American newspaper giant Tribune Company has announced it has filed for bankruptcy protection after its debt levels became unsupportable.
The owner of 12 papers including the Los Angeles Times, Chicago Tribune, Baltimore Sun and Orlando Sentinel confirmed in a regulatory filing that it had applied for court protection under the US Bankruptcy Code.
Tribune said it urgently needed to restructure its £8.7bn debt – which is backed by only £5.1bn in assets.
“The company will continue to operate its media businesses during the restructuring, including publishing its newspapers and running its television stations and interactive properties without interruption, and has sufficient cash to do so,” Tribune said in its statement.
Sam Zell, the property magnate who bought the company for £5.5bn last December, said Tribune had made “significant progress” over the past year. In May, the publisher sold New York suburban daily Newsday to TV conglomerate Cablevision for £435m.
“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,” said Zell, the Tribune chairman and chief executive.
“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. This restructuring focuses on our debt, not on our operations.”
Tribune said it would continue to pay employees’ salaries and health benefits during the restructuring process, and hopes the bankruptcy protection will be approved by the courts “in the next few days”.
In an email memo seen by Editor and Publisher magazine, Zell told staff: “This filing should not impact the way you do your jobs on a day-to-day basis.
“We will continue to operate responsibly in a challenging environment – aggressively managing costs and maximizing revenue opportunities.
“The reality is that we – along with the rest of the country – have very little visibility on where the economy is headed and how our businesses will perform given the recession.”
He added: “I am proud of the work we have done at Tribune in the last year. I’ve seen strong determination to take hold of this company and put it on a new course.
“As a result, we’ve reduced costs, gained market share, and laid the groundwork for creating a new business model out of traditional media.
“This restructuring will give us the time we need to build that model, to secure sustainable and growing cash flow, and to achieve the success the talented partners in this company deserve.”
In June this year, Tribune Company issued an edict to its newspapers that news pages should be reduced to bring the ratio of advertising to editorial pages to 50:50.
In its third quarter results, the publisher made an operating loss of £85m on revenues down 10 per cent year on year to £670m.