has been dedicated to saving the Defender for the family and running it herself. She says it was her deathbed promise to him, which he acknowledged by nodding and squeezing her hand. As trustee, Northern Trust believed its duty was to sell off the assets for top dollar. The only way Myiti Sengstacke could resist was to mobilize the power of the beneficiaries to dismiss the trustee, and she managed to do that. James Lowry, her choice, came on as interim trustee a year ago, and Lowry and Thomas Hett, the circuit court judge who'd appointed him, favored her attempt to settle the estate in a way that would bring her the Defender.
Back then, Myiti Sengstacke thought she'd found a savior in Don Barden. He's a flamboyant Detroit businessman who'd made his money in cable TV. He offered $12 million in cash, loans, and equity, which would have put the paper he coveted, the Chronicle, in his hands. He would have given Robert Sengstacke a million-dollar IOU for his 10 percent share of Sengstacke Enterprises. Robert and his cousin Tom Picou would have become minority partners with Barden in the two smaller Sengstacke papers, the Courier in Pittsburgh and Tri-State Defender in Memphis, and they would have run them. Myiti Sengstacke and her brothers would have owned 49 percent of the Defender and Courier, and she would have become the Defender's publisher.
"I'll have that paper [the Defender] turned around and making money in a year," Barden told the Detroit press.
The boast was hard to believe. Rejected bidders said Barden was dooming the Defender because the paper needed millions of dollars in new capital and the deal didn't provide it. Other beneficiaries--such as Robert Sengstacke's young children by his second wife and John Sengstacke's ailing 80-year-old friend Thelma Montgomery, who'd been willed $100,000 plus $2,000 a month for life--complained that better offers had been left on the table. Cherry and Marshall had each bid $15 million cash.
Robert Sengstacke wanted nothing to do with Barden. He wanted cash for his 10 percent, and he wanted to own the papers in Pittsburgh and Memphis outright. He explored borrowing enough money to be able to buy Barden out if the deal went through. "I've been accused of destroying the Barden recap plan," he says wistfully. "I think some of my kids are unwilling to face the facts. What was offered to me was unacceptable in the Barden deal. He wanted me to take notes, and I was not going to finance his taking over Sengstacke Enterprises--which is basically what I was being asked to do."
Robert Sengstacke's father had never allowed him to play a central role at the Defender, though he did get to spend a few years in Memphis, where, he says, he turned around the Tri-State Defender. "If I have any regrets," he told me a year ago, "it's not so much not running the Defender but not recognizing the kind of man dad was and taking off sooner." Today he's a professional photographer, a member of the team shooting Chicago this year for the CITY 2000 project.
He'd like to see Kurt Cherry wind up with the Defender, because Cherry's a Chicagoan. His daughter (who didn't return phone calls for this story) told me last year that Cherry and his people "were very pushy, almost haughty" and she knew from the first meeting that she didn't want to work with them. So there's a definite breach between Robert Sengstacke and his children. "When they need something they still come to me. I'm still dad," he insists. But "it's a little too painful for me. The Barden deal kind of ruled everything. After a while I saw the older kids had their own agenda, and I had to back away. My kids kind of had the idea money isn't the issue--saving the Defender is. But I'm 56 years old. I've paid my dues. I built the Tri-State Defender back up from a joke into what it is today. I never got in the big seat, but at the same time I'm basically living the family legacy through my camera. I'm more out there than my dad was."
Eugene Pincham, the attorney looking out for Thelma Montgomery's interests, is much more pointed in his language. The way he sees it, Myiti Sengstacke was being sold a bill of goods. "When you tell people what they want to hear, they buy into it. By the same token, if you sit down and tell them the truth, I don't think it would have been difficult to show her she doesn't know how to run a paper and somebody's blowing smoke up her butt trying to tell her otherwise." He calls Barden's offer "a sham and an insult."
With so much resistance, the Barden deal was never wrapped up, and last month Barden took it off the table. He said he was "tired of all the bickering" and had decided to make a straight-up $10 million cash offer for Sengstacke Enterprises. Rival bidders, he said, should "take their best shot."
