Tribune Co. Files For Bankruptcy

Chicago-Based Media Conglomerate Tries To Deal With $13 Billion Debt

(CBS/AP)  Media conglomerate Tribune Co., smothered by $13 billion in debt and a drop-off in advertising, on Monday became the first major newspaper publisher to seek bankruptcy protection since the Internet sent the industry into a tailspin.

Most of the company's debt comes from the complex transaction in which the company was taken private, with employee ownership, by real estate mogul Sam Zell last year. Although Tribune's next major debt payment isn't due until June, the company has been in danger of missing financial targets set by its lenders.

Other newspaper companies have also struggled with their debts, but many have negotiated with lenders to ease their targets in exchange for higher interest rates.

"Tribune's debt was so outsized and so disproportional to its cash flow compared to these other companies that it can be the sore thumb sticking out rather than an example of the industry," said Ken Doctor, media analyst with Outsell Inc.

The Tribune owns the Chicago Cubs baseball franchise, as well as the Los Angeles Times, Chicago Tribune, The Sun of Baltimore, The Hartford (Conn.) Courant, six other daily newspapers and 23 television stations.

Legal reporter Henry Weinstein took a buyout a few months after Zell took control of the company.

"He's had several sets of layoffs. He's lost Pulitzer Prize winners. He has diminished the quality of his own asset rapidly in the last several months," Weinstein told CBS News correspondent Ben Tracy.

But pain at the presses is a story from coast to coast as several newspapers have folded for good. And in the past two years, 43,000 newspaper jobs have been cut, reports Tracy.

The Tribune's lending agreements require it to keep its debt at a certain point relative to its cash flow. Those deals become harder to meet as revenue declines, even if the debt itself doesn't increase.

And while Tribune had planned on meeting its obligations with lenders by reaping income from its various properties, the recession has led consumers and advertisers to severely cut spending this year, exacerbating pressures the industry already was facing because of the migration of readers to the Internet.

To make a debt payment this year, Tribune sold the Long Island daily Newsday to Cablevision Systems Corp. for $650 million.

To generate additional cash - and meet the next debt payment of $593 million, due in June - Chicago-based Tribune has been looking to sell the Cubs, Chicago's storied Wrigley Field and the company's 25 percent stake in a regional sports cable channel. But a tight credit market has made it tougher for potential buyers to obtain loans.

"So, how did we get here? It has been, to say the least, the perfect storm," Zell wrote in a memo to employees. "A precipitous decline in revenue and a tough economy have coupled with a credit crisis, making it extremely difficult to support our debt. All of our major advertising categories have been dramatically impacted."

Monday's filing, made in bankruptcy court in Delaware, could give Tribune time to raise cash by waiting until the credit market eases to sell off assets. It also could put additional pressure on its lenders to ease the financial targets that Tribune must meet.

The company entered court protection with $13 billion in debt and $7.6 billion in assets.

Brent Jones, a Sun reporter and a vice chair with the Baltimore-Washington Newspaper Guild, said the bankruptcy filing unnerved the newsroom and prompted questions about whether Tribune might cut more jobs or sell the paper.

Zell said the company's operations will function as before during the bankruptcy protection period. He also said in his memo that the Cubs franchise is not part of the bankruptcy filing. The Cubs issued a separate statement saying that the timetable for a sale has not changed.

John Penn, a partner who specializes in bankruptcy at Haynes & Boone LLP, said the Tribune's decisions about whether to sell papers or other assets would boil down to one issue: "If it makes cash, keep it. If it loses cash, get rid of it," he said. "And that's either by selling it, closing it or whatever it takes to stop the bleeding."

Stephen Lubben, a bankruptcy profession at Seton Hall Law School in Newark, N.J., said Tribune employees are particularly vulnerable because they also own all the company's stock. Shareholders are last to be paid in bankruptcy, and they often end up with nothing, with the shares getting wiped out. Employee-stock ownership programs are not likely to be treated any differently under the bankruptcy code, Lubben said.

For instance, UAL Corp.'s United Airlines adopted an employee-ownership structure in 1994, causing employees to suffer steep losses after the company declared bankruptcy in 2002.

"That's a huge hit," added David Skeel, a bankruptcy professor at the University of Pennsylvania law school. "That will no doubt be the subject of much discussion in this case."

