Media conglomerate Tribune Co. has filed for Chapter 11 bankruptcy protection.The owner of the Chicago Tribune, the Los Angeles Times, the Chicago Cubs, Wrigley Field and other properties has $13 billion in debt.
"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," Sam Zell, chairman and CEO of Tribune, said in a prepared 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."
Severe reductions in advertising this year because of the recession has put pressure on the company. Most of its debt comes from the complex transaction in which the company was taken private last December in an $8.2 billion buyout led by Zell. Although the next major principal payment isn't due until June, analysts said Tribune has been in danger of missing lender-imposed financial targets.
The Wall Street Journal, quoting people familiar with the matter, said Tribune Co.'s cash flow may not be enough to cover nearly $1 billion in interest payments that are due this year. Tribune made the filing Monday in bankruptcy court in Delaware.
The company said it will continue to operate its media businesses during the restructuring, including publishing its newspapers and running its television stations and interactive properties. It added that it has sufficient cash to maintain operations.
As posted earlier on 360 Degrees, the Tribune Co. reportedly hired financial advisers ahead of the filing. The Chicago Tribune reported that its parent had hired investment bank Lazard Ltd. and law firm Sidley Austin as it considers its financial options.
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