The company said its board of directors also is looking at other strategic alternatives to increase shareholder value, including joint ventures or strategic partnerships.
But a sale has been, and remains, widely expected. Key shareholders in the struggling company, which also owns dozens of smaller Chicago-area papers, have been pushing for its sale to boost a badly lagging stock price caused by the industrywide loss of readers and advertisers to the Internet.
To strengthen its attractiveness to prospective buyers, Sun-Times Media has been slashing costs for the past two months in order to lower annual operating costs by $50 million.
Chief Executive Officer Cyrus Freidheim touted the company's "solid portfolio" of publications and Web sites, which he said deliver high-quality journalism and great value to advertisers.
"The steps that we've taken in the past year are designed to make sure that this is true today and will continue into the future," he said in a statement. "Our board's decision to explore strategic next steps now is the right thing to do to ensure the future of the Sun-Times Media Group publications and Web sites and to generate the highest value for our shareholders."
The company said the board has established a committee comprised of directors Gordon Paris, Graham Savage and Raymond Seitz to oversee the strategic process, with Seitz serving as the panel's chairman.
Boston-based K Capital Management, the company's largest shareholder with a nearly 10 percent stake and the most vocal advocate of a sale, applauded the announcement.
"Sun-Times owns very attractive community newspapers but is too small to operate as an independent public company," said Chief Investment Officer Abner Kurtin in an e-mail. "The assets have more value to a buyer then they do as an independent company."
Shares in Sun-Times have lost 80 percent of their value since reaching their 52-week high of $6.94 last April. The stock fell 2 cents to $1.38 in Monday trading before the company's announcement.
By Dave Carpenter