[vomichairman-2009]

Why print newspapers in the first place? It''s strictly a failure to adapt to the changes in the GLOBAL economy that [[ have been ]] taking place over the past 15 years; a lack of foresight by a bunch of old die-hards who can''t understand that there is a new economy and can only keep tinkering around the edges instead of buckling down and making the necessary [[ virtual infrastructure ]] changes that need to be made ; big bloated bureaucracies that are more like supertankers unable to stop themselves from being hijacked by Somali pirates running circle around them in speedboats.

Virtual Organize It, Stupid!

Here is a link to an article I recently wrote titled "Social Networks: Virtual Organize It, Stupid!"

http://virtualorganizationinstitute.com/social-networks-virtual-organize-it-stupid.pdf

Pierre Coupet
Founder, CEO & Doctor of Virtual Organization Management
Virtual Organization Management Institute

[centerfall94]

DUH. What do you think happens in a depression? More to come for sure.

Thank Bush, Cheney, Rummy, and Haliburton.

Posted by sockpuppet4 at 04:41 PM

Don''t forget McSame, Failin, the neocons and the right wing radio haters. They''re just as much to blame.

[xpineapple]

Maybe Obama will want to bail them out too, huh?

[McHineguy]

Americans have lost faith in their traditional news organizations. First, they became entertainment, then they gave up their objectivity, then their credibility. Finally, they have failed in every way. Kinda like the Big 3 car companies. The public will go somewhere else and bailouts only help for a little while.

[nothappyatall]

The Tribune owns the Chicago Cubs baseball franchise"

LOL that should have been the FIRST thing they dumped long ago as totally unrelated to the news industry

[tallyman2008]

Lot more ''newspapers'' about to join them

We are all here, on the Internet now, yes ?


These days, to work for a newspaper

Is the equivalent from 500 years ago

If you were a scribe hand-writing books for the King

Then along came the printing press


Would be wise to find a new line of work

[jowand]

Great news, maybe this is the hope the change the future we were promised, it should make the front page.

[hitoyou11]

Itis all the fools that are on here that cost the paper. No one on here knows what the Hellllll they are talking about. All that goes on here is paople running off the mouth.

[credibility2]

The Wrigley family should have never sold their concerns in the 1980s. The grandson of the founder did so just to turn a quick buck. Then about a year ago, the company went public. A lack of advertising is killing the print medium, but anyone who thinks reading off of the Internet is a good thing has a one-dimensional and vapid life. I''ve seen many publications fold because of this and going to a digital only version. What I used to read is no more and I refuse to read anything from the Internet, unless is for quick research. I''m published writer and find purely a digital version a way to get rid of creative staff.

[koyt1]

Did no one tell them that all they had to do is go to D C with the union boss and their hand out to get the 15 Billion they need?

[questionnews]

Nobody will miss the LA Times except the homeless. Oh, what will they use for toilet paper now?

[cattiej]

It''s online services that have cost the newspaper their lifeline. I knew this would happen several years ago. We live in a society that wants instant service, instant food and instant everything...The first form of communication was the written word, the written word in now what you are seeing. People across the country canceled their newspapers. TV News is where the young people get their information. It all reminds me of the nursing home, where everyone just sits around the TV and watches for hours..after awhile, they don''t even hear whats being said. When is the last time you went to the local library??? Our library is basically empty most of the time. We buy junk made in China, we pay highly inflated prices to go to the baseball games, who can we blame, ourselves. I hope the baseball players are not paid millions anymore. They also need to pay the price. Most people can''t afford to go to a baseball game anymore.

[inketolstoy]

I''ll give ''em five bucks for the Cubs. Not a nickle for the L.A. Times or the Tribune.

[indianaman13]

I guess we didn''t learn what happens when the financial world is run on credit. The Depression was caused by Stocks being traded on credit. The financial system back then was no where near as complex as the one today, but the basic principles of business are the same. The financial system may be 100 times more complicated today but when everything is on credit, and inflated to a ridiculous point (Caused by Republicans through Reagan to bankrupt Russia), it all comes crashing down to earth because it all those credit figures are imaginary. Credit rates and Inflation rates all set by a group of men who''s sole purpose is making money for themselves and to keep the commoners on just enough to get by.

[whitemale08]

This is not just the Bush/Hannity/Limbaugh-Depression but it''s the ''breakdown crisis''.

We are all heading fast for a New Dark Age.

One day you guys will listent to me but it will probably be too late.

larouchepac.com

[matrixrx2003]

Everybody is now crying they need a bail out and are over extended and in Debt.

[barbaraf4]

I guess they will want to be bailed out too.