Chicago Tribune parent Tribune Co. filed for Chapter 11 bankruptcy protection today in Delaware so it can restructure its debt.
The Chicago Cubs and Wrigley Field, which Tribune Co. has on the auction block, are not part of the filing. The company said it has sufficient cash to continue to operate its media businesses, including publishing its newspapers and running its television stations and interactive properties, without interruption.
Chicago-based Tribune Co. had more than enough cash on hand to make a payment of $70 million due today on money borrowed before Zell's deal, but it was unable to convince lenders to embrace a broader restructuring of its debt.
Much of its debt was incurred last year when real estate magnate Sam Zell took the company private last December. It has re-paid approximately $1 billion of its senior credit facility since then. But the situation at Tribune Co., which has suffered from industry-wide declines in advertising revenue that have eroded its cash flow since the deal was done, is emblematic of the squeeze felt throughout the media business overall, and newspaper companies in particular.
Beside the Chicago Tribune, Tribune Co. owns the Los Angeles Times and other newspapers as well as several TV stations.
According to the filing, Tribune Co. has $7.6 billion in assets and $12.79 billion in liabilities. The company said it has moved to supplement its cash availability in case operating results take an even steeper decline through an agreement negotiated with Barclays to maintain post-filing its existing securitization facility.
"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," said Zell, chairman and chief executive of Tribune Co. "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.''
Zell said the "restructuring focuses on our debt, not on our operations," and the company believes that a new debt structure "will bring the level of our debt in line with current economic realities, and will take pressure off our operations, so we can continue to work toward our vision of creating a sustainable, cutting-edge media company that is valued by our readers, viewers, and advertisers, and plays a vital role in the communities we serve."
Tribune Co. already this year has cut costs through moves such as reducing the staff and size of its newspapers, including the Chicago Tribune and Los Angeles Times. It also has unloaded assets, including selling control of its Long Island, N.Y., daily newspaper Newsday to Cablevision's Dolan family and part of its stake in the CareerBuilder.com employment site to fellow partner Gannett Co.
Tribune Co. expects its first-day motions will be approved in the next few days.