The Chicago-based Tribune Co., one of the nation's most prominent newspaper publishers, filed for bankruptcy today. The company owns the Los Angeles Times, the Chicago Tribune and The Baltimore Sun, plus five other daily papers, 23 television stations and the Chicago Cubs.
Tribune was already struggling when real estate magnate Sam Zell took it over a year ago. And it's not alone in that regard. The E.W. Scripps Co. is seeking suitors for the Rocky Mountain News, the second-largest paper in Denver. McClatchy is reportedly intending to try to sell the Miami Herald. And the New York Times Co. has announced it intends to borrow $225 million against the value of its new headquarters in midtown Manhattan.
Zell's highly leveraged takeover of Tribune left the company $13 billion in debt, and it had little room to maneuver as the economy collapsed. Tribune made deep cuts and sold the large daily Newsday, but a projected sale of the Cubs has been delayed by the credit crunch affecting the financial markets.
In an e-mail to employees on Monday, Zell said the newspapers will continue publishing and that there are no new rounds of layoffs planned.
The bankruptcy could give the company breathing space to negotiate more favorable terms with lenders. According to its bankruptcy filings, Tribune has more than enough money to make a $70 million payment due Monday. But the company appears to be in danger of falling afoul of some of the financial requirements set out in its borrowing agreements. And there are far larger bills looming ahead.
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