Tribune Bankruptcy - Will the Chicago Cubs Be Sold?

According to the Washington Post, the media giant Tribune Co. has filed for Chapter 11 bankruptcy protection in a Delaware Court today, Monday, December 8, 2008.
This business move will allow Tribune to stay in business while it seeks better terms from its creditors.
The Chicago-based company owns a coast-to-coast empire with television stations and newspapers in most of the nation's largest cities. Its holdings include the Los Angeles Times; cable television superstation WGN in Chicago; the Baltimore Sun; and WDCW-50 in Washington, the CW affiliate. The company also owns the Chicago Cubs.
Tribune assumed some $13 billion in debt when real estate mogul Sam Zell engineered an employee-owned transition to private ownership one year ago this month. Hopes were high among employees that the company could be re-engineered to be a news company of the 21st century.
But sharp drops in advertising revenue, a decline in almost all of the nation's newspapers in recent years, have put the company in danger of being unable to meet its debt covenants, according to a source close to the company who spoke on the condition of anonymity because Tribune is privately held.
"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," chief executive Zell said in a statement today. "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."
The company has hired investment bank Lazard and law firm Sidley Austin to consult on the bankruptcy.
"We believe that this restructuring 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," Zell said. "This restructuring focuses on our debt, not on our operations." The company said it has enough cash to keep going but will secure additional credit from Barclays in case economic conditions worsen.
In November, the company reported a $124 million third-quarter loss, compared with an $84 million profit in the same period of last year.
Tribune is on the hook for about $1 billion per year in loan repayments. The company is eyeing a big payment in June 2009, which had worried analysts.
It's no secret that the ongoing financial crisis and the tightening of the credit markets forecasted almost certain doom over the media giant. Believe it or not, the unemployment situation was also a big factor for this financial move - newspapers depend on help-wanted ads. With less help wanted postings the less advertisement monies they receive.
Venerable newspaper chain Knight Ridder was swallowed in June 2006 by rival chain McClatchy Co., which has watched its stock price lose 90 percent of its value since then. Over the same period, shares of The New York Times Co. are down more than 60 percent, while shares of The Washington Post Co. are down more than 40 percent.
Today, the Times Co. said it would stake its new Manhattan headquarters as collateral for some $250 million in new loans the company seeks.
Tribune has been raising cash by putting assets up for sale. The Cubs and their storied Wrigley Field are on the block and the company hopes for a spring sale, with an expected price tag of several hundred million dollars. However, the pool of potential bidders has shrunk since the team went on the market, as the credit crisis has put financing in doubt for such a large deal.
The Cubs and Wrigley are not included in the bankruptcy filing, the company said today.