Judge Hett ordered the bidding reopened, and all bids must be in by February 14. This new timetable has the next owner of Sengstacke Enterprises being announced at the end of February, but no one has much faith in timetables anymore.
Certainly not John Coleman, attorney for Chicago Defender Charities. "I don't think that's realistic," he says. "There's a lot you have to accomplish before then. At least they're waking up to the fact [the company] has to be sold immediately. For cash."
Coleman says the trust is some $83,000 in arrears on the Yellow Lake mortgage, which, he adds, is a trifle next to the $3 million the trust owes in estate taxes, interest, and penalties. The bank is likelier than the IRS to pick off Yellow Lake, but Coleman finds it hard to imagine that trustee James Lowry would allow either to take it. Loss of the land would be seen as extreme fiduciary irresponsibility and could get Lowry sued by the beneficiaries. Because it's being given to charity, the land is supposed to provide the trust with a huge IRS deduction. "If I lose it," says Coleman, putting himself in the shoes of his client, "they'd lose the deduction. The estate tax is almost doubled then."
Following the Leader
Chicago newspapers are rarely gallant about giving credit where credit is due when it's due to the competition. A couple of weeks ago the Sun-Times found an ingenious new way of not giving credit without looking small and begrudging.
But first, an example of business as usual. Consider the front page of the Sun-Times of January 18. We encounter an astonishing color photo taken at the Sheridan Correctional Center of a grinning Lenard Clark standing alongside his new friend Frank Caruso, who was sentenced to eight years in prison for beating Clark to within an inch of his life back in 1997. This interracial attack made headlines for months. The newest headline: "Clark visits his attacker / Beating victim meets Caruso twice in prison."
The Tribune dutifully went out to do the story. The next day it ran a piece back in the Metro section that didn't mention the Sun-Times and focused on several skeptical observers who suspected the Clark family was being conned.
So it goes.
For something the Tribune could brag about, there was its own front page that day, with the banner headline "Another Death Row inmate cleared" and the preening logo "Tribune Investigative Report, a Follow-Up."
Now it was the Sun-Times's turn to react to an exclusive. The AP sent out its version of the story, and the Sun-Times dutifully posted it on-line. But in the newspaper's printed pages? Nothing the first day and nothing the second. You don't look a day late and a dollar short if you don't show up at all. There were stories in the Sun-Times January 20 about a Glenview tree house, overweight cats, a pigeon problem at a south-side grade school, a tax hike in Oak Park, and a proposed addition to a Lake County high school--but not a word on the newest humiliation for the state's criminal justice system.
Editors wouldn't get back to me to explain why the death-row story was ignored. One reporter trying to be helpful explained that it was just too "urban" for today's Sun-Times.
The Tribune kept working the story. Sunday brought another front-page exclusive, this one enormous: Governor Ryan had decided to halt all executions in Illinois until a commission can figure out why so many innocent men are being condemned. Again the Sun-Times didn't have the story. But on Monday morning it produced a traditional catch-up--on page three and with no mention of the Tribune. The Washington Post also covered the Ryan story that day--on page one.
Monday was when Ryan acted. His historic moratorium, unprecedented anywhere, was national news on Tuesday, making page one of not just the Tribune but the New York Times. The Sun-Times account--its headline advising "Some critical of governor's call"--ran on page eight.
Fortunately credit doesn't have to be a zero-sum game. Journalism is a process of accrual--everyone chips in. Last week this column praised Dennis Byrne for a column noting that the police board hearings into the LaTanya Haggerty shooting weren't being attended by the police board, whose members rarely show up for such things.
Without retracting a word, I must now add that last November the Chicago Reporter carried a long study of the police board by Rebecca Anderson. She reported that "the board rarely sees the people whose cases it decides" and quoted an attorney for the police union who said, "It's like a jury that never hears a case but is standing in the hall smoking cigarettes or something."