Dec 8, 2008 9:17 pm US/Central
Tribune Company Files For Bankruptcy
CHICAGO (CBS) ―
Media conglomerate Tribune Co. has filed for bankruptcy protection, pressured by high debts.
The Tribune Company has been dealing with $13 billion in debt since Sam Zell took over the company a year ago. The company has to pay $70 million of that debt Monday. The company is another victim of declines in advertising revenue. It already cut costs by laying off newspaper employees and selling off some assets, including its newspaper in New York.
A bankruptcy court judge will soon be making many of the company's major financial decisions.
"It prevents the creditors, the banks from coming after them and taking things and selling them at fire sale prices," Ann Saphir of Crain's Chicago Business said.
With 10 daily newspapers, 23 TV stations and billions in debt, Zell told employees "we will continue to operate our business as usual."
The publisher of the Chicago Tribune, Tony Hunter, promised readers "the level of service and news coverage you've come to expect."
The Tribune is still negotiating to sell the Cubs baseball team and hopes to get that done by the end of the year to offset some of that debt.
The Chicago Cubs franchise, including Wrigley Field, is not included in the Chapter 11 filing, the company said in a release. Efforts to monetize the Cubs and its related assets will continue. Their sale could fetch nearly $1 billion.
"Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers," Zell said in a statement. "Unfortunately, at the same time, factors beyond our control have created a perfect storm -- a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt.
"We believe that this restructuring will bring the level of our debt in line with current economic realities, and will take pressure off our operations, so we can continue to work toward our vision of creating a sustainable, cutting-edge media company that is valued by our readers, viewers, and advertisers, and plays a vital role in the communities we serve. This restructuring focuses on our debt, not on our operations."
Most of its debt comes from the complex transaction in which the company was taken private by Zell.
Although the next major principal payment isn't due until June, analysts say Tribune has been in danger of missing lender-imposed financial targets.
Tribune made the filing Monday in bankruptcy court in Delaware.
The Tribune will apparently continue to be published, if the bankruptcy judge approves. And so will the company's other papers and broadcast properties, like WGN Radio.
CBS 2's Mike Parker talked to the Tribune's signature columnist, John Kass.
"It's a great newspaper. I think it's indispensable. Who else is going to watch political corruption? Who will report in context how government works?" Kass said.
But at this point, it is impossible to predict how bankruptcy protection and a judge will affect the size of the paper's already diminished staff.
"They will be beholden to a higher power," Saphir said.
"I don't think the bankruptcy itself is likely to have much impact on the actual operations," David Eaton of law firm Kirkland and Ellis. "I think readers will still get their paper, viewers will see the same stations that they're used to. This is really about finding a way to pay back the debt."
Kass added, "The Tribune's here, we're doing a good job, we're still going to be here. Mayor Daley, I know you're watching, I know you love me. You'll be reading me every day."
Chicagoan James O'Shea, a former editor of the Los Angeles Times, which is owned by the Tribune Company, said he feels sure readers will see a change in their newspaper, even if that newspaper's still coming out every day.
O'Shea is writing a book about the Tribune, and was once its managing editor, before being promoted to editor of the L.A. Times. He was forced out by Zell's people when he refused to make wholesale cuts.
"You have to figure out ways to raise revenue and if you don't raise revenue, you can't just keep cutting and expect to get through this; there was too much debt," O'Shea said.
When Zell took over the Tribune he said he would use his business sense to make the company profitable.
"I think the message is that there's a new sheriff in town," he said. "It's all about the three R's: relevance, revenue and respect."
Kass said the staff is unafraid of the future and, in his words, "nobody's jumping out of windows." But another reporter says that with the recent firings and expected future layoffs, the newsroom slogan should be, "the beatings will stop when morale improves."
O'Shea is worried about his old paper.
"The Tribune has long been one of the watchdog organizations of the city and with fewer reporters and fewer resources, you're not going to be as vigilant," he said.
CBS 2's Mike Parker and Chief Correspondent Jay Levine contributed to this report.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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