Chicago Sun-Times files Chapter 11:

The company has one significant creditor — the Internal Revenue Service. The IRS has said Sun-Times Media Group owes up to $608 million in back taxes and penalties from past business practices by its former controlling owner, Conrad Black, now imprisoned for theft from corporate coffers.

Unlike other newspaper owners that have filed for bankruptcy amid steep dropoffs in advertising, including Chicago-based Tribune Co., Sun-Times Media Group has no bank debt. But its IRS debt thwarted efforts to raise new capital.

And USA Today’s free newspaper giveaway strategy isn’t working out so well these days.

USA Today President and Publisher Craig Moon retired abruptly yesterday and said the nation’s biggest newspaper lost 100,000 subscribers from the slowdown in travel. A decline in hotel occupancy means fewer people are there to collect free newspapers.

USA Today gives away 1.3 million daily copies in hotels, which accounts for more than half the newspaper’s 2.3 million total circulation. These giveaway copies are booked as paid circulation. This is obviously a sham but it’s technically considered circulation under newspaper circulation rules.

Here’s the rule from the Audit Bureau of Circulations governing newspaper bulk circulation:

All copies purchased by hotels, restaurants, airlines and rental car agencies for free distribution to their guests and by sponsors for free distribution to hospital patients and nursing home residents, regardless of the number of copies, will be reported as Third-Party Sales when at least 25 percent of the basic price is paid, either in cash or by applicable barter.