Debt Forces Tribune Co. To File For Bankruptcy

Tribune Co., which owns the Los Angeles Times, Chicago Tribune, The Baltimore Sun and other daily newspapers, has filed for Chapter 11 bankruptcy. The conglomerate also owns TV stations, the Chicago Cubs and Wrigley Field. It's been crushed by a drop in advertising and $13 billion in debt.

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Some of the newspapers reporting on the bailout have their own trouble. Papers owned by the Tribune Company have a total readership in the millions and debts in the billions. The Chicago-based company has filed for bankruptcy protection. NPR's David Folkenflik has the story.

DAVID FOLKENFLIK: Gary Weitman is a senior vice president of Tribune. He says the company won't skip a beat, despite filing for bankruptcy.

Mr. GARY WEITMAN (Senior Vice President, Tribune Company): I can assure you, you will see your paper in the morning. And our readers, our listeners, our viewers, our advertisers will see absolutely no interruption of service or any difference in the quality of the paper they've come to expect.

FOLKENFLIK: But it's been a rough time for Tribune, the owner of eight big dailies plus 23 TV stations and the Chicago Cubs. Real estate magnate Sam Zell took the company private a year ago, putting down only several hundred million dollars of his own to do it. That highly leveraged deal left the company deeply in debt - just shy of $13 billion, according to bankruptcy papers filed yesterday in Delaware. And the economy has gotten a whole lot less forgiving in the intervening year. Tribune's Gary Weitman.

Mr. WEITMAN: We simply have too much debt in light of the current environment. And this gives us the opportunity to continue operating our businesses without interruption while we go about the process of restructuring our debt and making it more manageable.

FOLKENFLIK: Bankruptcy is a story common enough to airlines and Internet start-ups, but it's a new one for major newspaper companies. Yet in retrospect, the equation seems pretty simple. Newspaper revenues are falling steeply as advertisers and readers head to free Web sites. And Tribune's debt payments are daunting.

Ms. LAUREN RICH FINE (Research Director, ContentNext): It really is just a company fessing up that they need some help. It's a way of putting their creditors at bay. It's a way to legally work through some of their problems - in this case, massive amounts of debt.

FOLKENFLIK: Lauren Rich Fine is research director at ContentNext, a digital media company. Some suitors previously expressed interest in the Los Angeles Times and the Baltimore Sun, but Fine says it's a tough time for a fire sale.

Ms. FINE: This is hardly the market to try to do wholesale sale of assets. It doesn't matter what the industry, the credit markets are very difficult. It would be hard to get financing.

FOLKENFLIK: And that's a tremendous distraction. Former Minneapolis Star Tribune editor Tim McGuire says journalists are talking these days, but about...

Mr. TIM MCGUIRE (Former Editor, Minneapolis Star Tribune): Things like leverage. And you're talking about the soundness of the pensions and the future of the health plans. And you're not talking about journalism, you're talking about survival.

FOLKENFLIK: But Tribune is not alone. The owners of the Star Tribune and the Philadelphia Inquirer are also laboring under heavy debt obligations, as are the McClatchy and MediaNews chains. It makes Tim McGuire wince.

Mr. MCGUIRE: Quality journalism has been looking for a good business model for the last few years. But right now, quality journalism is looking for owners who are not leveraged up to their turtlenecks.

FOLKENFLIK: Last spring, Zell made the rounds to his new properties but sometimes chafed at what he felt was resistance to change, as in this recording obtained by NPR of a closed-door meeting with Tribune journalists in Washington, D.C.

(Soundbite of closed-door Tribune Company meeting)

Mr. SAM ZELL (Chairman and CEO, Tribune Co.): I don't have a choice. Every month, I've got to make the payment. Every month, I've got to make the payment. So the question is, how do I make the payment? Well, I can't have redundancy, and I can't have a bloated Washington bureau for a declining business. It makes no sense.

FOLKENFLIK: Under Zell, buyouts and layoffs have been accompanied by snappier layouts and shorter stories driven by the desire to lure back vanishing readers. So the story of Tribune continues. This week: Chapter 11. David Folkenflik, NPR News.

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Tribune Files For Chapter 11 Bankruptcy

The Tribune Co. — publisher of five Pulitzer Prize-winning newspapers and owner of the Chicago Cubs baseball team — filed for bankruptcy protection Monday in an effort to cope with almost $13 billion in debt.

The company listed $7.6 billion in assets and some $12.97 billion in debt in its filing in U.S. Bankruptcy Court in Delaware. JPMorgan Chase and Merrill Lynch were listed as the company's largest unsecured creditors.

In a statement on its Web site, Tribune said its newspapers and television stations will continue to operate normally as the company restructures. The company made routine motions to continue its operations, including maintaining payroll and health benefits for employees, which are expected to receive approval within a few days. The Chicago Cubs and Wrigley Field were not part of the Chapter 11 filing, the company said.

"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," Tribune Chairman and Chief Executive Officer Sam Zell said in a statement.

Founded in 1847, Tribune — the publisher of the Chicago Tribune and Los Angeles Times — took on massive debt when it went private last year under a deal led by Zell, a Chicago real estate mogul.

The company has tried to raise money and cut costs by selling off other interests and axing jobs. Earlier this year, Tribune sold Long Island, N.Y., newspaper Newsday to Cablevision Systems Corp. Tribune also sold a 10 percent interest in online job site CareerBuilder to Gannett Co. for $135 million.

In addition, the company has cut jobs at its newspapers, including eliminating 80 editorial jobs earlier this year at the Los Angeles Times, the country's fourth-largest newspaper by circulation.

The company has also wielded the ax at The Baltimore Sun, the Orlando Sentinel and The Hartford Courant and other newspaper and television stations.

Newspapers around the country have been reeling as circulation rates decline. Last week, E.W. Scripps announced that the Rocky Mountain News was up for sale.

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