The Tribune Co., groaning under a huge debt load, could go into default under terms of agreement with its bondholders. But is this an indictment against newspaper-dominated companies, or a cautionary tale about the dangers of highly leveraged financing ?
CBC Radio says the Tribune Co. owes $13 billion.
The Tribune Company, the newspaper chain that owns The Chicago Tribune and The Los Angeles Times, is trying to negotiate new terms with its creditors and has hired advisers for a possible bankruptcy filing, according to people briefed on the matter.
Tribune is in danger of falling below the cash flow required under its agreement with its bondholders, but it is not clear how seriously Tribune is thinking about seeking bankruptcy protection. Analysts and bankruptcy experts say that the hiring of advisers, including Lazard and Sidley Austin, one of the company’s longtime law firms, could be a just-in-case move, or a bargaining tactic. The company would not comment on Sunday.
Tribune went private last December, paying more than $8 billion in a deal that put Samuel Zell, a real estate billionaire, in control of the company. It has struggled since then under the resulting debt, forcing deep cuts at its newspapers. It also sold Newsday to raise cash.
The Tribune Company owns 23 TV stations and 12 newspapers, including two of the eight largest in the country by circulation. As of Sept. 30, The Los Angeles Times had weekday circulation of 739,000 and the Chicago Tribune had 542,000. ...
The weak state of newspapers has made some lenders more loath than usual to force bankruptcy, fearing that it could worsen their chance of significant recovery, or at least delay it.
The companies that own The Inquirer and The Daily News in Philadelphia and The Star Tribune in Minneapolis recently suspended debt payments but have not filed for bankruptcy.
As the economy weakens, other lenders have become more aggressive about forcing debtors into bankruptcy when they believe such a move is inevitable, to preserve a company’s valuable cash reserves. Delaying can make it hard to emerge from bankruptcy successfully.
Sadly, the article didn't fully address my question about how many of the Tribune Co.'s problems are debt-related versus the structural and short-term pressures bearing down on newspapers.