The Tribune Co., owner of the Los Angeles Times, The Chicago Tribune and numerous other dailies, filed for bankruptcy today in what can be seen as the latest blow to a newspaper industry reeling from a drop in advertising and the rise of online media.
From the New York Times:
The move came less than a year after Samuel Zell, a Chicago real estate tycoon, took control of the Tribune chain and took on most of the $13 billion debt burden that now threatens to cripple it in the face of a sinking economy and a collapse in advertising.
Mr. Zell said the company had enough cash to continue operating its 12 newspapers, 23 television stations, national cable channel and assorted other media holdings, and the company insisted that the filing would have no effect on employees’ payroll and benefits, or on the vast majority of their retirement accounts.
But in light of its shrinking cash flow, Tribune decided to file for bankruptcy in a Delaware court, with the urging of some of its major creditors who met with Tribune representatives over the previous three days.
The recession and the shift of advertising to the Internet have hit newspapers with the sharpest drop in advertising revenue since the Depression — Tribune’s papers were down 19 percent in the third quarter — and some major newspapers have defaulted on debt or been put up for sale, with no takers. But Tribune’s problems were made significantly worse by the unusual $8.2 billion deal put together last year by Mr. Zell, which took the company private and nearly tripled its debt load, driving the company deeper into debt than any other major newspaper publisher.
The company has cut its staff and products, deeply and repeatedly, in an attempt to stay ahead of debt payments. In May, it also sold one of its most profitable newspapers, Newsday, to Cablevision for $650 million.
Tribune faces more than $900 million in interest payments over the next year, and a $512 million principal payment due in June.
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