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By Jaclyn Diaz
A coalition of labor organizations is among the group of financiers that are ponying up to purchase the Chicago Sun-Times.
ST Acquisition Holdings LLC announced July 13 that it acquired from Wrapports LLC properties that include the Sun-Times, the Chicago Reader, and straightdope.com. ST Acquisition Holdings is spearheaded by Edwin Eisendrath (D), a former Chicago alderman.
The terms of the deal were not disclosed.
The purchase ended efforts by Tronc Inc., which owns the Chicago Tribune and other news outlets, to buy the paper.
Eisendrath, who made an unsuccessful bid in 2006 to unseat then-Gov. Rod Blagojevich (D), will serve as CEO of the Chicago Sun-Times.
Jorge Ramirez, president of the Chicago Federation of Labor, will serve as the chairman of the Sun-Times.
In addition to the Chicago Federation of Labor, the other Chicago-based labor organizations that will be shareholders of the company are: LIUNA Chicago Laborers’ District Council, Chicago Regional Council of Carpenters’ Labor & Management Committee, Service Employees International Union Healthcare Illinois, Indiana, Missouri & Kansas, and SEIU Local 1.
Gompers-Lewis Media Corp., a limited liability corporation owned by the International Union of Operating Engineers Local 150, is also a shareholder of ST Acquisition.
Organized labor and media are no strangers, Robert Bruno, professor and director of the Labor Education Program at the University of Illinois at Urbana-Champaign, told Bloomberg BNA July 13.
From the 1930s to the 1940s, labor groups printed their own papers, newsletters, and other communications. Later on, they eventually ran their own television and radio programs on local access channels, he said.
The Sun-Times deal is different, Bruno said. As far as he knew, this is the first time a group of labor organizations have become part owners of a commercial for-profit publication.
Unions are stakeholders in other companies, however.
“It’s not at all uncommon for labor unions to be investors in companies that they have organized” or in industries in which union members work, he said. “There is a robust degree of shareholder activism where unions are investors and own large shares of stock in companies.”
Whether other labor unions will consider investing in or buying fledgling newspapers in the future is “the $60 million question,” Bruno said.
A number of variables will have to be in place for that to work. People will be watching the Sun-Times to see if the investment in the company is successful, profitable, and whether union-ownership sparks readers’ interest, he said.
The deal will “garner a lot of attention” by labor unions and companies going forward, Bruno said.
The acquisition group’s goal is to combine the various outlets into a multi-platform news organization, Eisendrath said. The group also purchased Answers Media, a digital communications company.
“The additional acquisition of Answers Media will allow us to expand and contemporize these channels with high-quality multimedia content and innovative technology solutions that will attract a broad audience of new readers and advertising partners,” he said.
The Sun-Times will move headquarters later this year.
In May, Tronc announced it had entered into a nonbinding letter of intent to acquire Wrapports.
The deal drew criticism from labor organizations like the Chicago News Guild, which said the proposal would lead to “a virtual print media monopoly in Chicago, with Tronc owning the Tribune, Sun-Times, Reader, Red Eye, Chicago Magazine, and a plethora of suburban newspapers,” the union said on its website.
The proposal drew scrutiny from the Department of Justice’s Antitrust Division, which said the merger of the two daily newspapers in Chicago would raise significant antitrust concerns.
The DOJ announced July 12 it had dropped the investigation because of ST Acquisition’s purchase of the paper. The company does not currently own an interest in any other newspaper, the DOJ said.
Individual investors in the paper are: Jeff Bohnson, CEO of Answers Media; William Brandt, founder and executive chairman of Development Specialists Inc.; John Eisendrath, the brother of Edwin Eisendrath; Stuart Ellison, a private financier; Leonard Goodman, a lawyer for the jailed Blagojevich; attorney Sidney Herman; Elzie Higginbottom, a Chicago housing developer; and Linda Yu, a former journalist and news anchor for WLS-Channel 7 in Chicago.
Two other investors have requested to remain anonymous, said Eisendrath, who announced the details of the purchase during a press conference July 13.
How much each investor put forth to buy the properties will remain confidential as a stipulation of the deal, Eisendrath said.
To contact the reporter on this story: Jaclyn Diaz in Washington at jDiaz@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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