Sun-Times Media Group Inc – ‘8-K’ for 10/5/04 – EX-99

On:  Wednesday, 10/6/04, at 7:15pm ET   ·   As of:  10/7/04   ·   For:  10/5/04   ·   Accession #:  950142-4-3461   ·   File #:  1-14164

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         6     22K 
 2: EX-99       Exhibit 99.1                                           5     23K 
 3: EX-99       Exhibit 99.2                                           2     11K 
 4: EX-99       Exhibit 99.3                                           2     10K 

EX-99   —   Exhibit 99.3

EX-99
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                                                                    EXHIBIT 99.3
                                                                    ------------

Dear Advertiser:                                                                

I am now able to provide you with detailed information about the inflation of   
circulation at THE CHICAGO Sun-Times. But first I'd like to thank you for the   
patience you've shown us during this challenging period for our newspaper.      

The information I am sharing with you in this letter was produced during an     
intense, five-month independent investigation carried out by counsel for        
Hollinger International and the law firm Gardner Carton & Douglas LLP with the  
assistance of other professionals from Deloitte and Touche LLP. During the      
investigation, dozens of SUN-TIMES employees were interviewed and our business  
records were extensively examined.                                              

The enclosed press release summarizes the investigation's findings and outlines 
the practices that violated the rules of the Audit Bureau of Circulations. As   
you will see, our investigation found that the inflation of THE SUN-TIMES'      
single-copy circulation began modestly on weekdays and Sundays during the period
covered by the 1998 ABC report and increased over time. Saturday circulation was
never inflated.                                                                 

On discovering the problem earlier this year, I stopped all unacceptable        
practices and the investigation began promptly after I reported my concerns to  
the Company's officers and directors. Our press release includes a table that   
sets out the extent of the overstatement reported in each year since 1998.      

It may seem that this information has been a long time coming, but we wanted to 
ensure this investigation was thorough and our disclosure complete. We intend to
do this only once... and to get it right the first time.                        

Through intensive work, our investigation yielded a great deal of information   
for us to determine the extent of what occurred. Specifically, the investigation
identified three different types of overstatement. First, THE SUN-TIMES         
incorrectly reported the timing of unsold papers in a manner that caused the    
average paid circulation to be miscalculated and inflated. Second, THE SUN-TIMES
at times intentionally failed to report the total number of its unsold papers,  
thereby further inflating the calculation of average circulation. Finally, THE  
SUN-TIMES occasionally included in its circulation copies of newspapers that,   
while actually published and circulated, were ineligible to be counted as paid  
circulation under ABC rules.                                                    

With the knowledge of these methods and using internal, historic records and    
other available information, Deloitte & Touche was able to provide an estimate  
of the circulation overstatement that enables us to set matters right with you. 
As the financial impact of this inflation varies significantly by differences in
advertising program, we are not proposing a one-size-fits-all solution. Instead,
we are implementing a uniform set of restitution principles:                    

o    We will make appropriate restitution for the overstatement of our ABC      
reported circulation.                                                 

o    Our methodologies will err on the side of advertisers for computing the    
compensation amount.                                                  

o    We will compensate advertisers based on the dates their ads ran.           

o    Our settlements will be structured to protect us from paying twice for the 
same wrong.                                                           

As an insert advertiser, we know that you depend on the reported ABC circulation
for implementing your program. We will provide you with a dollar-for-dollar     
reimbursement for all                                                           

EX-99
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insert revenue generated from the overstatement beginning with the April 2001   
ABC report, as well as compensation for reasonable excess printing cost. We have
chosen this compensation starting point in order to expedite restitution, and   
because prior to April 2001 the average overstatement was approximately one     
percent. Our compensation will be based on the overstatement in each of the     
applicable ABC audits for weekday and Sunday circulation.                       

As you may know, a number of attorneys have filed class action lawsuits         
following our public disclosure of the overstatement in June of this year.      
Copies of the class action complaints which contain the name of the plaintiffs' 
counsel will be provided to you upon request.                                   

Over the next few weeks, our advertiser representatives will provide you with   
our estimate of the make whole offer and loyalty rebate amounts. I have         
instructed them to create a 2005 advertising program which can incorporate the  
terms of our settlement offer into your future program.                         

THE SUN-TIMES has a proud history in Chicago. It has been acknowledged for      
decades as one of America's great newspapers. This has been a period of anguish 
and embarrassment for all of us here. We are anxious to put this period behind  
us and we have been working very hard to regain our reputation.                 

Over the past several months, we have made investments in editorial, marketing, 
circulation sales and reader service in order to increase our circulation. In   
addition, you should know that, everyone here at THE SUN-TIMES is committed to  
earning and maintaining your trust. We feel confident that today's announcement 
and our restitution offers mark an important step forward.                      

                        Sincerely yours,

                        John Cruickshank