Well, that was fast.
Over the weekend, reports began to fly that Tribune Co. could soon declare bankruptcy. Company officials were cagey, however, saying that all options were on the table. This afternoon, however, the company declared bankruptcy, putting all of its assets except the Chicago Cubs under court protection. You can see the court documents here, including a painfully long list of creditors. It’s hard to believe that it’s been barely 20 months since Sam Zell told his new employees at the Chicago Tribune that he considered Tribune Co. to be a long-term investment, and that old media still has plenty of profitable life ahead.
What does this mean? In the short-term, not much. Creditors are put on hold while the company reorganizes and tries to pay off some of the $1.5 billion in debt that comes due over the next seven months. Court protection provides Tribune with some leeway to avoid being driving into the ground by its debt service.
However, the company’s future is now effectively out of its hands. Unless the advertising climate improves substantially, the court is likely to authorize asset sales to meet debt obligations. We’d guess that many of the big Tribune titles could end up in local hands or be sold to other media companies. The problem is that there are no healthy media companies left right now and most local investors are going to want to pay pennies on the dollar.
It’s still early, and bankruptcy can be a magic potion for companies in good markets that just need to get themselves aligned. That isn’t the case with Tribune, though. It’s hard to imagine that much good will come out of this latest development.
This entry was posted on Monday, December 8th, 2008 at 6:06 pm and is filed under Business News, NewMedia. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.