Tronc Puts in a Bid to Acquire the Chicago Sun-Times
DOJ will give its blessing if another buyer isn't found in 15 days.
On Monday, Tronc (NASDAQ: TRNC), formerly Tribune Publishing, announced that it has signed a non-binding letter of intent to acquire the Chicago Sun-Times, a long-time rival of the Chicago Tribune, a Tronc-owned newspaper. The Sun-Times is owned by Wrapports Holdings, a privately-held company that owns a handful of media and digital outlets including The Sun-Times, Aggrego.com, The Chicago Reader, The Straight Dope and The Muse. Terms of the deal were not disclosed.
According to a statement, Wrapports management approached Tronc earlier this year about a possible acquisition. Since then, Wrapports and Tronc have been working with the Department of Justice’s antitrust division. To earn the DOJ’s blessing, Wrapports agreed to the DOJ’s condition that they publish a full-page ad on Tuesday looking for another buyer to remain independent. If another bidder is not found within 15 calendar days, the deal can move forward and could close as early as June 1.
“…within the 15 calendar day period, prospective buyers must begin due diligence and indicate an expression of interest, including a price range for the Chicago Sun-Times, and demonstrate the financial ability to operate the paper,” said the DOJ in a press release.
Wrapports said it has already sought out other buyers, without success.
“We look forward to operating the Sun-Times as a separate news unit, which means an independent Sun-Times will continue to produce the award winning journalism readers are accustomed to seeing online and print daily,” Jim Kirk, publisher and editor-in-chief of the Chicago Sun-Times, said in a statement. “The Chicago Sun-Times is an integral part of the fabric of the city and this path is an opportunity for the Sun-Times to thrive.”
Tronc CEO Justin Dearborn commented on the deal, stating that the Sun-Times will “maintain its independent voice.”
“There are minor points still to be worked out, but we are confident that we will be able to move forward on this transaction and reach a definitive agreement. This is generally viewed as good for all Tronc shareholders,” said Dearborn.
“If we successfully close, we will be pleased to have the Chicago Sun-Times join our existing family of strong brands and help it maintain its independent voice,” Dearborn added. “Tronc will benefit from increased unique visitors, better engagement with Sun-Times consumers and more data for future troncX initiatives.”
Michael Ferro, the largest shareholder of Tronc, founded and owned Wrapports before taking over Tribune Publishing in February 2016. Gannett attempted a takeover of Tribune last year. In his attempt to foil an acquisition, Ferro rebranded the company Tronc. An acquisition would bring Wrapports back under Ferro’s direction, as well as both Chicago papers, making Chicago one of the few two-newspaper cities left.
The Sun-Times and the Chicago Tribune have an existing relationship. According to the Chicago Tribune, it started distributing the Sun-Times in 2007, and in 2011, began printing it. In 2014, Tribune Publishing, now Tronc, purchased all of Sun-Times Media’s suburban publications from Wrapports, which included six daily and 32 weekly papers, for $23.5 million.
News of a possible acquisition came just two weeks after Tronc reported its first quarter financials in which it showed total revenue of $366 million, an 8 percent decrease year-over-year, and a $3 million net loss, compared to a net loss of $6 million for the same period last year. As of March 26, 2017, Tronc reported total assets of $800.7 million, so while it may have reported a net loss, the company still has money.
Originally from the Chicago area, I remember the days when the broadsheet-style Tribune and the tabloid-style Sun-Times battled for position of top dog. It is hard to imagine the daily newspapers under the same ownership while maintaining “independent voices.” It will be interesting to see how Tronc will ensure the papers remain independent and how readers react to the news.