ROBERT SIEGEL, host:
One of the nation's biggest newspaper publishers filed for bankruptcy today in a federal court in Delaware. The Chicago-based Tribune Company owns the Los Angeles Times, the Chicago Tribune, The Baltimore Sun, and five other major daily papers, as well as 23 television stations, not to mention the Chicago Cubs. The company says it needs the legal protection to restructure its enormous debt. NPR's David Folkenflik joins us from our studios in New York. Hello, David.
DAVID FOLKENFLIK: Hey, Robert.
SIEGEL: Tribune Company does have huge debts. When people try to explain how it got that way, what do they say?
FOLKENFLIK: Right. Well, people say, you know, is this cyclical? That is, you know, is it just a tough stretch for the industry? They say, is it structural? Is the industry falling off the cliff? And in some ways, the best answer is, yes, it's both of those things. It's a time when, of course the economy is tanking, rip large. It's a time when the newspaper industry is having tremendous troubles as readers and advertisers migrate to the web.
And then there's that debt that you talked about, and that's a huge element when it comes to Tribune. Sam Zell has owned the Tribune for about a year, and he took over that company, and it took it private by using this kind of baroque tax structure to put down almost relatively no money, several hundreds of millions of dollars to take over a company valued at about eight billion.
Well, in papers filed today in a Delaware court, Tribune declared that it was nearly $13 billion in debt, and although it could pay off the $70 million repayment due today, it appears as though the company is in some ways not going to be in compliance with some technical aspects of their loan agreements, and also, that there are some big looming debt payments due in the future that it may have some trouble with. The bankruptcy is a way to get some protection from creditors and a little breathing space.
SIEGEL: Well, what does it mean for people who will expect to see the L.A. Times or, for that matter, the Chicago Tribune on their doorstep in the morning? I assume the papers will still be there tomorrow?
FOLKENFLIK: That's right. They're still publishing. You know, Tribune Company owns something like 23 local stations. Those will still be broadcasting. In an email to employees today at the Tribune and in a memo sent to advertisers who work with the Tribune Company, you know, Sam Zell said the company is still functioning. It's still operating at full throttle. We'll be here. We'll still be reporting the news.
That said, over the course of the past year and, indeed, in the several years leading up to Sam Zell's purchase, there have been some fairly significant cuts. There's been deep, deep cuts in Washington, of the Washington bureau of the combined newspapers, and, in fact, there's been a significant scaling back of coverage abroad and locally as well. So there are some concerns about what they need to figure out ways to pay the debts in the newsrooms
SIEGEL: As you said, everybody knows there are structural problems facing the newspaper industry. Newspaper readership is down in many respects. Is there anything new here? Any news for the industry, the newspaper industry that people didn't know before?
FOLKENFLIK: Well, let's put it this way. It's the most stark declaration of the troubled the newspaper industry finds itself in. You know, The McClatchy Company, which bought the Knight Ridder newspaper chain, has put The Miami Herald up, is reportedly is seeking suitors. The Scripps Company is seeking a buyer for the Rocky Mountain News out in Denver. The New York Times says it wants to borrow $225 million against its headquarters here in Midtown Manhattan.
That's pretty significant pinches in pretty significant times. Bankruptcy can be useful. It can offer you some protections to renegotiate your rates. So, you know, a friend of mine I talking about this with today said, look, you know, if somebody goes to alcoholics anonymous, on the one hand, its them saying, I am an alcoholic. There are real troubles here. On the other hand, in a sense, they are admitting putting (unintelligible) to seek some help and regress, and maybe this gives Tribune a little more time to figure out how the heck they can pay off these enormous debts.
SIEGEL: OK, NPR's David Folkenflik in New York talking about today's bankruptcy filing by the Tribune Company. David, thank you.
FOLKENFLIK: You bet.
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