<abbr title="2008-12-07" class="post-date">http://www.nytimes.com/2008/12/08/business/media/08tribune.html?_r=1&dbk=&pagewanted=print</abbr> December 8, 2008 <nyt_headline version="1.0" type=" "> Tribune Co. Could Be Flirting With Bankruptcy </nyt_headline> <nyt_byline version="1.0" type=" "> By RICHARD PÉREZ-PEÑA and MICHAEL J. de la MERCED </nyt_byline> The Tribune Company, the newspaper chain that owns The Chicago Tribune and The Los Angeles Times, is trying to negotiate new terms with its creditors and has hired advisers for a possible bankruptcy filing, according to people briefed on the matter. Tribune is in danger of falling below the cash flow required under its agreement with its bondholders, but it is not clear how seriously Tribune is thinking about seeking bankruptcy protection. Analysts and bankruptcy experts say that the hiring of advisers, including Lazard and Sidley Austin, one of the company’s longtime law firms, could be a just-in-case move, or a bargaining tactic. The company would not comment on Sunday. Tribune went private last December, paying more than $8 billion in a deal that put Samuel Zell, a real estate billionaire, in control of the company. It has struggled since then under the resulting debt, forcing deep cuts at its newspapers. It also sold Newsday to raise cash. The Tribune Company owns 23 TV stations and 12 newspapers, including two of the eight largest in the country by circulation. As of Sept. 30, The Los Angeles Times had weekday circulation of 739,000 and the Chicago Tribune had 542,000. Tribune has been trying to sell the Chicago Cubs baseball team; the team’s stadium, Wrigley Field; and the company’s share in a regional cable sports network. Such a deal, which could bring the company more than $1 billion, has been a crucial part of its strategy since last year. But the sale — originally expected to take place before the last baseball season — has been delayed by several factors, including the tight credit market. It is not clear how recent federal allegations of insider trading against Mark Cuban, believed to be the highest bidder, could affect the sale. Rating agencies say Tribune’s short-term problem is not in making payments on its debt. Instead, the company is struggling to comply with a requirement that its main debt from its acquisition of the company not exceed nine times its earnings before interest, taxes, depreciation and amortization. A quarterly test of that compliance is expected at the end of this month. A failure to comply would mean Tribune had technically defaulted, even if it continued to make payments. Technical defaults can sometimes lead to bankruptcy. Companies in that position usually negotiate new terms with their lenders, often paying higher interest rates in return for less stringent cash-flow requirements. But such negotiations have become more difficult in recent years, as lenders have become more likely to sell pieces of debt to third parties, which must approve any new terms. Like most newspapers, Tribune’s have suffered double-digit percentage declines in advertising this year, as ads and readers continue to shift to the Internet, and the recession has prompted retailers and other businesses to curtail their ad spending. What makes Tribune’s problems more serious is the heavy debt load it carries as a result of last year’s buyout. The weak state of newspapers has made some lenders more loath than usual to force bankruptcy, fearing that it could worsen their chance of significant recovery, or at least delay it. The companies that own The Inquirer and The Daily News in Philadelphia and The Star Tribune in Minneapolis recently suspended debt payments but have not filed for bankruptcy. As the economy weakens, other lenders have become more aggressive about forcing debtors into bankruptcy when they believe such a move is inevitable, to preserve a company’s valuable cash reserves. Delaying can make it hard to emerge from bankruptcy successfully. Andrew Ross Sorkin contributed reporting.
That's kind of sad, but at the same time, not entirely. They don't appear to be doing much right to me.
In other news, I hear that Ben Gordon is flirting with another LuvABull. And ladies, sometimes a slap to the face is better than a stabbing!
Good day and bad day for TribCo. Bad, obviously, is the bankruptcy. Good is the criminal complaint filed against Gov. Rod B. alleging, along with the proposed sale of a senate seat and withholding funding from a hospital for lack of campaign contributions, the attempted shakedown of the Trib to force firing of editorial board members critical of the gov in exchange for state money benefitting the Cubs. Buh-bye, helmet hair. To think I initially liked you for snubbing Dick Mel and Richie Daley.
It is sad that Zell ruined the Tribune (it looks like a silly tabloid now) and a couple months later it goes belly up. I never read the Trib every day but it was a classic style newspaper all through my childhood and adulthood and now it looks like a joke. All for a failed business plan. Of course, perhaps the demise was inevitable anyway.
I think they definitely needed a new business plan (most every newspaper does), but they picked a bad one. Denny, remember what we were saying when Sam Smith got axed? http://sportstwo.com/forums/showthread.php?t=113267&highlight=tribune My summary But hey, KC Johnson does the same thing for less. Just worse.
The tribune company isn't the only company in trouble. The successful trend in the newspaper business has been to do more online presentation and blogging. The Trib has merely been slower at these things than most. The Trib and the LA Times are considerable brand names and news agencies, and have been for a long time (there's several others they own). The idea of owning the newspaper and the TV station and the ballpark and the baseball team is interesting. They just didn't pull it off very well. The Cubs used to be a community "owned" team (fans felt ownership), but the announcers have been changed frequently and the team feels like a business these days.
I think the Wrigley's (or whoever sold out) made off like bandits a year or two ago. Zell is the guy who is down on his luck. The idea of owning the newspaper and the TV station and the ballpark and the baseball team worked great, and still does. It's the papers and publishing arm that's going under. If they weren't selling 3.2 million tickets to Cubs games each year, I'd be more inclined to agree with you. They might not be "your" team anymore where you could walk up and get good seats to any game, but I'd much rather they spent the money actually trying to win instead of just trying to turn a profit. The cubs are finally acting like a big market team, which they are.
