Why Are The Sun's Backers Getting Cold Feet?

Last night, word emerged that The Sun, the right-leaning daily founded by Ira Stoll and Seth Lipsky in 2002, may end up shutting down at the end of the month if the company doesn't find additional investors willing to step in. The Sun has had financial problems since day one and it never made much headway in the circulation department. This time, though, it looks like it could be the end of the line: The paper even posted an account of its problems on its website. (Perhaps in the hope that another super-conservative, Jewish billionaire will turn up with his checkbook.) So why are the Sun's current backers—including Bruce Kovner, Tom Tisch, and Michael Steinhardt, left—giving up? They've got plenty of other stuff to worry about, that's why.

There were a handful of wealthy neocons involved in financing the paper in the early days. There was Conrad Black, who once headed up the publishing conglomerate Hollinger, and who is now in prison. It's unlikely that Black has been part of the equation for quite some time given his legal travails. Other investors included Bruce Kovner, Roger Hertog, Tom Tisch, and Michael Steinhardt. Regarded as secretive (and rather paranoid), Kovner presides over Caxton Associates, a fund that hasn't exactly been raking it in since the credit crisis began last year. There have been persistent rumors about less-than-impressive returns at Caxton for some time. In 2007, Kovner was estimated to have earned $100 million, down from $715 million a year earlier, according to Trader Monthly. And reports about his returns thus far in 2008 aren't encouraging.

Steinhardt, one of the most famous hedge funders of all time, is retired from the business and spends his time giving to Jewish charities and amassing his art collection. But he may be seeing his multi-billion dollar nest egg slowly withering away. He reportedly has a sizeable amount of money invested with Steve Feinberg's Cerberus Capital, the private equity fund that made major investments in GM and GMAC in 2007, and has been battered in the market in recent months. (See the story about Cerberus in today's Times.)

None of these men are in the poorhouse, of course, and they could afford to keep funding the paper if they had to. (They've said they're willing to continue to support the paper, just as long as other investors come to the table.) But it's also not entirely surprising that they're deciding to cut their losses and move on. Did we mention that after $70 million and six years, the paper still only has 16,000 paying subscribers?

New York Sun May Close if Millions Aren’t Found [NYT]
The Future of the Sun [NY Sun]