Tribune Co. Headed for Chapter 11?
Tribune Company, which owns the Los Angeles Times, the Chicago Tribune and a host of other media properties, has hired the Lazard investment bank and law firm Sidley Austin to try to stave off a Chapter 11 filing, both the Wall Street Journal and the New York Times report. But that may not be enough: The WSJ says owner Sam Zell, who took on some $8 billion in debt to buy the company last year, is preparing for a possible bankruptcy filing “as soon as this week.”
Tribune’s problems are well documented and are similar to every other newspaper–including the New York Times (NYT), as well as papers owned by News Corp. (NWS), which also owns this Web site, as ad dollars, revenue and readers are all moving rapidly to the Web. In addition, Tribune is particularly debt-laden: It owes $1 billion in interest payments this year, has another $500 million payment due next June, and may already be violating debt covenants that limit the amount of money it can borrow.
Tribune tends to receive special attention from us media types because of the size of the company and the prominence of its publications, but also because Sam Zell gives good quote. He’s generated plenty of them since he bought the company, and most of them come back to the same theme: He bought the newspapers to make a profit, not because he’s enamored of newspapers. And he holds a visible contempt for journalists who worry about the future of journalism.
Here’s a sampling:
If you don’t want to be a charitable trust, then you’ve got to focus on producing a return for investors’ capital, and it’s just that simple. It worked in the old days because you could be a public trust and you could do well for your shareholders because you had a monopoly, and monopolies are wonderful. I mean, I think competition is terrific, particularly for all those guys out there. Me? I like monopolies. I’m just sorry I waited 60 years to get into the newspaper industry because the 40 I missed were great.”
And here’s Zell addressing the staff of his Orlando Sentinel in January 2008. Warning–one bit of colorful muttering at the very end of this: