Tribune Publishing, parent of the Chicago Tribune, has closed a deal to acquire all of Sun-Times Media’s suburban properties from Wrapports.
The agreement, confirmed Friday, brings six daily and 32 weekly suburban newspapers into the Tribune fold, bolstering circulation and revenue while significantly expanding its publishing footprint across the Chicago market, from Waukegan to northwest Indiana.
Longtime Chicago Tribune advertising executive Bob Fleck has been named publisher and general manager of the newly acquired suburban newspapers.
As part of the deal, the Chicago Tribune Media Group also announced a long-term agreement to continue printing and distributing the Chicago Sun-Times, which had opted out of its contract last year.
Terms of the acquisition, and the printing and distribution deal, were not disclosed.
While no hard assets will change hands, some 143 editorial and advertising employees of the suburban papers — which include the SouthtownStar, Merrillville Post-Tribune, Aurora Beacon-News, Elgin Courier-News, Naperville Sun, Lake County News-Sun and the weekly Pioneer Press newspapers — will become Tribune employees, according to executives.
“We have reach in the suburbs now, but this gives us more reach, deeper reach, with really good brands that we’re acquiring,” said Jack Griffin, CEO of Tribune Publishing. “We think it’s very rational, very sensible and it will be another good test for us and the ability to demonstrate that this kind of activity makes sense for the company and ultimately, our shareholders.”
It also represents a major shift in strategy for the Sun-Times, long Chicago’s No. 2 newspaper, which is yielding huge swaths of its home market to focus on launching a national network of local news websites. After the sale, only the core newspaper and the free weekly Reader remain under the Sun-Times Media umbrella.
Chicago-based Tribune Publishing, which includes the Chicago Tribune, Los Angeles Times and eight other daily newspapers, was spun off from Tribune Media in August.
Speculation that the Chicago Tribune’s parent was looking to buy the Sun-Times’ suburban papers surfaced last week. The blueprint for such a move has been in place since veteran magazine executive Griffin took the helm of Tribune Publishing this year.
Griffin has said strategic acquisitions such as the May purchase of two Maryland newspapers — The Capital in Annapolis and the Carroll County Times, expanding the reach of the company’s Baltimore Sun — would be part of a larger plan to reverse years of declining revenues across the newspaper group.
The acquisition of the Sun-Times suburban newspapers dovetails with that broader strategy, with some market-specific efficiencies baked in.
“It allows us to leverage this very big infrastructure that we have here in Chicago, from virtually every angle,” Griffin said. “Not only are we leveraging the resources, but we’re leveraging the management teams.”
The Chicago Tribune already prints and distributes the Chicago Sun-Times and its former suburban newspapers. In August 2013, the Sun-Times executed cancellation clauses terminating the separate printing and distribution deals, which pay the Tribune about $70 million per year, according to sources. The printing cancellation was effective in May, with the distribution deal to end the following year.
The new agreement will keep the Sun-Times as a commercial client, while taking over printing and distribution for Tribune’s newly acquired suburban papers at cost, making them potentially more profitable as well, according to executives.
“It really is our opportunity to grow,” said Tony Hunter, publisher and CEO of the Chicago Tribune Media Group. “It’s also exciting to establish a new long-term relationship with the Chicago Sun-Times and to ink the print and distribution deal.”
Fleck has served as executive vice president of advertising for Tribune Publishing since January. Previously, he headed up advertising for the Chicago Tribune Media Group.
As part of his new role, Fleck also will oversee TribLocal, a 7-year-old hyperlocal platform offering suburban news through websites and weekly inserts integrated into the Chicago Tribune. Fleck sees TribLocal and the suburban newspapers as complementary products, but did not outline a specific plan for maximizing the relationship.
“We believe there is synergy that can happen to make all the products better,” Fleck said.
Suburban newspapers in the Sun-Times Media portfolio total about 70,000 in daily circulation, according to the semiannual report released Tuesday by the Alliance for Audited Media.
Wrapports, an investment group led by technology entrepreneur Michael Ferro, acquired Sun-Times Media for about $20 million in December 2011. That purchase included the flagship paper, seven suburban dailies and 32 weekly newspapers.
In March 2013, Sun-Times Media laid off longtime suburban editors and staffers to consolidate operations in its downtown Chicago offices. Sun-Times Media agreed to sell the assets of the Joliet-Herald News to Dixon, Ill.-based Shaw Media in December.
Friday’s agreement to buy the full suburban portfolio was intertwined with the printing deal, and to some extent, put the Tribune and the Sun-Times on the same page, according to Brad Bulkley, president of Dallas-based Bulkley Capital, which represented Wrapports in the transaction.
“No matter what they paid for the suburban newspapers, it was important that the Tribune maintain profitability and the print and distribution contract,” Bulkley said. “And from our point of view, it was important that it be a sound economic deal for us going forward for the Sun-Times, and I think we accomplished that on both ends.”
Sun-Times editorial staffers will come over as union employees, and the Tribune will assume the collective bargaining agreement with the Chicago Newspaper Guild, according to Hunter.
On Friday, Ferro said shedding the suburban newspapers will allow the company to focus on its core Chicago newspaper, and its newly launched Sun-Times Network, which will aggregate news content on 70 localized websites across the U.S.
Those sites will be led by Tim Landon, who co-founded careerbuilder.com and cars.com.
“This transaction allows Wrapports to focus on our international digital strategy and to financially strengthen the Chicago Sun-Times,” Ferro said in a statement.
With Tribune Publishing acquiring adjacent properties in two of its eight core markets, another logical opportunity may exist in Los Angeles, where earlier this month the Los Angeles Times sued the struggling Orange County Register for breach of contract and failure to pay more than $2 million in delivery fees. While Griffin would not discuss whether other deals were in the works, he remained open to the possibilities.