Sun-Times sags in Chi-town showdown

Like a pair of proud but over-the-hill prizefighters, the Sun-Times and Tribune are slugging it out in a deadly duel to determine who will remain standing as the sole daily in Chicago.

Both newspapers are operating under Chapter 11 protection and both have seen far better days in terms of circulation and advertising sales. But it’s hardly a fair fight. With an overwhelming advantage in weight, reach and stamina, the Tribune almost certainly is going to win.

Sooner rather than later, the recession, the secular decline in newspaper advertising and a legacy of dysfunctional management will kill the feisty Sun-Times, leaving the Trib alone to serve a metropolitan area of nearly 9.8 million souls.

It’s sad but true: Even in a town as big, bold and vigorous as the Windy City, there evidently is no longer enough business to support more than one metro daily.

The Tribune already dominates the market, selling 501,202 daily papers to 312,141 for the Sun-Times, according to the Audit Bureau of Circulations, an industry-funded group. On Sunday, the day of the week that traditionally produces half of a newspaper’s advertising revenues, Trib circulation thumps the Sun-Times by a threefold margin of 858,256 to 254,379.

On the web, the Tribune outdraws the Sun-Times by nearly 2 to 1. The Tribune attracted 4.8 million unique visitors in June vs. 2.8 million for the Sun-Times, according to Editor and Publisher.

As the largest paper in the market, the Tribune not only sells more advertising than the Sun-Times but probably is gaining market share at the expense of its money-losing competitor.

The publishers don’t release detailed ad sales statistics for their individual properties, but it is well known that economic downturns historically have been hard on No. 2 newspapers in the few cities still fortunate enough to have competing dailies. That’s because advertisers tend to channel a greater percentage of their dollars into the dominant paper when recessions force them to cut over-all spending.

To make things worse, the most severe recession since World War II hit at a time when budget-conscious advertisers already had begun diverting dollars away from newspapers to the cheaper and more targetable interactive media. Advertisers in Chicago, as in the rest of the country, have cut back on newspaper expenditures in every major category: retailing, employment, auto and real estate.

Although the Sun-Times is in no position to wait for the economy to improve, the Tribune is.

The Sun-Times Media Group, the parent of the newspaper and some five dozen other weeklies and dailies in the Chicago area, was down to a mere $23 million in cash at the end of June, according to bankruptcy filings provided by reporter Ann Saphir of Crain’s Chicago Business.

Despite continued aggressive cost cutting, the Sun-Times Group lost $2.3 million in June. Assuming no change in the burn rate, the company, which is desperately seeking a wealthy patron to buy it in what would be a prodigious act of civic charity, would be broke within 10 months.

Meantime, the Tribune Co., which owns the eponymous newspaper, delivered a 15% profit in June. The company sought bankruptcy protection in December just days before the one-year anniversary of the $13 billion transaction that recklessly overburdened it with debt.

The Tribune Co., which owns an array of broadcast and publishing assets across the nation, generated a net profit in June of $43.9 million on revenue of $289.7 million, according to Trib columnist Phil Rosenthal. The company ended the month with $740.5 million in cash, or nearly 32 times more of a cushion than the struggling Sun-Times.

The Tribune shrewdly is pressing its advantage, too, as the dominant, multi-media force in town. In addition to publishing the flagship newspaper, Tribune Co. blankets Chicago with:

:: A jazzy, free, youth-oriented tabloid called the Red Eye that has been chewing into news-stand sales for the Sun-Times since 2002. Some 200,000 free copies of the Red Eye flood the market every business day, with 130,000 copies distributed on Saturday.

:: A tabloid edition of the broadsheet Chicago Tribune sold side-by-side with the Sun-Times at vending machines and transit stops. Home-delivery subscribers still get a broadsheet.

:: Hoy, free a daily Spanish-language tabloid newspaper and an affiliated website, ViveloHoy.Com.

:: Some 65 hyper-local Triblocal weekly print supplements and websites to combat a similar number of daily and local community properties and websites published by the Sun-Times.

:: Powerful broadcast properties including WGN television, a CW affiliate; WGN-AM, a major talk-radio outlet, and CLTV, a 24-hour cable channel featuring local news.

:: Chicago, a slick monthly city magazine.

:: The Metromix entertainment website and a new compendium of 60-plus local blogs called ChicagoNow.

A great example of how all this media power was brought to bear occurred in the spring, when Target wanted to promote the designer brands featured in its bargain-priced stores by opening a Bullseye Bazaar in downtown Chicago.

A Bullseye Bazaar, which is known in the trade as a pop-up store, is opened for only a few days in a prominent location to capture the attention of consumers and press. Then, it is shut down.

As luck would have it, the Chicago Tribune happened to have prime, ground-floor retail space available at its headquarters building on tony Michigan Avenue. The space at the Tribune Tower recently had been vacated by the McCormick Freedom Museum, a collection of exhibits promoting the First Amendment.

Randy Michaels, the chief operating office of Tribune Co. explained how the Tribune capitalized on the opportunity in a memo to the staff:

“Target bought a four-page wrap-around section in RedEye, additional ads in Chicago Tribune and on its website, chicagotribune.com. The stars of The CW’s ‘Gossip Girl’ attended the press preview of the store.”

The ad purchases were accompanied by some nice ink in the Tribune and favorable play at CLTV.Com. The Sun-Times helpfully pitched in with some buzz, too.

“Target, a major client, is extremely happy,” Michaels said in his memo. As further proof, take a look at the graphic below, where a Target ad is stripped across the bottom of the front page of yesterday’s Tribune.

“In a tough ad environment” the close collaboration of a media company and its advertisers “means a lot,” Michaels told the staff.

In fight to the finish wth your cross-town rival, it may mean even more.